Diversity Wins: How inclusion matters
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The document discusses the importance of diversity, equity, and inclusion (DEI) in organizations, highlighting their roles in financial performance and employee satisfaction. It reports that companies with diverse leadership teams tend to outperform those lacking diversity and addresses challenges faced by underrepresented groups, particularly during the COVID-19 pandemic. Additionally, it outlines actions organizations can take to improve DEI, including training, setting clear goals, and fostering an inclusive workplace environment.
Diversity Wins: How inclusion matters
- 1. Copyright © 2020 McKinsey & Company. All Right Reserved. June 2021 North America Diversity wins: How inclusion matters
- 2. McKinsey & Company 2 Diversity is about who is represented; Equity refers to equality of opportunity; Inclusion addresses what people experience
- 3. McKinsey & Company 3 Addressing and responding to Diversity, Equity, and Inclusion requires an understanding of all three dimensions What it is How it’s measured The composition of employees across various elements of difference (e.g., gender, race/ethnicity, age, sexual orientation, disability), measured at each level of the organization Measured in statistics and metrics on representation and advancement The norms, practices, & policies in place that ensure identity is not predictive of opportunities or workplace outcomes Measured through understanding and accounting for the differences in opportunities, burdens, and needs that occur on the basis of identity The degree to which organizations embrace all employees and enable them to make meaningful contributions Measured through employees’ perception of the organization as a whole and their personal experiences in it Source: McKinsey Organization Practice Equity How we ensure equality of opportunity Diversity Who is represented in the workforce Inclusion How the workforce experiences the workplace
- 4. McKinsey & Company 4 There is a stronger likelihood of financial outperformance for companies who are at the top quartile for diversity Likelihood of financial outperformance1 by diversity in leadership teams in 2019, % 40 54 2019 Gender2 +38% Executives 81 68 33 58 2019 80 77 +80% Gender2 Board 41 61 2019 Ethnic3 Executives Quartile 4 Quartile 1 No. of companies in each quartile Q4 Q1 98 76 1. Likelihood of financial outperformance vs the national industry median. P < 0.05. 2. N = 319 for female executives, N = 311 for female board members; 2017 North American companies with gender data available in 2019; EBIT 2014-2018 3. N = 314; North American companies with ethnicity data available in 2019; EBIT margin 2014-2018. Board was excluded as results were statistically insignificant (P > 0.05) +48%
- 5. McKinsey & Company 5 The pre-COVID-19 talent pipeline shows continued progress at the top, but the broken rung remains % of employees by level This year’s talent pipeline provides a pre-COVID-19 baseline, but the pipeline is likely to have changed during the pandemic Since 2015, there have bright spots at the top but less progress at the entry and manager levels Source: 2020 Women in the Workplace research 1. Sum of % White women and % women of color may not sum to overall % women because overall figure includes employees with race not reported Pre-COVID-19 12 19 66 3 13 23 59 5 6 13 24 57 15 25 51 9 12 18 26 44 C-suite SVP VP Sr. Manager Manager Entry level Men of color White women Women of color White men 18 18 29 35 % of women1 2020 2015 ’15 to ’20 change, % McKinsey & Company 5 47 45 5% 38 37 3% 33 32 5% 29 27 4% 28 23 18% 21 17 22%
- 6. McKinsey & Company 6 Due to COVID-19, senior women have been placed under additional pressure due to caregiving and at-home demands Mothers 1. Often or almost always finds themselves to be the only, or one of the only, people in the room of their gender 2. Lives with a partner/spouse that works full-time or is self-employed Burned out 39% Pressured to work more 36% Exhausted 54% Since COVID-19, senior women have felt… Source: 2020 Women in the Workplace research Onlys of their gender1 In dual-career couples2 Senior women are more likely to be in multiple groups facing distinct challenges 41% 54% Senior men Senior women All women 6% 36% 19% 39% 58% 54%
- 7. McKinsey & Company 7 Many women are considering leaving the workforce or downshifting their careers due to the pandemic What drives women to consider this … Their company not providing the flexibility they need Feeling like they need to be “always on” Spending additional hours on housework Feeling worried their performance is judged negatively due to caregiving Feeling blindsided by decisions that impact their work Source: 2020 Women in the Workplace research Discomfort sharing their challenges with co-workers Feeling they can’t bring their whole selves to work 1 in 4 women are considering leaving the workforce or downshifting their careers McKinsey & Company 7
- 8. McKinsey & Company 8 Black women face distinct challenges overall due to COVID-19 Black women have been particularly challenged … Source: 2020 Women in the Workplace research 1.5x more likely than women overall to feel uncomfortable sharing their experience of grief or loss 2.5x more likely than women overall to report the death of a loved one was a big challenge … and they may be more likely to leave the workforce % of employees who considered taking a leave of absence or leaving the workforce altogether Black women make up less than 10% of the corporate workforce. If companies don’t take action, we could lose Black women disproportionately 13 10 18 13 Women Men Black Overall
- 9. McKinsey & Company 9 LGBTQ+ employees are as likely as straight ones to aspire to top- executive positions Career intentions and reason, % LGBTQ+ men Straight women Opportunity to impact the success of my company 70 60 60 49 Opportunity to be a role model for others like me 31 38 43 46 Opportunity to have a positive impact on the world 31 37 35 43 I want to be a top executive 45 45 33 37 Straight men LGBTQ+ women Source: Women in the Workplace 2019, LeanIn.Org and McKinsey, 2019, womenintheworkplace.com
- 10. McKinsey & Company 10 Our research points to five ways that diversity, equity and inclusion impact performance Source: Diversity Wins 2020; 2019 Women in the Workplace research Win the war for talent 1 Improve the quality of decision making 2 Increase customer insight and innovation 3 Drive employee motivation and satisfaction 4 Improve a company’s global image and license to operate 5
- 11. McKinsey & Company 11 Source: Aperian Global, Business of Fashion, Edelman Trust Barometer, https://www.mckinsey.com/business- functions/organization/our-insights/understanding-organizational-barriers-to-a-more-inclusive-workplace 78% of Millennials believe their companies have a responsibility to better the world 39% of global survey respondents have turned down or decided not to pursue a job opportunity because of a perceived lack of inclusion 52% of respondents of color will not work for a company that fails to speak out on addressing racial inequality Employees believe companies have a responsibility to their people and society
- 12. McKinsey & Company 12 100 98 94 90 73 76 75 80 47 64 40 48 46 28 17 65 28 27 24 21 19 18 18 17 13 13 8 8 8 5 3 15 United Kingdom South Africa Singapore Norway Australia Sweden Average United States Nigeria Denmark France Brazil Germany Mexico India Japan Women in US continue to be underrepresented at executive levels Female workforce participation 36 46 44 48 47 45 46 46 44 47 45 42 45 23 42 Women1 1. n = 1,039: 2019. Respective weighted averages by country population size: 9% and 45% Source: Diversity Matters data set; World Bank (labor force participation rate, September 2019) Companies with at least one minority on executive team Average minority representation2 McKinsey & Company 6 Equal opportunity and fairness are vital – together, they are the biggest predictors of employee satisfaction and retention When employees believe they have equal opportunity and the workplace is fair, they are… 3x more likely to say they are happy with their career 3x more likely to plan to stay at their company longer 3x more likely to recommend their company Source: 2019 Women in the Workplace research
- 13. McKinsey & Company 13 Organizations are increasingly considering their role on issues of Diversity, Equity, and Inclusion, both internally and in society at large 50-50 gender parity at all levels of management by 2025 Double percentage of Black VP+ leaders over next five years LGBTQ+ inclusion rates on par with company average by 2023 Internal: Aspiration-Back What is our vision for our people and our culture? External: Capability-Forward How can our unique capabilities improve our communities and/or society? Iconic marketing campaign repurposed Anti-bias employee training and resources made available to the public Commitment on shelf space and opportunity to donate reward points Internal examples External examples
- 14. McKinsey & Company 14 Example: Addressing racial equity & racial justice internally and externally Level of challenge, impact and sustainability An inclusive environment Equitable access to opportunities & benefits A diverse organization Corporate and social responsibility Strategic to create shared value Operational impact Ensuring employees of varying racial/ethnic identities all feel a sense of belonging and the ability to contribute to their fullest Ensuring all staff have the opportunity to grow, contribute, and develop; power is shared in the workplace Creating a diversity of racial/ethnic identities at each level of the organization Engage all 32,000 colleagues in anti- racism and inclusion programs Ensure our processes are free from bias and support retention, attraction of Black and diverse colleagues Double our Black leadership and hiring of Black colleagues in the next 4 years Example McKinsey actions Explicitly designing operations & investment processes to improve outcomes & minimize downstream impacts Using organization’s platform to influence changes in institutional and structural disparities; take clear stance on racial equity Double our spending with diverse suppliers in the next 3 years Create a Black Economic Institute to help clients with practical tools on Black economic empowerment Commit $200 million over the next 10 years in pro bono work globally to advance racial equity Example McKinsey actions Internal: Aspiration-Back Focused on improving the organization External: Capability-Forward Focused on improving community and/or society Embedding racial equity considerations at all levels of strategy development
- 15. McKinsey & Company 15 Our commitment to racial justice and equity Double our Black leadership and hiring of Black colleagues in our firm over the next four years 1 2 3 4 Bring to bear the best available expertise to help us ensure our processes are free from bias and to support the attraction, development, advancement and retention of Black and diverse colleagues Engage our 32,000 colleagues in an anti-racism and inclusion program in addition to our existing training on unconscious bias. We will make these materials available publicly for others to use in their own organizations Create a firmwide day of service dedicated to understanding racial injustice and giving back to our communities. On that day, we will recognize those who exemplify anti-racism and inclusion Create a dedicated McKinsey Academy virtual leadership program and make it available at no cost to our clients to support rising Black executives. We will also broaden and expand our student internship programs across our firm to help grow more Black leaders 5 6 7 8 9 10 Building upon the McKinsey Global Institute and our related longstanding research on racial inequities, we will found a Black economic institute to translate insights into practical tools to enable our clients to advance Black economic empowerment and racial equity in the U.S. and beyond Double our spending with diverse suppliers within three years Contribute $2 million in cash to Generation to launch new programs in the U.S. to train and place Black learners in small and medium-sized Black- owned businesses. Globally, we will double our support for Generation to train and place 40,000 learners in 14 countries, predominantly from under- represented groups Commit $200 million over the next 10 years in pro bono work globally to advance racial equity and economic empowerment among Black communities Donate a total of $5 million in cash this year to nonprofits working to create educational opportunities and combat racism. The majority of this gift will be directed to organizations to be selected by our McKinsey Black Network colleagues Additional detail We are committing to an initial set of 10 actions to anchor global efforts in favor of racial justice and inclusion for all.
- 16. McKinsey & Company 16 McKinsey’s Black Leadership Academy Black Executive Leadership Program Management Accelerator Black executives, 1-2 levels below C-suite Early- to mid-career Black leaders Hones executive leadership capabilities with focus on real- world challenges and driving transformative personal and professional change Enhances leadership and general management skills focused on setting and leading a business strategy, problem solving for impact and 9 functional deep dives 12 weeks, 1.5 hours per week 24 weeks, 1.5 hours per week Audience Objective Timing Digital courses to anchor content Peer connectivity • Larger cohort connectivity • Small cohort progression of concepts and discussion Fireside chats with notable leader Virtual exchanges to explore ideas Experience Virtual facilitated workshops to anchor content Peer connectivity • Larger cohort connectivity • Small cohort progression of concepts and discussion Fireside chats with notable leader Virtual exchanges to explore ideas
- 17. McKinsey & Company 17 Common pitfalls of DEI… Thinking training is a “cure-all” vs. part of a broader solution set No clear goals or arbitrary goals set without analytical rigor or understanding underlying DEI challenges DEI becomes a “flavor of the month,” not owned and consistently advanced by a broad set of leaders Letting “one thousand flowers bloom” with no plan to learn and prune Aspiration or case for change are generic or “copy-cat” and lack leader conviction
- 18. McKinsey & Company 18 There are five stages in a proven journey companies are taking to transform Diversity, Equity, and Inclusion Aspire Align on the vision Assess Build the fact base Architect Develop the plan Act Launch enterprise- wide actions and pilots Advance Scale and sustain momentum Interventions crafted in Architect should directly tie to Aspire and Assess Aspire and Assess are often done in parallel or iteratively, as each informs the other Define and commit to D&I aspiration Define and commit to a tangible aspiration Communicate aspiration, starting with senior leader champions Diagnose current D&I practices Assess the current state qualitatively and quantitively Build company-specific business case linked to strategic priorities Develop roadmap and KPIs Design portfolio of interventions linked to specific objectives; prioritize based on ease and impact Launch quick wins and longer-term initiatives Launch enterprise-wide initiatives and prioritized pilots with BUs/functions/ geographies Build on success and track progress Scale efforts, tailoring to specific contexts as needed Build progress monitoring and leader accountability into regular management routines
- 19. McKinsey & Company 19 You Thank
Editor's Notes
- #6: Over the past 6 years and before COVID-19, we had seen signs of slow and steady progress in the representation of women in corporate America. Since 2015, the number of women at the top – especially the C-suite and SVP levels -- had grown by 22% and 18%, respectively. However, it’s important to acknowledge that the 2020 pipeline provides a pre-COVID baseline. As we know, companies, employees, and women in particular have already had to make tough decisions as they respond to COVID-19, so it’s likely that the pipeline has already been altered this year. If companies do not act, the hard earned gains we’ve seen while doing this work could be erased.
- #7: Senior-level women are under the same pressure to perform right now as senior-level men– and then some. They are more likely to be in multiple groups facing distinct and compounding challenges during COVID-19: Senior women are almost 2x as likely as women overall to be “Onlys”, which is associated with feeling pressure to work more, experiencing microaggressions, and needing to provide additional evidence of their competence. They are also more likely than senior-level men to be in dual-career couples, which means they are less likely to have the support at home that a partner who does not work often provides. Finally, they are more likely than women overall to be mothers. The outcomes of these pressures are stark, with senior-level women reporting high levels of exhaustion, burnout, and feeling pressured to work more
- #8: In past years, we have seen that women and men have left their companies at similar rates. Attrition has not been the root cause of unequal representation in the pipeline. However, in light of the challenges brought on by COVID-19, many employees are now considering leaving the workforce or downshifting their careers. And this year, for the first time we’ve seen signs of women opting out of the workforce at higher rates than men. Based on our analysis, this is more likely when employees worry that their performance is being judged negatively due to their caregiving responsibilities feel like they can’t bring their whole selves to work feel like they need to be “on” 24/7 feel uncomfortable sharing the challenges they are facing with their co-workers feel blindsided by company decisions spend many additional hours on housework or feel like their company has not provided them flexibility. Women – especially mothers, senior women, and Black women – are more likely to experience some of these drivers.
- #9: While Black women have always had more challenging experiences in the workplace, in 2020 the disproportional impact of COVID-19 on the Black community and the increased public attention to racial violence have magnified their struggles. They are more than two times as likely to say that the death of a loved one was a challenge during the COVID-19 crisis and 1.5 times as likely to feel uncomfortable sharing their grief. All of this can add up – as you see from the chart on the right, Black men and women are more likely to consider leaving the workforce entirely. Given Black people are already under-represented in the pipeline, and if they leave at higher rates we may see negative long term effects on the pipeline.