Ranking the best-managed companies is a tall order. Thankfully, the Drucker Institute, named after the famed management guru, Peter Drucker, is poised for such a task. The Drucker Institute’s annual Management Top 250 Ranking, is described as a “holistic measure of corporate effectiveness.” Effectiveness, for the Institute, is simply doing the right things well.
The Institute exhausts its resources evaluating company performance over five principal categories: innovation, social responsibility, employee engagement and development, financial strength, and customer satisfaction. Some companies do quite well in multiple categories, but below average in others. There is even the company that scored number one overall – Microsoft – but scored rather poorly in customer satisfaction (519th).
As such, simply looking at the top seven or even ten companies based on their overall ranking is not a true measure of who the best-managed companies really are. Rather, it’s more accurate to look at those companies that scored at least one standard deviation above the mean for every company analyzed over all five categories. Those are the Drucker Institute’s best-managed companies.
A company that registers a 50 in a given category sits on the mean. Those that score a 60 are one standard deviation above. These are companies in the top 15 to 20% of the total. Scoring a 60 is not unusual, but scoring at least a 60 in all five categories is rare. This year seven companies scored in this elite category: Apple Inc., Mastercard Inc., Procter & Gamble Inc., HP Inc., Pfizer Inc., Accenture PLC, and Visa Inc.
All seven do a host of things well, but customer-centricity stands out. Mastercard, for example, has pledged to bring one billion people and 50 million small businesses into the digital economy. This obviously increases their customer base but also generates a significant social impact. Mastercard employees enjoy working for a company that makes an impact and as such continue to be highly motivated.
Pfizer’s work during the pandemic is well-known and their employees also take great pride in working for a firm that has played a leading role in combatting Covid-19. Yet, of the seven best-managed companies, only one has been an All-Star firm since 2017 (scoring 60 or above in all five categories). That award goes to Procter & Gamble, Inc. Like Pfizer and Mastercard, Procter’s focus is the customer. Former CEO A.G. Lafely notes that only when the company becomes preoccupied with financial returns is when they stumble. In contrast, when the customer is front and center, they thrive.
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