By Nigel lake and cassandra kelly

In business and government, if you want to achieve something, you start by measuring it.  If your goal is to increase the number of pineapples sold each week in a supermarket, this is easy to do.  But what if the goal is much longer term, and the underlying data is much less granular?  This is precisely the challenge that faces any organisation that is seeking to drive certain types of cultural change. 

Ideally, diversity starts at the top with the board and management team.  But with only one chair, and only one CEO, diversity in individual positions is almost impossible (my company Pottinger has joint CEOs, but this is unusual).  Meanwhile, chairs typically hold their roles for at least four to five years, and typically only one non-executive director is replaced each year.  And although average CEO tenure is only around three to four years, the more successful ones can serve for much longer. 

As a result, changes in the diversity of boards and senior management can only happen very slowly, both in individual companies and more broadly across groups of companies such as the ASX 200.  Inevitably, there will be ups and downs in the statistics.  This means that a more sophisticated approach than simple averages is required to measure change and progress, if you want to be able to understand the trajectory properly, let alone forecast the likely outcome. 

In late May last year, Pottinger Analytics successfully predicted the outcome of the Australian Federal Election to within one seat, over three months in advance of the vote.  At the time, virtually all the pundits and pollsters were predicting a way more extreme result than occurred in practice, highlighting the power of our statistical approach compared to “moment in time” surveys and polls.  Meanwhile, for the last two years, my colleagues have run The Glass Elevator initiative, to engage, inspire and connect women in the middle of their working lives.  The ultimate objective is to help to promote greater diversity in the most senior ranks, by providing support at precisely the period in their careers when so many great female leaders are lost to the workforce. 

With such a focus on data and diversity in the same business, all it took was a moment of inspiration for the idea of the Equality Day series of indices to be born.  Later this week, Pottinger Analytics will launch the Equality Day Index for the ASX 200 group of companies, and others are planned in due course.  The index will predict how long it will take to reach various levels of gender diversity on the boards of selected peer groups of companies and other organisations.  The underlying concept is straightforward.  Simply choose the level of diversity that you want to target – 30%, 40%, 50% – and decide how long you are prepared to wait to achieve that objective.  The first index will be calculated for Australia’s leading listed businesses, ie members of the ASX 200 index. 

The Equality Day index will tell you whether you are on track, as well as the degree of certainty as to whether you will achieve your goal.  Using the sophisticated analytics associated “big data”, Pottinger Analytics will analyse both current Board composition and the way that the Board composition has changed over the last five years to predict the most likely date by which targeted levels of Board diversity will be achieved.  Critically, the approach is statistically robust – the findings can’t be fiddled, and the analysis yields its own assessment of how confident, or otherwise, you can be in the result. 

Over time, the predicted Equality Day will change – it move earlier or later – highlighting in powerful terms whether or not initiatives that are in place are having the desired effect.  Ultimately, most people in most countries around the world support the notion of equal rights and equal opportunity.  These concepts apply to gender, ethnicity, religion and other characteristics that define each person's individuality.  Yet progress towards true diversity remains painfully slow in many areas.  The Equality Day indices provide objective measures of both the rate of progress being made, as well as of the likely destination that will be achieved.

By Nigel Lake and Cassandra Kelly, Joint CEOs, Pottinger

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