Why Apple Isn't Among the 25 Best Companies in America

How is it possible to have a list of The 25 Best Companies in America without Apple (NASDAQ: AAPL  ) being included? Surely there must be something drastically wrong with such a list.

We can see why readers might be confused that Apple is not on there. Our aim was to analyze over 1,700 companies to see how they addressed the interests of various stakeholders, including investors, customers, employees, and the world at large. Apple actually ranked quite high using our methodology, but we ultimately decided against including it in the top 25. Below are some arguments for and against Apple as one of the best companies in America.

The case for Apple
As the largest tech company on the planet, Apple hardly needs an introduction. The company makes Macs, iPhones, iPads, and iPods. Apple sees its products as a way to reach people and make their lives better. In a recent interview with Bloomberg Businessweek, CEO Tim Cook said, "In creating these great products we focus on enriching people's lives -- a higher cause for the product."

It's always been Apple's belief that it can make a better product by integrating hardware and software in order to offer differentiated devices.

According to Glassdoor's 2013 rankings of best places to work, Apple ranked No. 34. That was a notable drop from the No. 10 spot it earned in 2012, which was an improvement from the No. 20 spot in 2011. Cook has earned a 94% approval rating among employees posting on the site, which is down from the 97% rating he received when he became CEO in 2011. Interestingly, that was actually higher than the 95% rating that Steve Jobs had.

Universum's 2012 poll on where college grads want to work ranked Apple No. 2, just behind search giant and mobile rival Google.

Apple goes to great lengths to satisfy its loyal customer base. The whole purpose of Apple Retail stores has always been to improve the shopping experience leading up to the purchase as well as provide ongoing support after the purchase.

The company consistently scores well in consumer satisfaction surveys. Apple scored No. 1 in J.D. Power and Associates 2012 U.S. tablet satisfaction study, narrowly beating Amazon.com and its Kindle Fire, while also topping the same researcher's 2012 U.S. smartphone satisfaction study for the 8th consecutive year. The American Customer Satisfaction Index also ranked Apple No. 1 within the PC industry for the ninth consecutive year in customer satisfaction in 2012, maintaining a healthy lead over Microsoft Windows PCs.

Under CEO Tim Cook, Apple has made a lot of progress with becoming more shareholder-friendly. Cook's overall compensation packages are immeasurably higher than Steve Jobs' famous $1 annual total compensation package, but Cook is also effectively performing both CEO and COO duties now since Apple did not hire a new COO once Cook become CEO.

Additionally, it's largely thanks to Cook that Apple finally re-initiated a dividend after a 17-year hiatus, currently paying $2.65 quarterly for a 2.2% yield. Along with the dividend, Cook implemented a $10 billion share repurchase program and was upfront that the purpose was primarily to neutralize dilution from equity compensation. These are two important changes that Cook is responsible for that directly benefit shareholders.

Does Apple make the world a better place?
Just weeks after becoming CEO, Cook put in place a charitable donation matching program, matching up to $10,000 of an employee's personal donations to a non-profit of their choice. Steve Jobs had axed the program when returning to Apple in 1997 to restore profitability, but never brought it back even as Apple's fortunes rose. Apple recently donated $2.5 million to the American Red Cross for Hurricane Sandy relief. What Jobs lacked in public philanthropy, Cook is helping make up for by making Apple more charitable.

Few technology companies put such high priority on sustainability and environmentalism. The company goes to great lengths to measure its environmental impacts and reduce its carbon footprint. That can mean everything from building the largest private solar array in the country to help power its North Carolina data center to focusing on the energy efficiency of its products and meeting the latest EPEAT and Energy Star requirements. The North Carolina data center has earned LEED Platinum certification from the U.S. Green Building Council, the highest possible rating and uncommon for data centers of this size.

The company also prepares detailed environmental reports on all of its products. Former Vice President and environmental activist Al Gore sits on Apple's board of directors.

It must do better
Apple's supply chain needs to improve. The challenges it faces there are common to all multinational corporations operating in such a globalized economy, but due to its stature Apple garners more attention over labor-related transgressions at Foxconn and other manufacturing plants in China.

For example, Foxconn also assembles other gadgets like Microsoft's Xbox 360 and Samsung's competing Galaxy S III, but since those products don't carry the same volumes as Apple, they are able to avoid some of the negative publicity. That being said, Apple does bear more responsibility to enact meaningful change with labor practices because it carries more weight.

It's for that reason that Apple chose to join the Fair Labor Association a year ago, becoming the first technology company to join as a participating company. The FLA has helped improve working conditions in numerous industries from coffee to apparel. In February 2012, Apple voluntarily had the FLA begin inspections in order to audit supplier factories in China and compile detailed reports of its findings. After the investigation was complete, the FLA said it found "excessive overtime and problems with overtime compensation; several health and safety risks; and crucial communication gaps that have led to a widespread sense of unsafe working conditions among workers."

A status report published five months later showed that Foxconn had made progress with improving conditions, including areas like employee health, safety, and working hours. There's still much work to be done, as working hour compliance ticked down since August as the number of workers increased. Cook has said that while Apple is obsessed with product secrecy, it's equally fixated on supplier transparency, which is why it produces thorough supplier responsibility progress reports that detail improvements as well as shortfalls.

Apple is one of many companies that outsource manufacturing overseas, but as a leader, the company is doing what it can to improve the broader industry.

Foolish bottom line
Apple is one of the best-run companies in the world. In many ways, Tim Cook has improved Apple organizationally relative to Steve Jobs, even if Cook is less of a "product guy." The company nurtures innovation at every level and attracts talent from all over the world, while inspiring unprecedented levels of customer loyalty for a consumer electronics company.

That's all translated into incredible gains for shareholders, which now also benefit from dividends. Cook has made Apple more charitable and improved supply chain transparency and conditions, even if it still has room to improve there.

Ultimately, the supply chain issues surrounding Apple were what resulted in it not making the cut, even though Apple ranks highly among investors, customers, and employees. The company bears primary responsibility for human rights transgressions within its global supply chain, even if other companies technically contribute to the problem as well.

Supply chain transparency has become a priority for Apple and there have been signs of improvement. For example, Apple has reached a new high of 99% compliance of working hours as of January 2013. There have also been recent reports that Foxconn has been seeing higher worker retention in part due to improved conditions and wages.

If Apple can continue making meaningful progress on this front, it may earn a spot in next year's rankings.

Click here to read about the rest of The 25 Best Companies in America.

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Read/Post Comments (23) | Recommend This Article (30)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 07, 2013, at 11:29 AM, 4aapl wrote:

    Really?

    To me it seems like Apple is the only one trying to make working conditions better at places like foxconn. I'd give it points for taking on that task.

    But it's not perfect. While I enjoyed most of the time that I worked there, we've all seen the occasional blog post from an irate corporate or retail worker. And while it doesn't happen too often, it does get news.

    And then for the shareholders there's the cash management issues that gets plenty of airtime. Apple has made so much cash so quickly, that it's seen as an issue. If they made the same amount over 20 years, they would have developed better ways to give back to the shareholders. I think they'll come around, and while I'd like them to spend $40B today to buy back 10%, which would then get rid of a lot of the shares that trade on a daily basis and thus make an even bigger change, I also know that it's unlikely. Apple has been in the doldrums before, so they're a lot more conservative with their cash than a tech stock that has never seen the dark side.

    But on the labor side of things, I would have thought the vast improvement and leading the way for change while everyone else using foxconn just stays quiet would have given it a boost.

  • Report this Comment On March 07, 2013, at 11:43 AM, luxetlibertas wrote:

    With Apple now being an important driving force behind improvements in labor conditions, education and wages in China, I find it unconvincing that this article somehow converts this strength into a negative.

    Apple is a bit heavy handed in restricting its users in things like multiple accounts for iTunes, multiple accounts on one device, apps it does not like, hardware upgrades etc. and their use of cash is very inadequate. Also on the software side the quality is a bit under pressure. But instead the arcticle chooses to focus on putting blame on Apple where it is unwarranted. Quite unbelievable.

  • Report this Comment On March 07, 2013, at 6:27 PM, TMFNewCow wrote:

    For what it's worth, I laid out the case for Apple as one of the 25 best but was not directly involved in the final ranking process.

    -- Evan

  • Report this Comment On March 07, 2013, at 6:34 PM, JustKolb wrote:

    If it is not in the top 25, why was it a Fool Best buy now just a month or two ago?

  • Report this Comment On March 07, 2013, at 6:55 PM, badsangria wrote:

    Articles like these are the reason why the Motley Fool is no longer among my top twenty sources of investing information. Too many fluff pieces, too many teaser articles designed to sell premium services, and an endless barrage of email advertisements.

  • Report this Comment On March 07, 2013, at 7:15 PM, eldetorre wrote:

    Apple is a good business but only a mediocre investment. The only reason to buy a stock is growth or income.It doesn't have a lot of room for growth, but it doesn't return value to shareholders.

    It also is not a green company at all. It doesn't offer sufficient computing power for mid tier users. iMacs are stand alone computers with minimal upgrade options. When the computer gets old you throw away a perfectly decent display. The display can't really be used by itself (it's docking capability does not bypass on board processing).

  • Report this Comment On March 07, 2013, at 7:46 PM, Onex wrote:

    This is a whole lot of hot air -- wishy washy and tiresome! How about a fact-based assessment instead of a whole lot of platitudes and opinions. Very disappointing evaluation.

  • Report this Comment On March 07, 2013, at 9:01 PM, neocolonialist wrote:

    You can put lipstick and a dress on a pig, but you still have yourself a little oinker.

    Apple has changed the world more than once, and makes more money than any company ever. It IS one of the top 25 companies anyway you slice it.

    Have to call this one a fail guys.

  • Report this Comment On March 07, 2013, at 10:26 PM, PRHSydney wrote:

    The article is titled "Why Apple Isn't Among the 25 Best Companies in America" BUT then spends most of the article putting forward the case as to why it SHOULD BE INCLUDED. Very confusing.

  • Report this Comment On March 07, 2013, at 10:27 PM, jdsabo wrote:

    i agree with the previous critical comments. MOTLEY FOOL apparently is ignorant of business

    values.

  • Report this Comment On March 07, 2013, at 11:30 PM, aperture1 wrote:

    The reason the headline is written as a negative is because the fool thinks more people will red it.

  • Report this Comment On March 08, 2013, at 12:24 AM, simk wrote:

    Profitability is still the key driving force to any company .The reason for using Foxconn is their strategic alliance for maintaining a stable price formula of mutual benefit . If Apple is ripping high profit over years from all I-phone products, but their return to society in charities is at mismatch proportion . As a well said statement " Apple's products enrich the life of people" , and who is paying for the success of it ?????

  • Report this Comment On March 08, 2013, at 12:49 AM, Morijo wrote:

    Seems Motley Fool is falling the trap of Apple bashing to be cool (flavor of the month) instead of being realistic.

  • Report this Comment On March 08, 2013, at 10:37 AM, dwilh51183 wrote:

    HEY, WHERE ARE THE 3 AAPL UPGRADES ANNOUNCEMENTS TODAY ? ALL DAY LONG YOU PUT THE 2 DOWNGRADES ON COMPANY NEWS YESTERDAY, BUT AAPL HAD 2 UPGRADES ON TUESDAY AND 3 ON THURSDAY, BUT THE MEDIA DOESNT WANT TO TALK ABOUT AAPL'S UPGRADES. AND AAPL NOT IN BEST 25 MAKES YOU ALL AT THE MF LOOK LIKE FOOLS. AAPL IS NUMBER 1

  • Report this Comment On March 08, 2013, at 2:56 PM, NickD wrote:

    Coca Cola

    McDonalds

    Walmart

    Proctor Gamble

  • Report this Comment On March 08, 2013, at 5:27 PM, gilcruz99 wrote:

    Apple not in the top 25... Give me a break. What I see here is that TMF has joined the ranks of the Apple haters. That's those who find fault in Apple regards of what the data says... I thought you guys had a little more integrity than that. Really disappointing.

  • Report this Comment On March 08, 2013, at 11:03 PM, JamesHoJuice wrote:

    Unfortunately in consumer tech,

    As much as efficiency & productivity places a part.

    It's pointless if you can't sell your products>

    So yes, it is essential that Tim Cook becomes a product guy or at least has a"star product guy" in his team.

  • Report this Comment On March 08, 2013, at 11:16 PM, JamesHoJuice wrote:

    That being said, I think it is important for Apple investors, be it LONG or SHORT to ask themselves a question, whether they really are well informed about this industry.

    Many people subscribe to Peter Lynch's " Only Invest In What You Know". But this quote has been taken out of context . People think because they use Apple products that means they actually know whats going on.

    So we should do ourselves a favour and do a status check, I put down a checklist of things under my article to see if you are up-to-date on your tech knowledge.

    http://beta.fool.com/jameshojuice/2013/03/07/apple-aapl-the-...

    Apple is now playing catch-up in some areas. It still makes good products, but its position as the benchmark in my humble opinion is a reality of the past.

  • Report this Comment On March 08, 2013, at 11:23 PM, Mega wrote:

    "We can see why readers might be confused that Apple is not on there."

    I think it's a bit patronizing to suggest your readers are confused, when they actually just disagree with you.

  • Report this Comment On March 09, 2013, at 1:26 PM, huibs wrote:

    ..3 steps to get the most hits on an article..

    1) write an article bashing AAPL

    2) sit back

    3) count hits

  • Report this Comment On March 09, 2013, at 4:51 PM, JimO30640 wrote:

    Difficult to read the above article when Fool's pop ups keep blocking the article.

    Unliken to Motley Fool spam!

  • Report this Comment On March 10, 2013, at 3:39 PM, sbroumand wrote:

    I always enjoy reading MF but on this one I really think you guys got it wrong. Nothing in the post explains why Apple doesn't belong on the list of Top 25 companies. If anything you make a strong case for why they should be at the top of that list. Very confusing arguments to be honest...

  • Report this Comment On March 10, 2013, at 10:50 PM, etihwttam wrote:

    Very much agree with badsangria's comment.

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