Why They're The Best

Dec. 21, 2004
The best managed have a social, environmental, and community conscience and work environments that help employees balance work and family issues.

General Mills Inc. has been one of the top 10 companies in return-on-equity among the IW 1000 since 1996. But that solid financial performance alone isn't why it also has been chosen as one of IW's 100 Best-Managed Companies for four straight years. Rather, it is General Mills' social conscience and the high involvement of its employees in such issues -- 80% of its employees and 40% of its retirees are engaged in volunteer activities each year -- that makes it a best-managed company. Indeed, all of IW's 100 Best-Managed Companies in 1999 have qualities beyond just financial performance that put them among the elite. Some work to curb child abuse or domestic violence. Others go the extra mile to provide the best benefits packages for employees or to provide an environment conducive to balancing work and family issues. Some have a strong orientation to recycling materials and waste and keeping the environment clean. Many work to make sure that there are no barriers to advancement for women or minorities. Extensive training programs to expand the skills of workers distinguish even more. Rarely do best-managed companies excel in just one nonfinancial measure. More often than not, they excel in three or more areas because they understand that their success is tied to their people and their willingness to be responsible corporate citizens. "We believe we have a responsibility to reach out to others [outside the corporation], to take what we know and do what we can to make a difference," says Stephen W. Sanger, chairman and CEO of Minneapolis-based General Mills. It is wrong, he suggests, to just "work through the challenges of everyday business" and dismiss the "problems of the world -- hunger, poverty, homelessness, illiteracy -- [as] too vexing." Thus, in the last five years -- in addition to 76 million pounds of food -- General Mills has provided $155 million in donations and contributions to help combat hunger, to provide education to students, to make neighborhoods where it operates safer, and to give start-up companies seed money to create jobs. Employees in 22 communities where General Mills operates sit on Community Partnership Councils to identify programs that will make a difference in those communities. Two recent examples: The General Mills Foundation initiated the Hawthorne Huddle -- a monthly 7:30 a.m. meeting of residents, businesspeople, and public officials in a north Minneapolis neighborhood. That has led to a reduction in crime, closing of crack houses, a 50% drop in vandalism, and the creation of youth programs, spawning hope in a troubled community. This year General Mills was honored by Washington-based Social Compact for providing $1.5 million in interest-free loans and hundreds of hours of free business consulting to Siyeza, a start-up frozen-food company in northern Minneapolis that now provides 36 jobs in the inner city. General Mills isn't alone in helping to create a social consciousness among its workers.

  • Switzerland-based Novartis AG has spent the last 10 years attacking leprosy in Sri Lanka with an education program that has led to the treatment of 13,000 people. A large part of the population in that country is now familiar with the first signs of the disease, and half the Sri Lankans who are treated for leprosy today now seek treatment on their own compared with 9% at the beginning of the decade. Novartis employees also have raised funds through walk-a-thons to help prevent blindness, planted gardens of fresh vegetables for food banks, and helped in literacy campaigns.
  • Employees of British-based Cadbury Schweppes PLC in Central Africa recycle soft-drink bottles and donate the funds collected for educational projects. Cadbury Canada uses a Chocolate Challenge and a Great Bunny Mall Tour to raise funds for the Easter Seal Research Institute, which supports research into physical disabilities of children. Cadbury's Doorstep project in India provides basic education to children living in deprived areas.
  • Since 1994 Denso Corp. has operated in Japan, its home country, a volunteer support center to assist the elderly and handicapped, to protect the environment, and to direct youth sports. Employees run clothing-collection drives each spring and fall for the needy in developing nations. The Denso Taiyo Co. Ltd. operation employs 200-plus people -- almost all of them with physical disabilities -- to assemble instrument clusters.
  • Another best-managed company with a wide array of programs is Schering-Plough Corp. Its profit-sharing plan pays employees up to 15% of their annual base salary. It opened a learning lab in Cleveland, Tenn., in 1998 for employees who have difficulty reading; the average attendee has improved his or her reading skills by seven grade levels. It offers on-site day care in two facilities and subsidies for off-site care at others, as well as on-site primary-care health services (there were more than 15,000 visits in 1998). In 1997 it made a $15 million commitment to combat childhood asthma and allergy problems among inner-city children. Other companies among IW's Best-Managed Companies believe they can be most effective when they focus most of their community or social efforts on a single issue.
  • Liz Claiborne Inc., which has addressed the domestic-violence issue since 1991, last year launched LizActs at its corporate location. Five teams of employees -- each led by two volunteers -- develop events to help nonprofit organizations raise money and address issues such as transition to work, affordable housing, AIDS, and other issues that concern women and children.
  • In a similar vein, Gillette Co. has undertaken several women's cancer initiatives. It has set up a toll-free information line and created a women's cancer Web site with resources and information. It is sponsoring nationwide seminars on breast cancer and provided the start-up funding in 1997 to establish and operate two Gillette Centers for Women's Cancer in the Boston area. Gillette also emphasizes training for its employees. A case in point: Before Gillette introduced a new shaving system in 1998, all key manufacturing employees received 100 hours of training.
  • Semiconductor giant Applied Materials Inc. also has strong worker training as well as programs to improve the communities where it operates. The company offers its employees more than 600 courses and training programs and allocates more than 60% of its annual charitable contributions to schools and universities.
In addition, Applied's pound-for-pound matching policy led to the donation of 1.9 million pounds of food to food banks in the U.S. Also, Applied employees in Lake Oswego, Oreg., and Vancouver, Wash., responded generously to a request from a single mother with four children and one grandchild for Christmas dinner and Christmas gifts for her children. The employees delivered Christmas dinner, 42 wrapped gifts, 450 pounds of food, prepaid the family's electric bill for several months, and purchased a stove, a space heater, clothing, $100 worth of bus passes, and two 18-speed bicycles with helmets and locks. This year, Applied became the founding sponsor of the Kindness & Justice Challenge, which mobilizes young people to be leaders in their communities, to perform individual acts of kindness, and to stand up for what is right. Best-managed companies also take care of their own employees with programs that set the standards for others.
  • German software firm SAP AG offers employees great flexibility in planning their work schedules. And in its home country SAP provides each employee with mentors for the first month on the job. Six weeks of vacation time is standard, and employees -- who are allowed to accumulate time off -- often take months off after completing a major project. After two years, employees can obtain interest-free loans of nearly $17,000 for down payments on a house or apartment. Many employees get a company car after three years. Lunch is free every day.
  • U.S. software giant Computer Associates International Inc., Islandia, N.Y., serves all employees worldwide a free breakfast and provides them with no-cost medical and dental care. There is an on-site, Montessori-based child development center and a fitness center. "Ultimately, CA is in the business of innovation, and innovations come from people," says Deborah Coughlin, senior vice president of human resources. "Creating a work environment that attracts talent and nurtures it is essential for any business whose success is based on the excellence of the people it employs." In addition, CA encourages employees to contribute to charity through a two-dollars-for-one matching program. It is an active corporate sponsor of children's charities. It also is putting money back into the Long Island area, where it is headquartered, to spur economic growth. CA donated start-up funds this year for a business-incubator program at the State University of New York at Stony Brook. There's enough seed money initially for at least 10 start-up firms that are willing to commit to stay on Long Island for at least three years.
  • Medtronic Inc. is a leader in offering benefits to part-time employees, who are eligible for retirement benefits, an employee stock ownership plan, health care, flexible spending accounts, vacation time and holiday pay, and a sick-child care program. Medtronic employees in locations across the world sit on committees to determine recipients of the company foundation's grants.
In 1998 it began a Healthy Countries initiative to provide health care in Kenya, Mexico, and parts of China and India, and a HeartRescue program to purchase automatic external defibrillators for police and fire departments. This year it added Healthy Connections, a program aimed at improving the health of patients with diseases or conditions Medtronic addresses as a business. Best-managed companies also are likely to be environmentally conscious.
  • Alcoa Inc.'s Alcoa of Australia unit developed a first-of-its-kind recycling facility to recycle the spent linings of aluminum smelting pots for its Portland smelter.
  • Denso recycles water at its Tennessee manufacturing facility and then reuses it to sprinkle lawns. It generates electricity and steam at many of its Japanese plants, allowing it to use 70% of the potential energy of its fuel compared with 40% when it's purchased from local providers.
  • A year ago Toyota Motor Corp. pledged to purchase all of its electricity for its Torrance and Irvine, Calif., headquarters locations from a mix of renewable energy sources and to switch its Long Beach port and its auto-parts-supply building in Ontario, Calif., to renewable energy sources -- despite an additional cost of $1 million. Finally, best-managed companies -- led by pharmaceutical companies -- also understand the importance of having a diverse workforce and managerial team.
  • Flextronics International Ltd. has managers from six different regions of the world on its executive team.
  • Eli Lilly & Co. has increased its percentage of women at the executive level from none in 1993 to 9.5% in 1998 and its minority representation among management from 3% in 1993 to 11% in 1998. One reason: 61% of the participants in its Executive Mentoring program are women; 39% are minorities.
  • Women and minorities make up 36% of the board of directors at Baxter International Inc., where 44% of the managers and professionals are women and nearly 18% are minorities. Since 1996 the percentage of female managers has increased by 8%, the percentage of female directors is up 18%, and the percentage of female vice presidents is up 30%.
  • Abbott Laboratories is the lead sponsor of the world's first permanent exhibit -- at the Field Museum in Chicago -- on cultural diversity. More than 38% of its interns and 30% of its new professional hires are minorities.

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