In the midst of perhaps the biggest financial meltdown since the 1930s, no companies seem immune to investor pressure, other than perhaps WalMart and McDonalds, who managed to eke out stock market gains in 2008.

But as a New Year dawns, what companies will lead us forward? 24X7 argues that “Being A “Most Admired Company” Loses Its Appeal” citing share price declines by the top 4 in this years list (Top 20 Most Admired Companies) Apple, Berkshire Hathaway, GE and Google.

I’m not so sure. AAPL has been off recently based on rumors concerning Steve Job’s health; BRK’s drop matches that of the DJIA, which shouldn’t be much of a surprise since Buffett has to take large positions, which means he needs large companies to take them in; GE is down due to concern over it’s credit rating (true of virtually any financial organization right now) and GOOG’s primary revenue source is ads, which organizations are cutting back on – but when the economy resurges, would you bet on traditional media? Number 5 on the list is Toyota (TM), but no one is buying cars right now for a variety of reasons. Those who follow the financial news know that there is a theory circulating around the Street that shares of many of the best companies have been sold simply because people who need cash can sell them, unlike the real dogs that have lost almost all of their value.

Since September 15, my portfolio has taken a beating like everyone else’s; I knew that when I started investing decades ago there would be up years and down years (and yes, I survived ’87). So, I prefer to look the longer term, and within the Most Admired Companies, the top 10 have significantly outperformed industry peers and the markets, giving average shareholder returns of 19.6 per cent, nearly three times the Standard and Poor’s average of 7.1 per cent, for the period 2004–2007 (when the most recent analysis was done).

Personally, I’m willing to bet on companies that have stood the test of time, those that have been Most Admired by their peers since our firm, Hay Group, began researching these for Fortune Magazine in 1997. Seven companies have appeared in the Top 25 every year: GE, Coca-Cola, Microsoft, Berkshire Hathaway, Toyota Motor, Johnson & Johnson and Citigroup. These companies have a number of characteristics in common:

Success through people:  the leaders of such companies take a ‘hands on’ approach to developing talent, devoting as much as 30 per cent of their time to the task and to coaching staff.

Strong organizational culture:  their leaders tend to have a consistent, shared understanding both of what the company’s culture is at present and where it should go in the future.

Profound employee engagement: they are more successful at maintaining high levels of loyalty and motivation in hard times.

Strategy that gets executed:  Our research indicates that this has a lot to do with clarity: in the Most Admired Companies, strategic objectives are clearer at all levels of the company and performance measures are more closely aligned with strategy.

Managed innovation: innovation starts at the top, with visionary leaders who direct innovation and establish a culture in which it can flourish.

Balance of global and local: they are better at integrating their operations globally to exploit opportunities of scale while simultaneously being successful in providing local business units with the flexibility to respond to local market needs.

Long-term focus: their performance measures are structured to focus on the long term and they are less tolerant of executives who compromise long-term objectives for the sake of short-term demands.

Read more here

Complete report here (.pdf).

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