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Financial Times: New economy takes the spotlight at last: "it is rather surprising to see Wal-Mart, often a target of criticism, ranked at number two in terms of community commitment and to see the oil companies BP and Royal Dutch/Shell ranked at fifth and ninth respectively. Those who work in the companies’ public relations departments have reason to be pleased.": Posted Friday 17 Nov 2005

By Philip Coggan
Published: November 17 2005 16:44 | Last updated: November 17 2005 16:44

World's most respected companiesThe new economy has finally triumphed over the old. For seven successive years, General Electric has topped the table of the world’s most respected companies. But for the first time, it has been pipped to the post by Microsoft, the software group.

It is sweet revenge for Bill Gates’ company, which was stuck in second place in all the previous polls. The survey was conducted by PwC, the big accountancy group, and polled 954 chief executive officers across 25 countries between August and October.

Microsoft is described by one chief executive as “innovative, fulfilling the needs of society with their products and ability to grow” and another as “a very innovative company (that) touches almost everything in our lives”. A further comment is that “the company is the first and best in the world. They have a strong base and employee satisfaction.”

The one-two ranking of Microsoft and GE among CEOs is echoed by polls conducted among fund managers and non-governmental organisations (NGOs). And, to complete the set, Bill Gates is ranked the world’s most admired business leader, just ahead of Jack Welch, the ex-head of GE (Jeff Immelt, the current GE chief executive is ninth).

Microsoft is also ranked number one in terms of shareholder value, community commitment and innovation. Only in corporate governance is GE ranked ahead of Microsoft. The only polls in which neither company tops the rankings are customer service, where the winner is Toyota, the Japanese vehicle maker, and the best turnround, won by another Japanese car company, Nissan.

GE can take comfort from some of the CEO comments which praise the company for its “great leadership”, “ability to reinvent itself”, “flexibility” and “aggressive approach to business decentralisation”.

Outside the top two, the most startling climb comes from Apple Computer, which jumps from 42nd to 9th on the back of the success of its iPod music player, perhaps the iconic consumer item of the first decade of the 21st century. One CEO describes the group as “an extremely innovative company. It’s been born again from the ashes. Apple is responsible for facilitating a new way of life.”

Another technology company to leap up the rankings is Google, the internet search engine, which makes its first appearance in the top 50 at number 39. And a further symbol of modern life, Starbucks, the coffee retailer, makes its debut in the rankings at number 14.

The listings also throw up some nice juxtapositions. Almost suggesting a collective sense of humour on the part of CEOs. The Virgin group of brands, including Virgin Atlantic, is ranked 27th, one place ahead of the airline’s arch-rival, British Airways. And as Airbus enters the top 50 at number 24, its fierce competitor Boeing drops out of the ranking altogether.

Many of the other companies to drop out of the top 50 have a distinctly “old economy” ring; DuPont, the chemicals maker, Caterpillar, the construction equipment manufacturer, Unilever, the food producer and Ford, the vehicle maker, have all lost ground in the eyes of global CEOs. But some new economy companies have slipped, too, notably the software vendors Oracle and SAP.

US companies once again dominate the rankings, with 24 of the businesses in the top 50. Germany is second with six constituents and the UK has moved above Japan into third place with four. BP, ranked seventh, is the first UK company to make it into the top 10.

So what makes companies well respected? By far the most important criterion seems to be financial success. Sixty-nine per cent of CEOs mention factors such as return on investment or profitability when making their nominations. The next most important factor, with 13 per cent, is a high quality brand or product.

The bad news for the investor relations industry is that “good communication with stakeholders” is mentioned by only 2 per cent.

The customer services rankings have a strong technology feel. Below Toyota at the top are the computer manufacturer, Dell, IBM, now increasingly a services group, and, of course Microsoft. Amazon.com is rated in 12th place. But there are also many companies featured that have more traditional links with consumers, such as Disney, Wal-Mart and McDonald’s.

The survey provides such a wealth of data that some of the most interesting points can emerge from a comparison of different lists. For example, Ryanair is ranked 33rd in terms of respected companies but is nowhere in the list for customer service. Both DHL and Federal Express are highly rated in customer service terms but do not make the top 50 in the overall rankings.

When it comes to innovation, Toyota is the best-ranked company after Microsoft, moving ahead of Sony which drops down to fifth place. There is some encouragement for Boeing, which dropped out of the most respected rankings, but is the highest new entrant in the innovation category. And technophiles will not be surprised to see that Research in Motion, manufacturer of the BlackBerry, also makes it into the innovation top 50.

Executives will be well aware that their time in the spotlight can be fleeting. But the rankings of most respected business leaders are remarkable for who is still included as well as those who have dropped out. Jack Welch’s continued high ranking is perhaps not surprising given that he is seen as the architect of GE’s success but Sam Walton is still ranked number 16 in the list, more than a decade after his death. “He changed the rules and model of creating business” is one comment about the Wal-Mart founder.

The highest new entrant in the top 30 is the septuagenarian Rupert Murdoch whose success with the Fox TV networks seems to have earned him the respect his newspaper empire did not. One chief executive praises his “ruthlessness and his capacity to take tough decisions”.

Steve Jobs will also be pleased, as the Apple boss leaps from ninth to fourth place. “He has swum against the tide and 90 per cent of the time, he is right,” says one CEO. “A classic example of how an individual can positively affect a company,” says another.

But it is goodbye in top 50 terms to Carly Fiorina, the ex-Hewlett Packard boss, ranked eight last year, to the outgoing Jurgen Schrempp of DaimlerChrysler and to Michael Eisner, who faced a shareholder revolt at Disney. Given the credit downgrades in the auto industry, it is no surprise that both William Clay Ford junior and Richard Wagoner of General Motors also drops down the list.

Disney is one prominent example of a company which earns the respect of its peers but without the benefit of a top-ranked business leader. Others include Procter & Gamble, Johnson & Johnson, Honda and Citigroup.

But perhaps the most intriguing of all the lists is that compiled from the votes of NGOs. Non-governmental organisations have often been highly critical of the corporate sector and of some companies in particular. So it is rather surprising to see Wal-Mart, often a target of criticism, ranked at number two in terms of community commitment and to see the oil companies BP and Royal Dutch/Shell ranked at fifth and ninth respectively. Those who work in the companies’ public relations departments have reason to be pleased.

Tables index
(all files in PDF format - click on a title to view the data)
 World’s most respected companies - companies with 5 nominations or more
 By industry sector
 By country
 World’s most respected business leaders
 Business writers and gurus
 Most value for their shareholders
Corporate governance
Customer service 
Commitment to the community
Innovation
Turnaround
 

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