Categories: General

Rewards are linked to performance effectively at 89 percent of the "world's most admired companies" vs. at 77 percent of their industry peers, according to the 14th annual World’s Most Admired Companies list compiled by Fortune magazine and Hay Group, a global consultancy. The most admired also are more likely to treat work/life issues as a top priority and to address differing generational needs.

Leading the 2011 list are the following companies (click on the links to read Fortune's discussion of their winning attributes):

  1. Apple
  2. Google
  3. Berkshire Hathaway
  4. Southwest Airlines
  5. Procter & Gamble

The Best vs. the Rest

According to Hay Group's research, corporate priorities at the most admired companies typically include:

  • Differentiating rewards effectively based on employee contributions. Rewards systems link incentive pay (including bonuses and merit salary increases) effectively to employee performance at 89 percent of the most admired companies vs. at 77 percent of their industry peers.
  • Addressing work/life issues. Work/life concerns are more likely to be seen as a top or very important priority for the most admired companies (49 percent vs. 30 percent). The most admired also see onboarding new employees as a significant priority (55 percent vs. 43 percent).
  • Responding to generational needs. With young generations changing the workplace dynamic, the most admired companies are more likely to view responding to different generational needs as a top or very important priority (45 percent vs. 30 percent).

“Employee engagement has become critical to organizational performance, particularly as we emerge from a time when many employees were asked to do more with less,” said Mel Stark, vice president and regional reward practice leader at Hay Group, in a statement. “The world’s most admired companies understand that money is not always what matters most to employees. Over the past year, they have focused on fostering work/life balance for employees while increasing productivity and decreasing the likelihood that work tasks will crowd out personal time.”

Also high on the list of key corporate attributes:

  • Engaging employees to increase productivity. Efficiency and effectiveness are priorities for the most admired and peer companies alike. However, among the most admired, employees at all levels are more likely to be encouraged to take reasonable risks in an attempt to increase organizational effectiveness (94 percent vs. 77 percent). Moreover, the most admired make a stronger effort to solicit ideas from employees for increasing efficiency (91 percent vs. 76 percent).
  • Ingraining innovation in company culture. The most admired companies are more likely to do a good job of leveraging new technologies and creative approaches to improve efficiency (81 percent vs. 72 percent) and capturing innovative ideas and diffusing them through the organization (87 percent vs. 74 percent). At the same time, their managers and employees are more likely to be encouraged to innovate in areas of current strength (83 percent vs. 70 percent).

“Amid economic and organizational changes, the world’s most admired companies have created an edge over their peer companies by leveraging the resources and opportunities they have at all levels, not just in the C-suite,” said Jeff Shiraki, vice president at Hay Group. “These companies are committed to continuous improvement and innovation, even in areas of strength, and are enlisting the creativity of their employees to help stay competitive.”

Stephen Miller, CEBS, is an online editor/manager for SHRM.