Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited
Whatever the subject nowadays, we cannot seem to escape from rankings, ratings and league tables. They are a dominant feature in the management of our schools, universities, hospitals and public utilities. Journals are ranked, as I know very well being both an author and an editor. Even the television schedules are full of programmes based on the top 100 pop records, the 50 favourite advertisements, the 100 best comedy moments, etc.
Of course any ranking is only as good as the methodology used to compile it. The methods used in the ranking or “list” programmes on television will rarely stand up to scrutiny, although this hardly matters because they are only intended as entertainment. On the other hand, some ranking methods do matter because they are linked to funding or are used as a measure of quality by members of the public when choosing services. For this reason their basis needs to be valid and trusted, which for many complex organisations and businesses presents a difficult challenge to external assessors. Ranking football clubs in a league table is easy; the number of games won and goals scored just need to be added. Therefore, nobody contests them. Conversely, school and hospital rankings are far more contentious since they are strongly influenced by social conditions in the area where they are located.
Manufacturing companies are also being confronted increasingly by rankings. Traditionally, they have been ranked externally by the business press according to many financial and performance criteria. More recently they are being ranked according to wider factors such as environmental credentials, employment conditions, and even peripheral aspects such as charitable giving.
Manufacturers also have the benefit of rankings when they make decisions. They have vendor ratings when choosing their sources of supply and user ratings when selecting plant and machinery. They even have country competitiveness rankings and FDI attractiveness indices when deciding where to invest in overseas facilities. However, these definitely need to be accompanied by a health warning. Despite using a long list of criteria they are still historically based and are heavily influenced by local political and economic factors that can change dramatically during the lifetime of an investment. For example, there have been big changes in the competitiveness rankings of many European and Asian countries in recent years, so any company using the data a few years ago may have found its decisions to be grossly out of date.
So, rankings can be interesting and even entertaining. They can even be useful if the methodology employed is accepted by all, not just those who are at the top of the list! But they should be treated with great caution by businesses wishing to make decisions that have long-term consequences.