(FORTUNE Magazine) – YOU WON'T FIND IT on the balance sheet, and it's not listed in a 10-K or a proxy. If you ask the wizards on Wall Street exactly how it figures into a company's net worth, be prepared for some mighty blank stares. But more and more companies are now coming to realize that when managed correctly, their good name can be their most valuable and enduring asset. Says Laurel Cutler, vice chairman of FCB/Leber Katz Partners, a New York City advertising agency: ''The only sustainable competitive advantage any business has is its reputation.'' For small companies as well as big ones, the payoff from a good reputation is vast. For starters, it's what puts you first in the minds of consumers and -- no small feat -- helps keep you there. A solid reputation makes a customer willing to pay more for your product or service. Want the best people working for you? A respected reputation not only helps attract and retain the top minds in your industry, but it also enables you to steal talent away from competitors. It can act as the launching pad for new-product introductions and help open doors more easily for international expansion. And contrary to what you might think, a good reputation, once lost, can be regained. The outfits that rank high on FORTUNE's list of the most admired corporations -- Merck, Levi Strauss, Rubbermaid, and Harley-Davidson, to mention a few -- understand that behind a solid reputation is more than just a well-known name. They earn their esteem by doing what they do well every day in every aspect of their operations, and then by vowing to find a way of doing it better tomorrow. What's more, these companies realize the importance of staying focused on the business that earned them their fame. At the very least a great reputation is built by offering a superior product or service. ''You can't skimp on quality and then pour money into marketing your reputation,'' explains Alan Towers, president of the consulting firm that bears his name. ''To get the most out of your good name, you must continually reinforce the product or service advantage you have over competitors.'' The companies that are winning the kudos also understand that consumers are looking beyond quality for something more. If the 1980s are remembered fondly for anything, it will be that they created the sharpest, most-educated customers marketers have ever faced. Sure, these shoppers want the best you have to offer, but they are also interested in what your company stands for. Is your company one they would want to work for? Are you polluting their planet? Says Peter J. Harleman, an executive director at Landor Associates, a design and consulting firm in San Francisco: ''A company with a good reputation is seen as being a member of society; that is, doing what helps the world rather than harms it.'' FOR EXAMPLE, Herman Miller, the furniture maker in Zeeland, Michigan, no longer uses tropical woods, such as rosewood, from endangered rain forests in its office desks and tables. Instead it uses cherry, which does not come from the tropics. Says CEO Richard Ruch: ''We thought first about the environmental aspect and then wondered if the switch would impact sales.'' In fact, the switch has not hurt sales, which were $869 million in 1990. And it has added more luster to Herman Miller's already fine reputation. Inspired by Herman Miller's decision, the Business and Institutional Furniture Manufacturers Association now urges all its members not to use tropical wood from endangered forests. Over the Christmas holidays, Levi Strauss introduced Naturals, a line of cotton jeans whose brown color is inherent in the fiber rather than produced through chemical dyeing. The color doesn't fade but rather intensifies as the garments get older. And in a funereal holiday retailing season, when Christmas sales remained flat, one retailer reports that he has a waiting list 18 pages long of folks who want Naturals. Says Levi's CEO Robert Haas: ''Obviously this type of product has an appeal to environmentally sensitive consumers.'' When a company is held in high regard, good things happen. On university campuses, the Merck name is golden. Roy Vagelos, 62, the physician, biochemist, and businessman who runs the Rahway, New Jersey, company, tries hard to attract the greatest minds to his research labs. ''I still visit about six or eight universities each year, both the medical and business schools, to talk about the discovery of new drugs and the wonderful opportunities we have here at Merck,'' he says. In the past few years the company has been able to lure top scientific talent away from the faculty of such schools as Harvard, Yale, and MIT. This comes as no surprise to Marc Mayer, a drug industry analyst at Sanford C. Bernstein, who asks, ''Wouldn't anyone want to work for the best company in the world?'' Once they are in the lab, Merck makes plentiful R&D money available to its scientists. In 1991 that amounted to a lavish $1 billion or 12% of estimated sales. In return, Merck expects its top minds to keep the pipeline filled with blockbuster drugs, and it hasn't been disappointed. Last year 19 of the company's drugs each had sales of $100 million or more. Among them: Vasotec, for treating high blood pressure, and Mevacor, for lowering cholesterol levels. Merck's high-quality research also helps it bring new medicines to market faster than its competitors. Says Paine Webber pharmaceutical analyst Ron Nordmann: ''I've marveled at Merck speakers in front of the hot lights at FDA advisory committee meetings. If they are asked a really tough or obscure question, they tell someone in the back of the room to put up slide No. 268, and it's the perfect response.'' Last spring the company filed an application with the Food and Drug Administration for a new drug called Proscar, which can replace surgery as therapy for prostate enlargement. The FDA has scheduled a review of Proscar's clinical studies in February, months sooner than some pharmaceutical analysts had expected. Approval for the drug, which they anticipate will be Merck's next $100 million medicine, could come before the end of the year. Merck's reputation pays dividends in other ways as well. Since the company deals directly with thousands of doctors rather than with patients, its salespeople must have access to these busy professionals. Says Nordmann: ''Doctors certainly make time for the Merck representative because chances are good that he or she has a fairly unique product to show. Merck's reputation is built on the strength of its products and their research.'' Indeed, esteemed companies often find the road to new-product introductions less bumpy. Haas of Levi Strauss believes that launching the Dockers brand of casual clothing in 1986 was relatively painless because the San Francisco company made it easy for retailers to do business with it. Says he: ''If we hadn't built up that relationship with our retailers over the years, their buyers would not have even looked at the Dockers line, let alone stocked their stores with it.'' Buyers are inundated with new products and usually require a hard sell before they will agree to accept them. The popularity of those cotton twill pants, some with pleats, designed for all those soft-in-the-middle males over 25, has been nothing short of astounding. In five years Dockers, which now includes coordinated shirts and women's styles, has blossomed into an $800- million-a-year business. By way of contrast, it has taken the company since California gold rush days to produce the rest of its $4.2 billion in revenues. Typical of Levi's relationship with its retailers is LeviLink, an electronic data-interchange system developed in 1986. When a Levi garment is rung up by a cashier at a major retailer, the sales information can be sent electronically to the jeans maker. It uses the information to generate reorders, invoices, or packing slips. About 40% of Levi's business is done through LeviLink, and the company expects to double that figure over the next five years. Rubbermaid -- dish drainers, soap dishes, and many of the plastic containers in the average refrigerator come from this Wooster, Ohio, manufacturer -- claims that in 1992 it will introduce a new product every day. You may think that's just too many dustpans and laundry baskets, but retailers don't. Because Rubbermaid trounces the competition in selection, color, and quality, several retailers, including Wal-Mart, have been testing all-Rubbermaid selling areas in their stores. One mass merchandiser in Cleveland, Twin Valu, now dedicates ten of its 100 or so aisles to nothing but Rubbermaid products. Says a store executive: ''The name has always meant quality to our customers. The products sell well, and the company is very easy to work with. They're one of the best.'' When companies turn drummers for their products overseas, they find that a sterling reputation at home translates into an easier time abroad. Demand for Levi's jeans is particularly strong in Europe and Asia. This is one Yankee no one wants to go home, and international operations accounted for 40% of the company's total 1990 sales and about half its pretax operating profits. Rubbermaid's foreign business is only 15% of sales, but CEO Walter Williams is predicting that it will be 25% by the end of the decade. ''The beauty about going overseas in a bigger way is that Rubbermaid's reputation has preceded us,'' he says. ''There are not many countries where we would go in and say we're from Rubbermaid and people wouldn't recognize us.'' ONCE CONSUMERS are sold on your product or service, a strong reputation is the magnet that keeps them loyal. USAA, a successful personal property and casualty insurer in San Antonio, has earned high regard from its 2.2 million policyholders -- the company likes to call them members -- for superb service in an industry that is notorious for poor customer relations. As a result, nearly 99% of members, almost all of whom are active or retired military officers and their dependents, renew their policies each year, vs. a renewal rate of about 80% for the rest of the industry. Says Robert McDermott, the retired Air Force brigadier general who has been CEO for 23 years: ''I've heard insurance executives say they have an image problem. I tell them, 'No, you have a reality problem.' The insurance industry doesn't serve customers very well.'' USAA may be the exception that proves the rule. The day after Hurricane Hugo hit the South Carolina coast in September 1989, Herman Tomer, then a resident of Hartsville, outside of Charleston, opened his front door to inspect the damage to his home. Standing on his lawn, clipboard in hand and pen ready to go, was his USAA agent, who showed up without being called. Says Tomer, now a vice president with Moen, a kitchen and bath products manufacturer in Elyria, Ohio: ''It only reinforced what I've known about USAA for years. They go overboard for their members in providing fast, efficient service.'' Like Levi Strauss, USAA fortifies its reputation with a megadose of technology. An IBM-designed electronic imaging system stores each member's correspondence in a computerized policy folder. Whenever a member telephones a service representative, the rep touches a button and the entire file pops up. That means members never have to hear those headache-inducing words, ''We'll have to get back to you on that.'' Says McDermott: ''More automation makes our operators more efficient. We want our reputation to say that we're reliable and that we make it easy to do business with us.'' And that's just what the reputation does say. When Consumer Reports surveyed customers of 51 automobile insurers across the country, USAA ranked second in overall customer satisfaction behind Amica Mutual Insurance of Providence. IF YOUR GOOD NAME is worth so much, what happens when you lose it? Says Richard Teerlink, CEO of Harley-Davidson: ''We are living proof that you can win your reputation back. But it's not easy.'' Once the great American motorcycle company -- would Peter Fonda and Dennis Hopper have been caught dead easy riding on Kawasakis? -- Harley skidded badly in the mid-1970s. ''When the competition came in with better bikes, customers left us in hordes,'' Teerlink recalls. ''People said that Harley had a great reputation as being part of Americana. That's nice, but it wasn't enough. No one was going to buy our motorcycles for that reason if they weren't better than the competition's.'' By focusing on quality improvements, he revved Harley's engines. Just as important, Teerlink began listening closely to what his remaining customers were telling him. He and his top executives, who often ride their hogs to work, spent weekends participating in cross-country rallies with other bikers and soon developed a keen sense of what the Harley rider wanted. So in the mid-1980s, when Japanese makers were concentrating on sleek aerodynamic styling that concealed the engine, Harley knew enough to stick with its macho bikes. The Milwaukee company has battled back to the leadership position in the super-heavyweight bike market with a 60% share. What's more, the cycles are in again. Arnold Schwarzenegger and other Hollywood tough guys tear around town on their hogs, and the bikes are just about the only models that keep their clothes on in racy ads for Calvin Klein jeans. Says Teerlink: ''It makes me feel good that I can allow my home phone number to be listed in the local directory. When I get calls saying, 'Hey, we like your product,' it's wonderful. That's how you build a relationship with customers, and that's all part of reputation.'' Avon, the cosmetic giant that stumbled badly in the 1980s, is trying to relearn that lesson. Though its cosmetics had always stood for high quality at a reasonable price, it was too slow to change the way it went after customers -- who were no longer at home to greet the Avon lady. Instead, the company tried to fuel growth with a number of disastrous acquisitions, including a few health care outfits, a chemical company, and Tiffany & Co., whose tony image was cheapened by the association. Today, having shed all its nonrelated businesses, Avon is pouring millions of dollars into new-product development and a direct-mail program to woo working women by allowing them to order their favorite lipstick or body lotion by phone, fax, or mail. Whether Avon's latest makeover is enough to polish up the company's once- great name is yet to be seen. Says Allan Mottus, a cosmetic industry consultant: ''Remember, this is a company with a lot of good will behind it. Avon stands for the old-time values that many people feel are important again. I think they'll do well.'' Certainly James Preston, the CEO, agrees. The direct-mail program began last fall, and he estimates sales of $25 million this year when the catalogue goes national. One thing he knows for sure: ''A bad reputation is like a hangover,'' he says. ''It takes a while to get rid of, and it makes everything else hurt.'' That's what Exxon discovered in 1989 when it had to accept the blame for a huge oil spill in Prince William Sound off the pristine Alaskan coast. Long after the slick has been washed from the bird feathers, Exxon will be remembered as a corporate bad guy. The reason, says marketing consultant Kevin Clancy of Yankelovich Clancy Shulman, is that Exxon ''never developed the kind of strong reputation that could have inoculated it against something like the Valdez spill.'' As is true of everything else worth having in life, esteem is earned over time and with hard work. Says Ralph Davis, author of the new book False Teeth to a Chicken: Products, Advertising & You: ''The best way to benefit from a good reputation is just to keep doing the things that earned it for you in the first place.'' That's not a bad way to lead a life, or run a business.