Do you work for a good company?

Posted: March 18, 2012

Bassi and her coauthors, Ed Frauenheim, Dan McMurrer, and Larry Costello, weren't trying to reinvent the wheel. The Good Company Index relies on 11 different sources of data and adds or subtracts points based on each company's appearance or ranking on those lists.

For example, they used employee-generated survey data for the Fortune 100 as posted on Glassdoor.com, an online jobs site that collects information about salary levels and employee satisfaction. Glassdoor.com averages the employee reviews of a particular company on scale of 1 to 5.

Supervalu Inc., the parent company of the Acme Markets supermarket chain, had a Glassdoor.com rating of 2.6, which translated into minus-2 points for the Good Company Index. Researchers used Glassdoor.com ratings only if a company received more than 25 employee reviews. Twenty-two Fortune 100 companies received fewer reviews than that number; thus, they did not receive any points.

Bassi called the Glassdoor.com ratings an example of "technology-fueled people power."

"It really reflects the power of the Web to gather and synthesize information in a way that ordinary people can use," she said.

For the Good Company Index, a corporation received 1 point if it was included in the Dow Jones Sustainability Index, which tracks the financial performance of companies that are committed to sustainable business practices. The same company could lose 1 point or gain 1 point based on its position in the Newsweek Green Rankings, an assessment of the environmental performance of largest publicly traded companies.

Companies were penalized for outsized CEO compensation, aggressive use of tax havens, and paying fines and penalties levied by government regulators. Bassi called those three categories "indicators of corporate greed" and argued that such activities, while not illegal, are "not worthy behavior."

She drew upon a 2009 Government Accountability Office report on the number of tax havens companies used. As you might expect, financial firms dominated the top of the list, with Citigroup Inc. reporting 203 tax havens (No. 1), Morgan Stanley 187 (No. 2), and Bank of America Corp. 69 (No. 5). Third place went to media conglomerate News Corp. with 99 tax havens, and Marathon Oil Corp. was fourth with 70.

Bassi and her colleagues did the legwork to compile the fines and penalties paid by the Fortune 100 corporations. The three companies that paid the highest penalties on the Good Company Index were Citigroup, at $7 billion; Pfizer Inc., $2.3 billion; and Intel Corp., $1.45 billion.

Tallying up the points from all of the rankings produces an overall score and letter grade for each company on the Good Company Index. "It's a little bit of sausage-making, I admit," Bassi said.

However, Bassi said she thinks the diversity of the ingredients is a strength. The Good Company Index draws from publications, such as Fortune's 100 Best Companies to Work For list and the New York Times' annual report on executive compensation, as well as more frequent online employee ratings from Glassdoor.com and wRatings, which provides investment research based on weekly consumer surveys.

One thing she would like to capture better is the effect of globalization, referring to Apple Inc.'s practice of outsourcing the manufacture of its popular iPad, iPhone, and other consumer products to other countries. "We haven't figured out a way to do it yet," she said.

Make no mistake: She's not antiglobalization. In fact, she said she thinks globalization is entering a new phase where social media enable people to put pressure on companies wherever they operate in the world.

To Bassi, this new phase puts a premium on "human capital management" as a competitive advantage. That's her real priority as a consultant who helps companies use "human resources analytics" to pursue "enlightened and profitable management of people," she said.

Easy to say, hard to put into practice.

Still, of what value is an index that ranks the goodness of 100 very large companies? Most of us work for small and mid-size companies. Bassi said she and her team are trying to translate the Good Company Index into tangible tools for people to use.

To get a sense of the grade your employer might get, you can fill out (anonymously) a "Good Company Quick Self-Assessment" on the McBassi & Co. website at www.bit.ly/self07.


Contact Mike Armstrong at 215-854-2980, marmstrong@phillynews.com, or @PhillyInc on Twitter. Read his blog, "PhillyInc," at www.phillyinc.biz.

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