When you really want fo find out who's hot, who do you ask? A company's peers, that's who. Trevor Merriden looks at the results of Management Today's 1997 Most Admired Companies survey.
No one knows better the value of a good reputation than a news organisation.
Which makes the choice of Reuters Holdings as Britain's most admired company for 1997 all the more fitting. After several years in which it has ranked around the middle of the top, Reuters joins a distinguished list of companies which have topped the poll since the Management Today survey first ran in 1989. The role of honour includes Shell, Marks & Spencer, Glaxo (now Glaxo Wellcome), Rentokil (now Rentokil Initial), Cadbury Schweppes and last year's winner, Tesco. Any company in the top 50 or so of our overall rankings of 260 companies is a first-class performer by any yardstick.
But to stay in the top 20 requires real tenacity. Of this year's top 20 companies only 12 have survived from last year and one (Asda Group, which didn't even have a particularly bad year) has dropped to 72nd place. New entries (and in the odd case, re-entry) to this year's premier league are Dewhirst Group, Hays, Rentokil Initial, Emap, Zeneca, Lloyds TSB, Boots and Reed International, the UK half of Reed Elsevier which is shortly to merge with Dutch publisher Wolters Kluwer.
First, the bare essentials of how the survey works (a more detailed explanation can be found on page 37). As anyone in business knows, good or bad reputations are sometimes unjustly won and lost. But who better to ask about the reputation of a company than its own peer group? In conjunction with Loughborough University Business School, Management Today approached 260 companies, the 10 largest public companies in 26 sectors of the economy, and asked their top management teams to evaluate their peers in other companies in their sector (respondents are not allowed to vote for themselves).
The research was once again conducted by Michael Brown from Nottingham Business School and assisted by Stuart Laverick from Derby University and Professor John Saunders of Aston Business School. They measured the assessments of their rivals against nine different performance criteria - quality of management, financial soundness, etc. We used this data to produce a ranking of the 10 companies within each sector, a separate ranking for each of the nine performance categories and, finally, an overall ranking of all 260 companies in the survey, which covers the 12 months to September.
Inevitably, the overall rankings are affected by the confidence felt by our respondents in their particular sector, as reflected in the overall level of marks given out, and our team of boffins make statistical adjustments for this. Last year, it was retail firms that were buzzing, with Tesco joined by Next in third place and Marks & Spencer in fourth position, Argyll Group (now Safeway) 12th and Asda 20th. This year, the winner, Reuters, is joined by other publishers such as Reed International (13th) and Emap (15th) in a top 20 which draws more evenly from a range of different sectors.
The brightest of the shooting stars featured in our survey is the Dewhirst Group, with a gain of 114 places. The company supplies clothing and toiletries to Marks & Spencer. Under Timothy Dewhirst, the Yorkshire-based company won the unanimous admiration of those in the textiles sector by winning all nine performance categories.
It has also been a fantastic year for Hays in the business services and distribution sector, with the company overtaking the once seemingly indomitable Rentokil Initial, a former favourite of the Most Admired Companies survey.
Recruitment is what Hays is known for, but it is also a dab hand in logistics and commercial services. The company has stood out bravely (and successfully) against the trend for greater focus by concentrating on not one but three core activities. Both Hays and Dewhirst are covered in our company profiles section.
On these pages, we show rankings and provide commentaries for those nine of the 26 sectors in the Most Admired Companies survey which, we believe, have the most interesting stories to tell.
We also reveal the top 10 performers in each performance criteria. Elsewhere we chart the rise of those who, like Dewhirst, have shot up the rankings and assess why others are dropping like stones. Finally we asked all our respondents to step outside their sector and tell us which company in Britain, irrespective of sector, size or ownership is the object of their unerring admiration.
The full results of the survey, including a detailed analysis of each sector, are contained in the report Britain's Most Admired Companies 1997, available from Management Today for £39.
Please contact Valerie Robertson on 0171 413 4203
TOP 20 MOST ADMIRED COMPANIES 1997
'97 '96 COMPANY TOTAL SCORE
1 6 Reuters 72.07
2 1 Tesco 71.41
3 4 Marks & Spencer 70.09
4 11 Glaxo Wellcome 69.96
5 12 Smiths Industries 69.17
6 16 Unilever 69.11
7 3 Next 68.66
8 7 SmithKline Beecham 68.51
9 123 Dewhirst Group 68.43
10 10 BP 67.94
11 18 BT 67.87
12 31 Hays 67.66
13 57 Reed International 67.39
14 30 Rentokil Initial 67.05
15 40 Emap 66.33
16 5 Cadbury Schweppes 66.05
17 15 Shell Transport & Trading 66.03
18 22 Zeneca 65.33
19 26 Lloyds TSB 65.32
20 48 Boots 64.75.