The U.S. market has witnessed an explosion of corporate rating programs in the last 20 years. We evaluate these rating systems through a case study of T-Mobile. The firm received at least 47 “best of” awards from 2011 to 2013, making the company an excellent candidate for our study. We evaluated these award programs in terms of selection criteria, the criteria used to evaluate firms, the quality of the data used, and the independence of the rating program. Our key findings include:
- The majority of contests are based on self-nomination, and very few are transparent about how firms are actually selected.
- These programs lack transparency in terms of the criteria used for evaluation. Consequently, several questionable firms have been included in these awards.
- Most of the national awards are based on company self-reports with little independent verification of the data.
- Many of the firms conducting national evaluations also provide consulting services to the very companies they are rating. This creates a strong potential for conflict of interest.
- Ratings based on workers’ surveys typically have low and unrepresentative response rates, calling into question the validity of the data.
- Employers are often responsible for supervising survey data collection, which may also compromise the validity of the data.
- The current rating systems fall short of established best practices in survey research.
- Taken as a whole, these ratings and awards cannot be seen as objective measures of corporate performance. Instead, they are best understood as parts of marketing programs operating in the guise of contests and competitions.
- Rather than evaluating actual company performance, the ratings are a better indicator of a company’s allocations of resources to win awards and its work to create a facade of good behavior.
- Consulting more rigorous and objective measures of corporate social responsibility suggests very different findings than the popular “best of” contest. At the same time that T-Mobile was named “One of the World’s Most Ethical Companies,” the highly rated ESG IVA rating gave T-Mobile a CCC rating, the lowest score possible, further questioning the validity of the “best of” ratings.