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Fortune World’s Most Admired Companies annual surveys are intended to assess those organizations that have the best reputation and financial performance across industries. As a result of the study, the Fortune 1000 listing and the Global 500 listing are created, with 6-15 organizations representing each industry. All the participants must have no less than $10 billion in revenue and rate among the leaders within their own industry. International presence is another obligatory requirement (“World’s most admired companies,” 2016).
Although the list is supposed to reflect social responsibility of companies, its utility is rather questionable since overall profitability seems to be the key inclusion factor. This makes it difficult to judge whether this or that company indeed excels in all other aspects. The following useful information can be obtained from the list:
- The ability of the organization to select and retain creative and talented employees.
- The quality of the company’s leadership and management strategies.
- The degree of social and environmental responsibility.
- The scope of innovation introduced by the leaders.
- The ability of the company to use corporate assets to increase profitability.
- The financial performance and the overall financial soundness.
- Long-term investments value.
- The quality of products manufactured or services rendered by the company.
- The success of international operations (“World’s most admired companies,” 2016).
Despite the fact that this information may be quite useful for business researchers, it is rather unreliable for investors. The problem is that, even being at the top of the list, the company may fail to be a good investment option. Since this rating attracts a lot of attention of the mass media, most people accept the underlying assumption that it would be profitable to work for these organizations or invest in them. Yet, the stock of the leaders typically has lower average returns that of those not included in the rating.
Neither is this list demonstrative in terms of companies’ attractiveness for employees as human resource management is only one of the inclusion requirements (and far from being the major one). Here, another rating comes to the foreground. The 100 Best Companies to Work For list, also executed by Fortune, includes organizations with the most favorable work conditions (based on feedback obtained from more than 230 thousand employees). The major distinguishing feature of the companies that win a spot on this list is a high level of their employees’ loyalty and trust. Since the assessment is conducted anonymously (which excludes the possibility of of pecuniary or other interests), the rating seems to be more useful for applicants than the previous one. Moreover, its confidence level exceeds 95% (5% margin of error), which makes the results highly reliable (“Proof is in the profit,” 2017). The following data can be obtained from the list:
- workplace convenience;
- quality of communication;
- managers’ honesty;
- degree of support for workers’ professional activities and personal life;
- the nature of relationships with co-workers (“Proof is in the profit,” 2017).
Thus, the comparison reveals that despite the seeming reliability and prestige of the Fortune’s Survey of Most Admired Companies, this rating does not give investors and employees sufficient information about the winners, mostly due to the fact that the overall financial performance acts as the major criterion for selection. On the contrary, the 100 Best Companies to Work for list seems to be more useful for employees since it is composed on the basis of real employees’ reviews.
Surprising enough, the lists do not overlap despite having a common author. The following table allows comparing the 2017 results (10 leaders from each rating):
Table 1. Comparison
(“World’s most admired companies,” 2017; “100 best companies to work for,” 2017)
It is evident from the table that there are no correspondences between the ratings as far as the first 10 positions are concerned. This allows stating that human resource management is not prioritized by the companies on the first list. Furthermore, it supports the opinion expressed by many experts that the majority of these leaders are not distinguished by their ethical behavior towards employees.
Company Analysis
The company selected for the analysis hereof is Starbucks. The magazine ranked it the third most admired organization globally and the first one within its industry. It is notable that the company has been on every list released by Fortune since 2003. In 2017, Starbucks has been ranked the first for each of the key factors (“World’s most admired companies,” 2017). This success is mostly attributed to the company’s new global growth and innovation plan.
However, having conducted research on the company, I came to the conclusion that I would not like to work for it. Due to its rapid global expansion, Starbucks was faced by a number of challenges connected with its HR policies. In order to win a competitive edge, it had to significantly reduce wages. Despite the fact that some employees (receiving higher wages) are happy to work for the company, the prevailing majority of workers report a labor crisis. When payments are increased, the organization simultaneously decreases work hours, which also has a negative impact on employees’ morale (Starner, 2017).
Furthermore, there is also a growing risk of losing health insurance coverage for Starbucks employees since it is available only to those whose weekly work hours exceed 20. In order to avoid excessive labor expenses, the company encourages its employees to take unpaid leaves and breaks. Some of them are sent back home earlier or allowed to come to work later, which is done to save the company’s money. This policy give sufficient grounds for changing one’s mind to apply for a job in Starbucks. Yet, to crown it all, employees also report communication issues since managers tend to be authoritative and uncompromising. The company does not admit the existence of this problem, stating that only a small percentage of cases contain valid complaints (Snell & Lemley, 2017). As a result of this neglect of the existing conflict, the universally praised employee benefits, tuitions, and programs provided by the organization do not manage to overbalance the general discontent and grievances against the top management.
Thus, the analysis reveals that the common belief that the company’s performance presupposes high-level human resource practices proves to be delusive. The case of Starbucks demonstrates that the organization may range among the industry leaders and have the highest scores in all performance aspects but still be unable (or unwilling) to solve human-related issues. This makes it possible to state that an abstract analysis of an organization cannot give a clear picture of its real state of affairs.
References
100 best companies to work for(2017). Web.
Proof is in the profit. (2017). Web.
Snell, S. A., & Lemley, A. (2017). Starbucks: Schultz Back in the Brew. Darden Business Publishing Cases, 1-18.
Starner, T. (2016). Starbucks workers claim wage and hour morale issues.HR Dive. Web.
World’s most admired companies. (2016). Korn Ferry Institute. Web.
World’s most admired companies. (2017). Web.
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