UK: Editorial - Respect gives you resilience.

UK: Editorial - Respect gives you resilience. - In too many companies financial performance becomes the tail that wags the dog. Pleasing the City matters enormously but it's not enough to guarantee a stellar reputation - or future success. None of the co

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Last Updated: 31 Aug 2010

In too many companies financial performance becomes the tail that wags the dog. Pleasing the City matters enormously but it's not enough to guarantee a stellar reputation - or future success. None of the companies with top scores in Management Today's Britain's Most Admired Companies survey have allowed their tails to take control. They have avoided accusations of short-termism by devoting serious resources to longer term issues. Often these are soft issues that are notoriously tricky to measure.

To find the companies with the best reputations in Britain, academics from Nottingham, Derby and Aston Business Schools canvassed the directors of more than 250 of our biggest public companies and asked them how they rate their peers in nine specific areas. The survey is entertaining, of course, but it is intended to be more than that. It acknowledges that there are different ways of assessing the value of a company.

At a time when change is accelerating and economic uncertainty is everywhere, the survey gives weight to different ways of looking at the strengths of an organisation. The quality of its management is always going to be important but so, too, is the quality of its products, its ability to retain the best people, and so forth.

It goes without saying that Britain's 10 Most Admired companies each have financial strength, but they also have the capacity to look good from other perspectives. Ask a City dealer what matters to him about a company and you will hear one story; ask the customer or employee and you will hear another. To most people companies are more than equities to be traded. Of course they need to make good profits. And if you decided to buy shares in each of Britain's 10 Most Admired companies you would have a pretty interesting portfolio. You'd have some of Britain's biggest retailers (Tesco and Boots); a high street bank (Lloyds TSB); an investment bank (Schroders); two oil companies (BP and Shell); two consumer goods companies (Cadbury Schweppes and Unilever); and two world-class pharmaceuticals companies (Glaxo and SmithKline Beecham).

However, with Britain heading inexorably towards recession, almost every organisation will face testing times. We have already seen tumbling results from British Airways and Marks & Spencer. Some companies will be badly bruised, even destroyed. Those valued for a broad range of qualities will be better-equipped to survive than most.

Reputations are not quickly built. They rise at a snail's pace. They require work without reward, investment without any measurable payback and nurturing in countless ways. But come the crunch, they can provide resilience that will help a company immeasurably. It is not just poor results that hurt companies. Boardroom rifts, faulty products and abortive take-over attempts all put companies on their back feet. The reality is that no single factor makes for a reputation - even creating enormous wealth for investors.

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