DiversIQ 2.0: App Revamp and Qualitative Measures of Performance

Building In Qualitative Measures of Human Capital Management and Diversity

In response to the needs of our clients, we have started to incorporate more qualitative information about company human capital and diversity policies, especially regarding engagement/stewardship and proxy voting. 

Here are a couple of examples:

  • Do companies have mandatory retirement ages and/or term limits for board members? Board seats do not open frequently—in most cases, they open when directors voluntarily leave or pass away, so this is one way to ensure board refreshment. This qualitative info, along with age data, helps our clients anticipate opportunities where companies will have potential open seats in the future. 52% of companies in our universe have a mandatory retirement age (ranging from 70-80), but only 6% have term limits (ranging from 5-30 years).
  • Have companies committed to a diverse slate for board recruitment (aka Rooney Rule)? Many companies signed pledges to improve their diversity efforts and build towards more diverse boards. Still, stakeholders seek explicit policies or firm commitments to prioritize recruiting women and people of color for new board members. Nearly 50% of companies in our universe have made this sort of commitment—here is an example from Apple’s 2024 Proxy Statement:

The Nominating Committee also considers the diversity of the Board overall with respect to age, disability, gender identity or expression, ethnicity, military veteran status, national origin, race, religion, sexual orientation, and other backgrounds and experiences. The Nominating Committee is committed to actively seeking out, and will instruct any search firm it engages to identify, individuals who will contribute to the overall diversity of the Board to be included in the pool of candidates from which nominees to the Board are selected. The Board monitors the mix of skills and experience of its directors to help ensure it has the necessary tools to perform its oversight function effectively.

DiversIQ 2.0: Revamped App, Expanded Coverage, Additional Data Sets

The DiversIQ platform went live just over two and a half years ago, covering diversity and human capital disclosure and data for 100 companies. Earlier this week, we launched a completely revamped application with expanded coverage (over 1,600 companies), additional data sets (person-level data), and enhanced functionality (build your own report). Behind the scenes, we have a more flexible and scalable framework allowing us to move much faster and deliver more customized experience.

So, what’s on the horizon? We will continue to expand coverage—MSCI World and Russell 3000 are our next targets, and OSHA injury/illness data and information on fines/lawsuits relating to workplace issues will be available later this year, as well as continuing to add tools and features. More importantly, we are starting to build upon our collection of data with signals, and actionable insights for our users.

As an example, we track corporate ‘external recognition’ related to diversity and human capital from third parties, including:

  • HRC Corporate Equality Index (CEI)
  • Bloomberg Gender Equality Index (GEI)
  • Disability:IN Disability Equality Index (DEI)
  • Fair360 Top 50 Companies for Diversity
  • Forbes America’s Best Employers for Diversity
  • Fortune 100 Best Companies to Work For
  • Glassdoor Best Places to Work

We think it’s important to include this information because there is noted materiality and a clear relationship between company financial performance and whether or not the company is included on one of the “best places to work” lists. Read more to see what I mean.

“Best Places to Work” And Company Performance

The Glassdoor’s Best Places to Work list for large companies (1,000 or more employees) has been published annually since 2009 and highlights the top 100 (50 before 2018) companies by average rating over the previous 12 months. This is one example of using ‘alternative’ data (anonymous employee reviews) to measure how well a company is at managing its workforce, and there is ample evidence showing that companies with high and/or improving reviews outperform – these are some examples of research (but not all-encompassing):

Another example is Fortune’s 100 Best Companies to Work For (published for 27 straight years), with the research and analysis done by Great Places to Work. There is a lot of evidence that companies on this list outperform:

Jefferies just put out a research note analyzing performance from the most recent list:

“From April 4, 2023, to April 4, 2024, the 2024 100 Best Companies to Work For rankings outperformed the S&P500 by 5.3%. The 100 BCs outperformed the market cap-weighted S&P500 by 6.62% annually since 1997; outperformed equal-weighted S&P500 by 7.66%. 18 out of 27 lists have outperformed the S&P500 since 1998.”

Combining this sort of sentiment/recognition data with company-reported data and policies and other trusted third-party data sets, we help our clients spot trends, identify risks and opportunities, and start to tease out what ‘great’ looks like in terms of company culture and people management.

Need human capital data for your planning?