The Methodology Behind Our Choices

Also, keep in mind that if the line scores indicated areas of concern for a company where there may be some improvement opportunities, they don’t tell you the root causes of those deficiencies without further analysis. The line scores are just a simple report card. Furthermore, they reflect 2007 versus 2006 performance, covering a one-year change in results. Many of these changes should be seen in a wider context of what a company has been doing for the last five or 10 years. So, the line score was based on:

• Employee growth percentage (2007 versus 2006)
  
• Sales growth percentage (2007 versus 2006)
  
• Operating profit growth percentage (2007 versus 2006)
  
• Operating profit margin improvement points (2007 versus 2006)
  
• Long-term debt to shareholders equity ratio improvement points (2007 versus 2006)
  
• 2007 total number of patents issued
  
• Percentage change in patents issued (2007 versus 2006)
  
• 2007 stock price closing as a percentage of 2007 stock-price high
  
• R&D expense change percentage (2007 versus 2006)
  
• Design influence on semiconductor spending dollars (2007)
  
• Design influence on semiconductor spending percentage increase (2007 versus 2006)
  
• 2007 ED Reader Profile Survey bonus points

We felt these factors gave us a good balance of financials, human resources, technology, stock market perceptions, and engineering. Companies that placed in the top 10 in each particular category got 10 points; companies that ranked between 11 and 20 got nine points; companies between 21 and 30 got eight points; and so on.

We gave companies that saw decreases from 2006 to 2007 a maximum of two points, so they weren’t overly penalized. Companies that didn’t appear in a particular category at all also got a maximum of two points so they weren’t overly penalized either. Similarly, we awarded two points for improvements in operating profit, operating margin, and debt to equity positions when there was an operating loss or negative equity so we wouldn’t overly reward a company. Then, we awarded bonus points based on employee responses to five questions on our 2007 Reader Profile Survey:

• How many job promotions have you achieved at your current place of employment?
  
• Do you feel that you are being challenged intellectually with the engineering projects you work on at your present job?
  
• To the best of your knowledge, what is the engineering employment outlook at your company in the coming year?
  
• Do you feel that your organization is more focused on employee retention this year as compared to a year ago?
  
• How would you rate your present job security?

When companies had more than one employee respond to our survey, we divided their bonus points by the number of respondents to get an average, which the company then received. Overall, the total company line score is a simple sum of all the category points plus any bonus points assigned. The maximum total company line score, then, would be 120.