How we rank the Top 500 Companies

The Top 500 research methadology was designed in conjunction with the University of Cape Town's Development Policy Reseacrh Unit.

The Top 500 aims to identify the top five companies in each of 100 business sectors monitored by the Topco Research Department. In order to do so, some measure of the qualities that we consider to be characteristic of top companies must be designed in order to rank companies.

To be classed as one of South Africa’s best companies, we expect companies to excel in three key spheres, namely financial performance, empowerment, and policy and accreditation. The criteria within financial performance speak to the ideas of top companies being large, growing and productive institutions that are leaders by virtue of their size and dynamism. Financial performance is measured by four indicators: turnover, rate of turnover growth, Rand turnover growth and turnover per employee.

Size is both an indicator and an outcome of whether or not a company is a top company. From the perspective of financial performance, turnover is used to proxy company size and this indicator has large weight within the measure. The dynamism of top companies is reflected in their ability to expand and grow, and so we include two medium-weight indicators – one relative, one absolute – of growth in the scoresheet. The former indicator is the rate of turnover growth over the year – since top companies are fastergrowing – while the latter is the Rand value of the turnover growth.

Absolute turnover growth is included to account for the fact that top companies’ growth should make a large contribution to increased total output. These two indicators have a medium weight within the scoring system. Top companies are more productive than other companies and the final performance indicator, turnover per employee, which has a medium weight, speaks to this characteristic.

The business sector has an important role to play in promoting equity and social transformation. Top companies are committed to fulfilling this role, and this commitment is measured using six criteria. Two of these criteria focus on companies’ commitment to the goal of transformation as demonstrated in their employment profiles, namely the shares of employment accounted for by female employees and by black employees respectively.

Top companies, however, go further than just employment, and are committed to ensuring greater diversity

at the level of management and control. The proportion of black and female executive and non-executive directors is evaluated to complete the scoring for this sphere. Top companies are involved within communities and are committed to quality. This sphere of policy and accreditation accounts for the remainder of the total score. In gauging companies’ engagement and involvement within communities, we measure their total spend on corporate social investment activities relative to net profit.

Companies are also judged on the existence of written policies regarding employment equity, skills development, health and safety, HIV/Aids, and the environment. The final criterion within this sphere, commitment to quality, is proxied by the number of SABSapproved accreditations held by companies.

Morné Oosthuizen
Deputy Director, Development Policy Research Unit, University of Cape Town