Five Companies That Are Not What You Thought They Would Be

It's always easy to tell which companies are doing good work and behaving and which ones are not, right? Actually, it's not. Some companies are very good at covering up their misdeeds while others get lumped with some ugly accusations that never go away despite all that they do.

For this issue, the authors of Good Company list companies that are not what you thought they would be by assigning a “Good Company” grade of A to F to five major players in the Fortune 100. The grade is based on their status as good employers, good sellers, and good stewards of the environment and their communities.

Here are five of the more surprising companies and their grades:

1. Walmart -- the company that so many love to hate –- earns a C (rather than the F that many readers might have expected). Why? Partly because of its significant advances in going green on a humongous scale and its use of its core capabilities to tackle hunger.

2. CVS Caremark -- operator of thousands of neighborhood drugstores -- received a D. It racked up government penalties of over $38 million in recent years due to Medicaid prescription drug fraud and potential violations of federal privacy regulations. On top of that, it got lousy marks as an employer.

3. Disney –- the “happiest place on earth” —- (appropriately enough) earns the highest grade of A. It did so by getting the basics -- being a good employer, seller and steward -- and by abiding by the law and avoiding greedy behavior.

4. Hewlett-Packard -- seen for decades as a paragon of corporate virtue -- only earned a C. Dismal scores from its employees on HP as a place to work were among the negative categories that offset some of HP’s more positive attributes, including its high green/sustainability rankings.

5. Goldman Sachs -- for many the poster-boy for corporate greed -- earns a B. Although many readers may grind their teeth, saying that Goldman deserves an F, there is in fact a great deal they have done right over the years. But to thrive in the future, they are going to need to improve their performance to an A or risk a future of mediocrity or worse.

You can find details behind these grades – as well as the grades of other Fortune 100 companies – at the Good Company Index.

So what do you think? Did Bassi and co-authors get it right or wrong? Chime in below.

1 comment:

Neal Maillet said...

Thanks Jeevan! Just a quick word on the Goldman Sachs rating--as the book's editor, I've received more comments on that than anything else.
1. Unlike rating agencies these days, the authors have created objective measures of companies' documented behaviors, not opinions. The ratings are based on actual data on numbers of fines and criminal convictions, employee happiness ratings, use of offshore accounts, company philanthropy etc.
2. The index does not take into account opinions about the company's business sector. Oil companies, for example, don't score worse because they're in a dirty industry, per se, but they score worse because their behavior is bad relative to others in the index.
3. Goldman Sachs, while caught selling bad derivatives during the bubble, was not a serial offender like many of the companies who scored poorly in the index--you may not like the business that they're in, but they have been fined, caught cheating and/or creating safety lapses far less than many, even most, of the companies in the index. Plus, their corporate philanthropy has to be taken into account.
3. Another way to look at this: corporate behavior, in general, is far worse than we thought. If a less-than-perfect company like Goldman Sachs scores higher than most Fortune 100 companies, we have a big problem. The authors have told me that they were shocked when they began to compile the raw data on regulatory and criminal infractions by the companies as a whole. Nobody has gathered this information from the municipal, county, state, and federal agencies taken together. The aggregate is extremely depressing.
4. The authors have posted all their metrics, formulas and data on their site and in the back of the book so that you can dig into the numbers and figure out why a company has earned a given rating. The main thing is that the authors have tried to compile a fair system and they didn't put their finger on the scale when the results were surprising at times!