Delivering through Diversity€¦ · SOURCE: McKinsey Diversity Matters Database Likelihood of financial performance 1 above national industry median, by diversity quartile 2 Percent,

Delivering through Diversity

2McKinsey & Company

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What dimension of diversity

matters most to you?

Open response

poll

4McKinsey & Company

There are hundreds of dimensions of identity – and for each

person, different aspects of their identity will be most salient

GenderReligionAthlete

ParentEthnicity

Courteous

Language

Sexual orientationFamily of origin

Education

IntrovertHobbies Spouse

SonNationality

NeighborhoodCreative

First LanguageSocio-economic Class

Age

Spiritual Affiliation

RaceAnalytical

SiblingCitizenship

Gender Identity

HonestDaughter

Birth place

ProfessionalFriend

Veteran

5McKinsey & Company

There is increasing recognition of the need to acknowledge diversity

in its multiple forms, boosting its potential to contribute to growth

SOURCE: Adapted from Hewlett, Marshall and Sherbin, “How Diversity Can Drive Innovation” in Harvard Business Review (Dec 2013)

Traits present at birth, e.g.:▪ Gender▪ Ethnicity▪ Sexual

orientation

Traits gained from experience, e.g.:▪ International work experience▪ Education and training▪ Socio-economic background

Inherent diversity

Acquired diversity

▪ People with multiple

diversity traits may

be more attractive to

companies in the war

for talent (multiplier

effect)

▪ Companies can seek

out intrinsic diversity

and cultivate

acquired at all levels

of their organizations,

e.g., by enabling and

rewarding experience

gained from

functional or

international job

rotations

▪ Language

▪ Cultural exposure/ belief system

▪ Disability

Mixed diversity

McKinsey & Company

Finance, insurance,

and professional

services

Transportation,

logistics, and

tourism

Heavy

industry

Energy, basic

materials, and

environment

SOURCE: Companies websites; McKinsey Diversity Matters database

North

America

US

Asia/Pacific

Australia, India,

Japan, and

Singapore

Sub-Saharan

Africa

Nigeria, South

Africa

Latin

America

Brazil, Mexico

Europe

France,

Germany,

and UK

33%

28%

4%

7%

28%

10%

16%

10%

12%24%

5%

23%

Consumer

goods and

retail Telecom,

media, and

technology

Healthcare and

pharmaceuticals

Published in 2018, McKinsey’s research represents a global

and cross industry perspective on Inclusion and DiversityDistribution of 2017 Delivery through Diversity sample by geography and industry group

Percent, N=1,007

7McKinsey & Company

Delivering through Diversity 2018 reinforces the link between diversity and financial performance – and suggests ways companies can make it work

SOURCE: McKinsey Delivering through Diversity report 2018

Expanded

performance

metrics

Holistic view

of diversity &

inclusion

Insight into

what top

performers do

Larger and

more global

dataset

Multiple levels

of the

organization

McKinsey & Company

Does diversity matter?

McKinsey & Company

What is the likelihood that

companies in the top quartile

outperform those in the bottom?

Multiple choice

poll

10McKinsey & Company

Likelihood that companies in the top quartile for diversity

outperform those in the bottom quartile

21%

33%

Gender

Diversity

Ethnic

Diversity

SOURCE: McKinsey Diversity Matters Database

1 Average EBIT margin,2011-15 in Diversity Matters II; 2 2017 findings are statistically significant at p-value<0.05

Likelihood of financial performance1 above national industry median by top diversity quartile2

Percent

McKinsey & Company

More women on executive teams also correlates to long term

value creation


Difference between 1st and 4th quartile likelihood of financial performance1 above national industry medianPercent, N= 991 companies (12 geographies)

1 Average economic profit 2011-15 and Average EBIT margin 2011-15. Results are statistically significant at p<0.05 for all EBIT correlations and for the EP correlation to ethnic diversity. Gender diversity correlation to EP at the Exec level is statistically significant at p<0.1.

For gender, the executive

team shows the strongest

correlations, reflecting the

importance of diversity in

decision-making roles

Profitability

Executive team

21%

Value creation

27%

McKinsey & Company

-29%

57

40

There is a penalty for the least diverse companies


Likelihood of financial performance1 above national industry median, by diversity quartile2

Percent, N=991 companies (12 geographies) for gender; N = 589 companies (6 geographies) for ethnicity

1 Average economic profit 2011-15 and Average EBIT margin 2011-15. Results are statistically significant at p<0.05 for EBIT and p<0.1 for EP

2 2 Executive gender diversity analysed for 991 companies in all regions. Executive team ethnic diversity data analysed for 589 companies in all regions except Australia, France, Germany, India, Japan and Nigeria

Q4 Q1-Q3

Now, as previously,

companies in the

4th quartile on both

gender and ethnic

diversity are more

likely to

underperform their

industry peers

financiallyProfitability


Win the war for talent

Improve the quality of decision making

Increase customer insight

Motivate employees and increase satisfaction

Improve a company’s global image and license

to operate

Our research also highlights why we believe inclusion and diversity

positively impact corporate performance across multiple areas

SOURCE: McKinsey; Diversity Matters

1

2

3

4

5

McKinsey & Company

Even knowing these facts, how long

will it take for us to reach gender

parity in Corporate America?

Multiple choice

poll


Corporate

America is not

on a path to

gender equality

At current rates, it will take

more than 100

years to reach gender equality

in the C-suite


It’s a leaky pipe… and women of color face the

steepest drop-off1

1 Women in workplace 2018 study includes 279 companies and is North America focused SOURCE: 2018 McKinsey and LeanIn.Org Women in the Workplace study

68%

19%

4%

67%

19%

4%

59%

24%

6%

52%

26%

8%

46%

16%

27%

12%17%

16%

31%

16%

31%

36%

38% 34% 29% 23% 22%48%

C-suiteSVPVPSr. Manager/ Director

ManagerEntry level

White men

Men of color

White women

Women of color

2018 Pipeline% women

12% 9% 9%13%

% of employees by level in 2018

McKinsey & Company

What share of women executive roles

are staff leadership roles (vs line

leadership roles)?

Multiple choice

poll


Leading companies have a higher share of executive

women in line roles

7

10

6

4

14

20

11

8

214th

1st

Line

3rd

Staff

2nd

All

Women’s share of executive teams by role type

by gender diversity quartile

Percent of total executives

Women executives

are underrepresented

in line roles

This holds true even

for top-quartile

gender-diverse

companies

experiencing above-

average financial

performance

100%

Line roles

67Staff roles

33

Women executive role

distribution

Percent of total female

executives

SOURCE: Company websites, McKinsey Diversity Matters database


Black women are materially more likely to be in staff

leadership roles

7 10 13 169

15 6 6 71 2

Black Hispanic Asian White Other

Black women

executives are

underrepresented

in line roles, and

may face a

harder path to

CEO

1 Sample includes 341 companies with 872 female executives

SOURCE: McKinsey Analytics; Company websites; McKinsey Diversity Matters database

Female executive roles by responsibility type and ethnic/cultural minority1

Percent

67

33Line roles

Staff roles

100%


What do women’s and men’s

experiences tell us?

McKinsey & Company

Why is the pipeline so leaky? What

are the drivers of women not

progressing to the C-suite?

Open response

poll


Attrition is not the problem

Why employees plan to leave

81% of women who plan

to leave their

company in the next

two years intend to

stay in the

workforce.

Taking a role

at another

company

Leaving the

workforce to

focus on

family

82%

81%

0%

2%

% of women and men who left their jobs in the last year

Women & men leave at a similar rate

15%

15%

MenWomenMost employees plan to stay at their company or remain in the workforce

23McKinsey & Company23McKinsey & Company

A key driver is women falling behind early –the first promotions are the most inequitable

SOURCE: 2018 McKinsey and LeanIn.Org Women in the Workplace study

Women are

21%less likely

than men to

be promoted

to manager

Black women are

particularly

disadvantaged

40%less likely

than men to be

promoted to manager

Men All women Black women


Women are as ambitious as men …Over 70% of men and women want to be promoted

But, they face a more challenging

work environment …

And receive less support in the

workplace … Women are less likely to have managers

showcase their work and help them navigate

organizational politics

Consequently, they see the

workplace as less fair… 29% of women think their gender will

make it harder for them to get ahead

64% of women experience microaggressions on a

daily basis


Women are as ambitious as men

Black women

All men

All women

White women

Latinas

Asian women

Lesbian women

% of employees who want to be promoted

MenWomen

75%

71%

68%

83%

76%

80%

72%

SOURCE: 2018 McKinsey and LeanIn.Org Women in the Workplace study

They want promotions at similar rates to men


What it feels like to be the only woman What it feels like to be the only man

1. Under pressure to perform (38%) 1. Included (26%)

2. On guard (31%) 2. Fortunate to be there (11%)

4. Included (25%) 4. Under pressure to perform (10%)

5. Fortunate to be there (23%) 5. Left out (10%)

6. That your actions reflect on people like you (22%) 6. Closely watched (8%)

7. Closely watched (22%) 7. That your actions reflect on people like you (7%)

3. Left out (25%) 3. On guard (11%)

Being an only woman feels worse than being an only man

McKinsey & Company

How do companies move to and stay at the top?


Our company deep dives identified four imperatives for

building a successful inclusion and diversity strategy

SOURCE: McKinsey Delivering through Diversity research and company interviews

Commit and cascade 1

Link I&D to growth

strategy2

Craft initiative portfolio 3

Tailor for impact 4

▪ Value drivers

▪ Diversity mix

▪ Data & analytics

▪ Local adaptation

▪ Cross-industry/sector

collaboration

▪ Prioritized initiatives

▪ Inclusive culture

▪ Metrics and tracking

▪ Compelling CEO vision

▪ Management accountability

▪ Dedicated resources


Five common pitfalls of I&D efforts that can be overcome

OpportunitiesPitfalls

Uneven engagement over emphasizes grass roots ability to solve it all

Integrate inclusion into core processes including communications and performance management

Hyperfocus on diversity with inattention to inclusion mindsets

Strong core of inclusion learning embedded in key milestone in career progression.

“Groundhog day” phenomenon applying same efforts year over year without results

Clearly defined goals with a bold streakDefining both long term BHAGs and near term markers of success to maintain focus while aiming big

Murky data, can’t tell what’s bending the curve vs. not

Analytical engine with predictive power Building an enduring capability that powers the business case, strategy, and impact

Lack of a clear vision and plan to tie aspirations to actions

Intense leadership commitmentCase for action must be clear and leaders must be willing to invest their brand and time


Focusing on inclusiveness enables the profound organisational culture change which is central to capturing the benefits of diversity

RETENTION

Pursue ambitious representation

goals & supporting initiatives,

programs, and policies

to retain diverse profiles

ADVANCE-

MENT

Provide all

colleagues

equal access

and support for

progression

NETWORKS

Expand

affinity

networks,

connect

members,

and support

external

communities

RECRUITING

Use innovative sources &

proven best practices for

attracting diverse profiles

INCLUSIVE MINDSET

Fully engage

colleagues from all

backgrounds and

perspectives to drive

distinctive solutions

SOURCE: McKinsey

McKinsey & Company

These companies view inclusiveness as key to unlocking the benefits of diversity

▪ Defining what inclusion means for their context, and why it’s important

▪ Demonstrating authenticity

▪ Introducing policies and formal processes to monitor and promote inclusiveness

▪ Developing individual and team capabilities to reinforce it

▪ Role-modelling inclusiveness at all levels

▪ Sticking with it over time

Build a culture of belonging that is authentic and far

reaching


Questions

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Delivering through Diversity€¦ · SOURCE: McKinsey Diversity Matters Database Likelihood of financial performance 1 above national industry median, by diversity quartile 2 Percent,