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Getting the Most from Your Diversity Dollars The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for- profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 85 offices in 48 countries. For more information, please visit bcg.com. GETTING THE MOST FROM YOUR DIVERSITY DOLLARS

JENN GARCIA-ALONSO

MATT KRENTZ

FRANCES BROOKS TAPLETT

CLAIRE TRACEY

MIKI TSUSAKA

June 2017 | The Boston Consulting Group CONTENTS

3 NEEDED: A MORE RIGOROUS APPROACH TO GENDER DIVERSITY

5 CORRECTING THE MISPERCEPTIONS

7 WHAT WORKS Hidden Gems Proven Measures Overrated Measures Baseline Measures

15 IMPLEMENTATION IS CRUCIAL

18 APPENDIX

19 FOR FURTHER READING

20 NOTE TO THE READER

2 | Getting the Most from Your Diversity Dollars NEEDED A MORE RIGOROUS APPROACH TO GENDER DIVERSITY

or senior executives, the main ings.” For a detailed description of our meth- Fquestion about gender diversity is not odology, see the appendix.) This report whether but how. How can the company discusses global findings; BCG is also publish- identify specific initiatives that offer the ing a series of market-specific reports that greatest payoff? How should the company discuss the findings for individual countries allocate its resources—in time, managerial in more detail. focus, and capital—to generate the biggest diversity gains? Unfortunately, many compa- For companies seeking to stretch their diver- nies simply don’t know the answers to these sity spending and generate a higher ROI, our questions, so they use a trial-and-error findings point to three clear imperatives: approach, trying a lot of things and hoping to see good results. •• Companies need to understand their particular underlying issues. Do middle That approach leads to wasted resources, and managers not support company-wide it may even be counterproductive. Although measures to increase gender diversity? Do more than 90% of companies have some sort aspects of the company culture implicitly of gender-diversity program in place, our re- favor men? In many cases, senior leaders search findings indicate that only one in four (particularly men) and the women who women feel that they have personally bene- work for them have dramatically different fited from such programs. When companies perspectives on these issues. generate a lot of activity but little progress toward gender diversity, leaders begin to feel •• Companies need to know which measures that interventions don’t work. Meanwhile, are the most effective in addressing these women grow frustrated, morale sinks, and problems. Our findings show that some company performance suffers. common measures—such as one-time training sessions —are less effective than Companies need to understand which initia- many people imagine. Conversely, other tives are worth pursuing and which are not. measures—such as interventions that With that objective in mind, we surveyed target key points in women’s career paths roughly 17,500 employees and interviewed (when they take parental leave or consider more than 200 senior executives at compa- an international posting, for example)— nies in various industries across 21 countries, tend to be underestimated but often lead seeking their perspective on 39 specific diver- to significant results. We call these sity initiatives. (See the sidebar “Key Find- measures hidden gems.

The Boston Consulting Group | 3 KEY FINDINGS

•• Around the world, companies have •• People also share some widespread launched highly visible programs to misperceptions about what works. Still, increase gender diversity, dedicating some interventions really are proven millions of dollars and thousands of measures that are effective in almost hours of executive time to the task. Yet any context. Among these are flexible they are not generating the practical work models, tracking of KPIs, and gains that they should. Consider that engaging men as diversity champions. 91% of our survey respondents say their company has a gender diversity pro- •• Other interventions are hidden gems. gram in place, yet only 27% say they For example, measures that target key have personally benefited at all from it. moments of truth in women’s careers (such as returning from maternity leave, •• One key issue is that companies tend to or getting promoted to a more challeng- treat every initiative as a positive thing ing position) can have a disproportion- to do. Companies need to use analytical ately positive effect. rigor in assessing how well a specific initiative is working, and whether they •• Implementation is critical. Companies could achieve better results by focusing cannot expect to make progress by their resources in other areas. simply issuing policies and directives. Instead, they need to focus on the •• At many companies, men (particularly real-world details of how programs senior leaders) and women don’t agree affect the day-to-day experiences of on the underlying obstacles to progress. women. Most starkly, 45% of women, but only 21% of men, believe the key obstacles lie in advancement.

•• Companies should thoughtfully and continually refine programs over time deliberately implement the programs they based on real-world experience. This introduce, testing the ROI of interventions report is a call to action for companies to and imposing a minimum bar for new run diversity programs with the same ideas. Implementation is critical. Issuing a rigor that they would apply to any other new policy on paper is all too easy. It is major commercial priority. much harder to follow through and

4 | Getting the Most from Your Diversity Dollars CORRECTING THE MISPERCEPTIONS

any companies are investing heavily share of women in the workforce is growing Min improving the gender balance of in most markets. their workplaces. On average, our survey respondents are aware of 11 gender-diversity Yet women remain underrepresented— initiatives underway at their company, out of often woefully so—on most leadership teams 39 total in our analysis. In the countries we and boards. (See Exhibit 1.) And gender di- studied, societal attitudes toward working versity programs aren’t helping as much as women have improved, and the aggregate they should.

Exhibit 1 | The Percentage of Women at Companies Declines with Rising Seniority

% share 60 56

40 38

20 15

5 0 University Total Managers Executives CEOs graduates workforce

Women within the company Women board members

Sources: University graduates, UNESCO Institute for Statistics; total workforce, World Bank; managers, Women in Business and Management Gaining Momentum, ILO 2015; executives and CEOs, The CS Gender 3000: Women in Senior Management, Credit Suisse Research Institute, September 2014; board members, Catalyst. Note: Data shows averages for 30 countries.

The Boston Consulting Group | 5 For company leaders, the first step in improv- identify recruitment as the biggest challenge ing gender diversity involves accurately un- in gender diversity. Women, by contrast, think derstanding the current situation at their or- that advancement and retention are the big- ganization. This may entail overcoming some gest challenges. (See Exhibit 2.) These misper- initial misperceptions. Often, senior leaders— ceptions matter because they shape compa- typically men—don’t grasp the scope of the nies’ investments in diversity initiatives. Our problem or recognize the circumstances in data shows that companies tend to spread which women experience the effects of gen- their diversity investments evenly across the der imbalance most directly. For example, five categories we tracked: recruitment, cul- when asked if their company offers support ture, leadership, retention, and advancement. for women from executives and middle man- That amounts to taking an all-of-the-above agers, 72% of male respondents say yes, com- approach to the issue, rather than allocating pared with only 54% of women. investments in a way that emphasizes the areas that women see as the biggest problems: Similarly, men often have different ideas retention and advancement. about where things go wrong. They tend to

Exhibit 2 | Men and Women Rank Obstacles to Gender Diversity Differently

% of respondents who see obstacles in each category

x1.7 x1.8 x1.8 x2.1

27% 26% 18% 30% 18% 33% 20% 36% 21% 45%

RECRUITMENT CULTURE LEADERSHIP RETENTION ADVANCEMENT

Source: BCG Global Gender Diversity Survey 2017.

6 | Getting the Most from Your Diversity Dollars WHAT WORKS

ompanies need to focus on efforts that schools, and taxes—can materially shift the Cgenerate the highest ROI. Our analysis likelihood of her moving, and thus her future indicates that gender diversity initiatives fall career trajectory. (See “Women on the Move: into four main clusters. (See Exhibit 3.) Shaping Leaders Through Overseas Postings,” BCG article, May 2017.)

Hidden Gems Addressing Unconscious Biases in Decisions These initiatives are highly effective, yet About Recruitment, Evaluation, and Pro many companies don’t pursue them actively motion: Periodically, companies make far- enough. The ROI on these measures tends to reaching decisions about employee recruit- be very high—much higher than leaders typi- ment, evaluation, and promotion. At these cally believe. moments, managers can yield to unconscious biases that cause them to favor people from Targeting Interventions to Moments of Truth similar backgrounds. In addition, organiza- in Women’s Careers: At several critical junc- tions’ assessment processes (for example, au- tures in a woman’s career, companies can take tomated tests for job applicants, or mecha- measures that have a disproportionate effect nisms to provide feedback about superiors, on that career’s trajectory. These moments of subordinates, and peers) can incorporate sys- truth include returning from parental leave, temic and hidden skews. applying for an overseas position, and aiming for a promotion with much greater responsi- There are specific ways to avoid these biases, bility. (See the sidebar “GSK Provides Extra such as by rephrasing job descriptions to Support at Critical Career Junctures.”) make them gender-neutral, requiring diverse short-lists of candidates for open positions, For example, women returning from materni- adjusting the parameters and wording of au- ty leave can benefit dramatically from mea- tomated testing, and refining the language or sures such as flexible working models, addi- questions asked on performance evaluation tional administrative support, and more forms. Although such changes are inexpen- direct access to leadership. (See “Why Paid sive to make, they can have a significant posi- Family Leave Is Good Business,” BCG article, tive impact, so their ROI is strong. For exam- February 2017.) Similarly, when a woman ple, Kimberly-Clark in the US revamped its considers taking an overseas position, clear hiring processes by, among other things, communication and targeted logistical sup- changing job descriptions to include transfer- port—such as advice on housing, child care, able skills and demanding diverse lists of can-

The Boston Consulting Group | 7 Exhibit 3 | Gender Diversity Initiatives Fall into Four Clusters

HIDDEN GEMS PROVEN MEASURES Highly valued by women on the ground, but Known measures with proven ROI—valued by underestimated by male senior leaders women and known to be effective by leaders • Targeting interventions to moments of truth, such as • Offering flexible working models such as part-time or returning from parental leave or taking an overseas flex-time options position • Committing publicly to gender diversity, in High • Addressing unconscious bias in recruiting, evaluation, combination with middle management support and promotion decision points • Tracking performance through meaningful KPIs • Increasing the visibility of role models in the • Sponsoring women through a scalable program ondents organization • Craing antidiscrimination policies as a statement of

esp • Supporting internal and external networks for women organizational values • Oﬀering professional development, such as talent management programs and executive coaching • Engaging male employees to promote gender diversity

ceived by women r BASELINE MEASURES OVERRATED MEASURES er Basic steps that have value but do not have a Seemingly promising initiatives that oen transformative effect on women’s daily experience do not lead to real cultural change • Mentoring women (oen not enough to overcome • Holding one-time-only training sessions (too systemic problems for women on the ground) frequently outsourced and isolated events, and not • Addressing the gender pay gap (differences in enough to reshape an organizational culture) Low individuals’ pay aren’t usually public) • Establishing grievance systems (necessary for Eff ectiveness as p • Taking a public stance in female advocacy egregious actions but typically insufficient to change organizations (does not change the day-to-day women’s daily experience) experience) • Incentivizing senior leaders (usually gets lost among a • Launching disconnected cultural initiatives such as long list of leadership targets) reducing face time (done in isolation, they oen fail) • Recruiting senior role models (not a quick fix for • Conducting employee surveys (typically lack failure of the organic pyramid) follow-through from leaders)

Low High Eﬀectiveness as perceived by male senior leaders

Source: BCG Global Gender Diversity Survey 2017.

GSK PROVIDES EXTRA SUPPORT AT CRITICAL CAREER JUNCTURES

Global pharmaceutical company GSK gives path. The company runs a coaching program additional support to women at crucial for people joining the company, rejoining moments of truth in their careers. For after an extended absence, or making a example, GSK Spain gives women employ- significant transition. The program lasts for ees who are more than 28 weeks pregnant four to five months and includes one-on-one the opportunity to adjust their work coaching, virtual support, and 360-degree schedule. The employee and her manager feedback sessions. Although the program is jointly agree on specific terms (such as open to all, women have reported finding it working fewer hours or working from home particularly beneficial—especially women on certain days), but there is no mandatory who received coaching during a move across requirement. The goal is to give women the business units or national markets within flexibility to work as long as possible before GSK. Since the program launched in 2015, giving birth, at their discretion. the 12-months-later retention rate for program participants has been 100%. At the global level, GSK recognizes the importance of moments of truth in a career

8 | Getting the Most from Your Diversity Dollars didates for open positions. As a result, in four ganizations and industries. (Notably, only years, the company increased its share of 27% of men in senior management positions women in leadership ranks from 17% to 30%. rank these networks among the top five most effective interventions, compared with 38% of Increasing the Visibility of Role Models in the all women respondents.) Organization: Survey respondents ranked role-model visibility third among the 39 initi Offering Professional Development, Such as atives we looked at: 44% of respondents cited Talent Management Programs and Executive it as being among the most effective mea- Coaching: Training and professional develop- sures. (See Exhibit 4.) Moreover, companies ment can improve specific capabilities and that already have role models in place—such allow women to access the tools they need to as women in senior positions and men who build long-term careers at a company. These have taken unconventional paths to the top— measures work best when they are tailored to have found that giving these people a higher an individual’s needs, rather than taking the profile requires very little additional invest- form of a one-size-fits-all program for all ment. The hard work is already done. By pro- women at a particular level. They are particu- filing such role models in employee commu- larly effective if used to help women negoti- nications, putting them on panel discussions, ate transition points in their career. Coaching and celebrating their accomplishments, orga- and development programs can be expensive, nizations can inspire women at lower levels but not when compared with the cost of re- of the company. placing a promising woman on the executive track. Supporting Internal and External Networks for Women: Fostering professional networks Engaging Male Employees: A strong correla- for women can be a very inexpensive propo- tion exists between male support for gender sition. Yet they create a valuable alternative diversity and reported progress over the past channel of information and support. They are three years. (See Exhibit 5.) After all, many of particularly effective in male-dominated or- the interventions described here benefit both

Exhibit 4 | Survey Respondents Consider Role Model Visibility Very Effective

51% #2

48% #3

44% #4

42% #5

35%

FORMAL FLEXIBLE ANTIDISCRIMINATION ROLE MODEL PUBLIC INFORMAL WORK POLICIES POLICIES VISIBILITY COMMITMENT FLEXIBILITY

Source: BCG Global Gender Diversity Survey 2017. Note: Percentages reflect the proportion of survey respondents who ranked each measure among the top 5 (among 39 total options) most effective interventions. Rank numbers refer to overall position among the 39 intervention options.

The Boston Consulting Group | 9 Exhibit 5 | Male Involvement Correlates Strongly With Progress Toward Gender Diversity

At companies where men are involved in gender diversity, 96% of respondents report progress

At companies where men are not involved in gender diversity, only 30% of respondents report progress

Source: BCG Global Gender Diversity Survey 2017.

men and women: improving diversity is in Leadership teams should therefore keep a everyone’s interest. Moreover, when men par- few things in mind. First, flex-work should ticipate in gender-diversity policies and pro- apply to both men and women and be visibly grams, the programs become normalized and used by successful role models of both gen- any stigma that might be associated with ders. Otherwise, there is a risk that it will lead them fades. Companies can celebrate men to negative stereotypes (for example, “Only who actively model key behaviors (such as moms use those policies”). Companies must taking their full paternity leave) and who ac- also make sure that the policy works on a tively sponsor women; involve men in design- day-to-day basis—and improves rather than ing and implementing key diversity policies; diminishes productivity—by thinking through and set up a network of men interested in the details in advance, leveraging technology, acting as champions. continually assessing how and where to get work done most effectively, and fine-tuning the program over time. (See the sidebar Proven Measures “Commonwealth Bank of Australia Creates a Proven measures deliver a high ROI, and Customer-Centric Model for Flexible Work.”) leaders rightly believe in them. Committing Publicly to Gender Diversity: Offering Flexible Work Models: Companies Public commitment to improving an organi- worldwide recognize flexible work policies as zation’s gender diversity is crucial. The CEO an effective way to improve gender diversity: and the entire leadership team must explicit- 51% of respondents rank it among the most ly identify diversity as being among the com- effective measures (more than any other). pany’s top priorities because of its impor- This is true across countries, genders, and tance to the firm’s strategic commercial leadership levels. Yet implementing flex-work agenda—and they need to back up that posi- policies poses some clear challenges. For ex- tion with action, including in all of their inter- ample, women are more likely than men to actions with middle management. (See the fear that adopting such a model will limit sidebar “Unilever Launches a Multifront their future career opportunities. Campaign to Boost Gender Diversity.”)

10 | Getting the Most from Your Diversity Dollars COMMONWEALTH BANK OF AUSTRALIA CREATES A CUSTOMER-CENTRIC MODEL FOR FLEXIBLE WORK

Commonwealth Bank of Australia (CBA), In 2016, CBA’s Group Lending Services one of the world’s largest banks by market team engaged its employees in a flexible capitalization, gives managers and employ- working test-and-learn pilot, encouraging ees significant latitude in setting the terms employees to periodically work from home. for how they will get their work done— After the four-month trial, 90% of partici- while still ensuring that the company pants said they felt more engaged, while meets its business objectives. Elizabeth customer outputs increased by 12%, thanks Griffin, CBA’s head of diversity and inclu- to fewer interruptions, better concentra- sion, says the company recognized that tion, and increased commitment. flexibility was a key factor in boosting engagement, productivity, and retention By the end of 2016, more than half of CBA’s among employees. “We devised a ‘reason- 52,000 employees were working under neutral’ and non-gender-specific approach,” some type of flexible arrangement. Griffin says. “Our starting point is a ‘yes’ on the basis that each employee and manager agrees to an arrangement that suits them and the business.”

UNILEVER LAUNCHES A MULTIFRONT CAMPAIGN TO BOOST GENDER DIVERSITY

Unilever recognizes that it is in a strong updates of the metric. In addition, the position to help empower women in its company publishes this information, along workforce and among its customers (more with other KPIs, on its website. than 70% of whom are women) and supply-chain partners. The company is Through this approach—and related convinced that boosting gender equality is policies, such as enforcing equal pay for not just the right thing to do but also a women and establishing a progressive clear business opportunity that is vital for parental leave program—the company has future growth. improved its gender balance and increased its share of women in leadership roles from Within its own workforce, Unilever has 38% four years ago to 46% today. Women applied a range of policies and practices to make up 50% of the board. improve gender diversity. The CEO and executive team have been extremely active Now the company is extending its focus to in the program, setting a clear tone from improving gender diversity beyond its own the top. The company also created a boundaries—through its supply chain, diversity board (led by the CEO), which wider ecosystem, and advertising practices. provided critical oversight while pushing For example, the company launched a responsibility for action to all levels of the program for 730,000 women in Kenya and organization. In addition, Unilever estab- India who supply tea to Unilever. The lished a small set of clear KPIs, including company found that providing women female representation. All leaders are held farmers access to training programs led to accountable for the gender balance on a 30% increase in crop yields. their teams. The targets vary by geography, but every team has to show improvement, and monthly executive meetings include

The Boston Consulting Group | 11 Tracking Performance Through Meaningful Holding One-Time Training Sessions: Many KPIs: There is nearly universal awareness companies invest heavily in professional that tracking performance through metrics training sessions—for example, to eliminate and key performance indicators is highly unconscious biases among managers. Yet effective. For example, General Mills USA has even though many senior managers favor increased its focus on diversity KPIs, with these initiatives, our female survey respon- senior leaders accountable to the CEO for dents tell us that the sessions are generally specific metrics. Thanks to this and other not effective. A single event—often led by ex- initiatives, the share of women in the com pensive outside vendors—is not enough to pany’s senior management team increased change deeply ingrained behaviors. from 9% in 2013 to 33% in 2016. KPIs should be practical, meaningful, and limited to a Establishing Grievance Systems: Grievance critical few. systems are a necessary element at any company, and senior managers tend to feel they Sponsoring Women Through a Scalable create a safety net, but women do not gener- Program: A good sponsor, with the appro ally perceive them to be effective in changing priate supporting infrastructure, can help an organizational culture. We believe that women navigate inflection points in their women tend to use grievance systems only careers and lobby for them to receive promo for extreme situations and not for milder day- tions, training, and key assignments. However, to-day negative interactions that our respon- the program needs to be wide reaching and dents tell us wear women down and affect consistent. C-suite executives at many organi their career paths. zations consider sponsorship to be more effective than it actually is, primarily because they experience it first-hand when working It is important that the com- on diversity issues. Yet a large corporation will have far more women who would benefit pany identify and sponsor from sponsors than it has senior executives who can fill the role. It is important that the talented women at scale. company identify and sponsor talented women at scale. Adding Gender Diversity to a Long List of Crafting Antidiscrimination Policies: Around Leadership Compensation Targets: Linking the world, respondents cited antidiscrimina- executive compensation to diversity sounds tion policies as the second-most-effective like an important step, but respondents did measure. Most companies—especially in de- not rate it highly in our survey. Why? C-suite veloped markets—have these policies in executives have so many measures in their place and may consider this type of initiative scorecards these days that one more doesn’t a given. But our respondents told us that a carry enough weight to change their day-to- smart antidiscrimination policy can make a day behaviors. significant difference, by giving executives a means to explicitly define and communicate Recruiting Senior Women Role Models from the company’s values, and perhaps even dif- Outside the Organization: Senior role models ferentiating it from competitors by using hired externally can be effective—especially strong statements of zero tolerance. for companies that need to rapidly improve their gender diversity. But external hires are no substitute for an organic pipeline of tal- Overrated Measures ent, and they can give the C-suite a false im- The third category consists of overrated mea- pression of progress. Although such hires put sures. These initiatives appear promising on women at the highest levels of the company, paper, tend to be fairly easy to launch, and they do not show a clear pathway to the top, often involve short-term bouts of focused ef- through the layers of middle management, fort. Unfortunately, in many instances they which is the biggest challenge that many don’t lead to real change. women face. Junior women replying to our

12 | Getting the Most from Your Diversity Dollars survey could clearly recognize the practical at their careers. Many women are often not difference between women hired externally even aware that their organization is involved at senior levels and internally successful role in such efforts unless it heavily promotes its models who showed that it was possible to participation. The most suitable participants rise through the ranks. are companies that already rank among the global leaders in diversity and can use their public profile as a differentiator in trying to Baseline Measures attract female talent. The fourth category consists of basic measures that all companies should have. These Disconnected Cultural Initiatives: Isolated, initiatives do have merit, but they are either superficial initiatives to change an organiza- baseline factors that do not make a meaning- tion’s culture—such as a policy to reduce the ful difference in women’s day-to-day experi- importance of face time in the office— often ences or insufficient measures when launched fail to yield real results. Although the ideas in isolation. In addition, too frequently, com- themselves have value, they need to be part panies do a poor job of implementing them. of a wider, more concerted effort or employees will perceive them as mere lip service. For Mentoring Women: Mentoring is the first step example, rather than simply issuing a policy many organizations take to promote gender about face time, companies might create a diversity. The concept is valid: executives formal flexible work policy. meet one-on-one with high-potential women to offer general career guidance and advice, but the arrangement is generally less formal Mentoring is the first step and structured than a typical executive sponsorship. The impact of mentorship hinges on many organizations take to the relationship and commitment between the mentor and mentee, and unfortunately promote gender diversity. these variables are difficult to engineer. For most women, mentorship may create some helpful support but does not alter the course Employee Surveys to Generate Feedback: Em- of their careers. ployee surveys are popular at many companies, but respondents give them low marks Addressing the Gender Pay Gap: A baseline for effectiveness, primarily because compa- measure of equity consists in paying men and nies rarely seem to do anything with the re- women equally for the same work. Clearly, sults. Among respondents who rank employ- companies need to understand whether they ee surveys among the five least-effective have a gender gap—and if so, they should measures at their company, more than half take urgent steps to reduce it. But unless the point to poor implementation. Surveys can be pay gap is extreme, it may not be noticeable useful, but only if leaders take visible action to individuals, particularly since most people to address employee issues head-on. don’t know what their colleagues earn. Also, companies may have valid reasons (such as Aside from these elements, one other initia- performance and tenure in a given role) for tive is worth mentioning: quotas for women salary differences in some individual cases. in leadership positions. Quotas can be effec- Fixing the gender pay gap alone is unlikely to tive in generating momentum for companies significantly improve the advancement situa- that face large challenges and need to show tion for women. rapid progress. But they are highly market- specific; not surprisingly, they generated the Company Engagement in Public Debates and most mixed reaction of all the initiatives we Membership in Female Advocacy Organiza- looked at. Some respondents hate them and tions: Giving the company a public platform believe they can be counterproductive (in from which to lobby for gender diversity is an that they stigmatize women as quota hires, outward-facing measure that rarely changes unable to earn a position on their own mer- the way individual women on the inside look its). Others believe that they are a reasonable

The Boston Consulting Group | 13 starting point for companies that need to gen- them among the least effective. On the other erate immediate progress. Among survey re- hand, some companies have succeeded in spondents who are aware of the presence of building a gender-balanced workforce with- such quotas at their organization, 26% rank out instituting a quota system. (See the side- them among the most effective measures, bar “Bank Muscat Creates a Balanced Work- and approximately the same number rank force Without Resorting to Quotas.”)

BANK MUSCAT CREATES A BALANCED WORKFORCE WITHOUT RESORTING TO QUOTAS

Gender diversity quotas are controversial in women customers, reinforcing the compa- the Middle East. Some companies see ny’s brand image as a model for gender them as a way to generate rapid progress, equality, emphasizing to all staff that while others consider them a form of internal diversity can improve business “positive discrimination” that hurts women performance, and helping to attract and in the long run. Bank Muscat, a leading retain women employees. financial-services firm in Oman, serves as a role model for how to create a balanced Women account for 48% of the company’s workforce without relying on quotas. total workforce, including 28% of depart- ment managers and 12% of senior leaders. The bank has a clear and strong antidis- They also constitute 51% of all participants crimination policy that the entire organiza- in learning and development programs. tion respects. It invests in developing its women employees—offering them a wide Building on this momentum, the company range of educational and training opportu- actively seeks feedback from younger nities inside and outside Oman—and it employees to gauge their perceptions of fosters a good work-life balance for both specific initiatives and to refine those men and women. (A portion of each work initiatives over time. It measures progress day, from 8 a.m. to 2 p.m., is fixed, but the through KPIs—such as promotion rates for remaining hour is flexible and set at the women—as part of its regular executive employee’s discretion. Maintaining a monitoring regime. And it holds a meeting significant period of overlap, when the each January to determine changes to entire staff is working, helps the program specific initiatives based on the previous succeed.) The bank also develops specific year’s progress. financial products and services for its

14 | Getting the Most from Your Diversity Dollars IMPLEMENTATION IS CRUCIAL

hat should CEOs do to create a During the implementation phase, several Wstep-change in gender diversity within principles are crucial: their organization? Each company is at a different stage in its journey and will have its •• Establish a clear business case at all own challenges. Nevertheless, all companies levels. The argument in favor of gender can benefit from reviewing their current diversity should be quantitative and diversity initiatives and levels of investment unequivocal. Further, executives should and comparing these with our findings of communicate that case to midlevel what works. Companies at an advanced stage managers, to ensure that everyone of gender diversity may already be pursuing understands the rationale for diversity some of our proven measures, but they can and is taking the necessary steps— invest in additional hidden gems as well. large and small—to make it happen. Conversely, companies that are just starting their journey might choose to focus on a •• Get men involved. The group responsible small number of proven measures to get for change should not consist of women those steps right and build momentum. alone. Otherwise, the program risks isolation from the company’s core opera- Leaders also need to pay close attention to tions as a special-interest “women’s how the company implements its diversity program.” When men are active members program. Mere activity—however well inten- of the diversity leadership team, compa- tioned it may be—is no substitute for prog- nies make faster progress. ress. In fact, CEOs need to apply the same rig- or to diversity initiatives that they would to •• Think through the details. When any large-scale change, setting strategic goals, companies fail to consider seemingly measuring progress in terms of quantifiable minor issues on the front end—and don’t outcomes, and refining over time. continually monitor and refine policies after implementation—initiatives fail to Fundamentally, achieving success in gender deliver. Employees often see a wide gap diversity requires that leaders, managers, and between the formal policy and the way it employees change the way they behave, and works (or doesn’t) in the real world. this kind of change is hard. The process will Flex-time is a good example. Giving likely take longer than many executives antic- employees the flexibility to work on ipate, and it will entail working in ways that alternate schedules is easy—but it raises a feel unfamiliar and even uncomfortable. host of follow-on questions. If a woman

The Boston Consulting Group | 15 wants to work longer hours four days a Pain points and cultural barriers can differ week and take Wednesdays off, will she at the level of departments and business still have to come to the office for import- units in the same company. (See the ant meetings on her day off? Will some- sidebar “PepsiCo Tailors a Global Diversity one be explicitly responsible for covering Program to the Needs of Local Markets.”) for her on Wednesdays? Will she ultimate- For example, in India and Brazil, close to ly be held responsible if her team makes a 50% of respondents rated on-site childcare misstep when she isn‘t there? Is she alone as among the most effective interventions, responsible for explaining her schedule to compared with fewer than 30% of respon- clients and colleagues? dents in the US and the UK.

•• Tailor interventions to individual sites •• Make sure that the first interventions and markets. Even the most effective succeed. Quick wins can generate mo- measures are not universally applicable. mentum for a broader program, just as

PEPSICO TAILORS A GLOBAL DIVERSITY PROGRAM TO THE NEEDS OF LOCAL MARKETS

PepsiCo has adopted a strategy for gender baked goods each week, with zero diversity across the entire organization. For quality complaints and outstanding example, it has a target in place for gender completion rates on job orders. parity at the management level by 2025, and it celebrates role models within the •• In Saudi Arabia, PepsiCo had just one company in a book highlighting the jour- female employee in 2009. Over the neys of senior women executives. (Notably, following three years, the company hired PepsiCo is one of only a few dozen Fortune 25 more women, in both management 500 companies that have a female CEO.) and front-line roles. More recently, the “For PepsiCo, this is a business imperative Saudi team has successfully recruited, given our consumer base,” says Cynthia trained, and retained more than 140 Trudell, the company’s chief human female associates for its food operations resources officer. in Riyadh. To do so, the company had to work with government authorities to The company also uses data-driven insights accommodate both the cultural change to tailor its strategy to the needs of the 200 of having women in the workplace and individual markets where PepsiCo operates. appropriate renovations to comply with Among its country-specific initiatives are local laws. (For example, the facility has the following: women-only workspaces, and PepsiCo provides transportation for women •• In Mexico, the company has a produc- employees, who are not allowed to drive.) tion line at its Vallejo biscuit plant that is staffed entirely by women. The •• In the US, PepsiCo launched the initiative—called La Linea Rosa (“The Pinnacle Program in 2011. Designed to Pink Line”)—started in 2013, with the increase retention among high-potential objective of putting women into produc- women, the program identifies female tion jobs they might not have held in sales associates who have strong the past, including physically intense performance records and provides them work such as stacking cartons or with additional career development, moving pallets. The company actively leadership training, and direct access to engaged employees’ families during the senior sales leaders. In its first five transition to provide encouragement years, the program has led to an and support. Today, the Pink Line improved retention of the company’s packages and ships about 75 tons of best female sales talent.

16 | Getting the Most from Your Diversity Dollars early failures can make people skeptical. ender diversity is a critical opportunity For example, if a company rolls out a Gfor companies. Most leadership teams flexible working policy without devoting understand the stakes, and many have taken proper thought to the practical details, the action to improve the balance in their work- first people to try it (likely women) may forces and executive suites. Now they need to end up leaving—discouraging any further make sure that those actions lead to real re- applicants and reinforcing stigmas sults. How? By treating gender diversity ini- regarding flex-work. tiatives the same way they would any other strategically important business imperative. •• Be relentless in measuring outcomes, not just activity. Rather than measuring Doing so entails accurately diagnosing the inputs, executives need to gauge perfor- root causes of imbalance at the organization, mance based on changes in the career identifying a small number of measures to trajectories of women. This will require address those problems head-on, tracking careful program design, to ensure the progress, ruthlessly culling initiatives that are company has the right KPIs. (See Changing not working, and focusing at a granular level Change Management: A Blueprint That Takes on implementation details. Hold, BCG report, December 2012.)

The Boston Consulting Group | 17 APPENDIX METHODOLOGY

We interviewed CEOs and top executives Participating organizations spanned a broad (both men and women) from more than 200 cross-section of industries, including financial companies in 21 countries and surveyed services, consumer goods, energy, industrial about 17,500 of their employees to under- goods, retail, and the public sector. stand their perspectives on diversity, the obstacles companies have faced, and the effec- To correct for any skewing in the survey data tiveness of the initiatives they have launched caused by large samples for specific compa- to strengthen female leadership. nies or countries, we weighted the survey data first by company and then by country to Executives and employees considered 39 obtain global values. discrete diversity interventions to determine which are the most and least effective, and which should be priorities in the near-term. We also gathered data on the organizations’ commitment in terms of time and resources dedicated to the different types of interventions.

18 | Getting the Most from Your Diversity Dollars FOR FURTHER READING

The Boston Consulting Group has The Rewards of an Engaged Women on the Move: Shaping published other articles and reports Female Workforce Leaders Through Overseas on the topic of gender diversity. A report by The Boston Consulting Postings Examples include those listed here. Group, October 2016. An article by The Boston Consulting Group, May 2017 Dispelling the Myths of the Gender “Ambition Gap” Digitally Driven Gender Diversity An article by The Boston Consulting A report by The Boston Consulting Group, April 2017 Group, June 2017

The Boston Consulting Group | 19 NOTE TO THE READER

About the Authors Jaafar, Ryoji Kimura, Fabiana For Further Contact Jennifer Garcia-Alonso is the Kondo, Hala Kosyura, Priyanka Jenn Garcia-Alonso global director of Women@BCG. Krishnan, Grace Lee, Katie Global Director, Women@BCG She is based in New York City. Matt Lefkowitz, Beatrice Lemucchi, Qi- BCG New York Krentz is a senior partner and Shan Lim, Maria Lopez, Vanessa +1-646 448 7706 managing director in the Chicago Lyon, Inés Mateo, Pamela Merlino, [email protected] office of The Boston Consulting Chisa Muramatsu, Hiroyuki Group, a member of the firm’s Nonomura, Bianca Orsini, Olivia Matt Krentz executive committee, and the firm’s Osicki, Violetta Ostafin, Andrea Senior Partner and Managing Director global people chair, where he leads Ostby, Gozde Yalazi Ozbek, BCG Chicago the firm’s diversity agenda. He Mehwish Panjwani, Mai-Britt +1 312 993 3320 focuses on people and organization Poulsen, Francesca Prosperi, Kate [email protected] topics. Frances Brooks Taplett is Protextor, Nor Azah Razali, Katie the firm’s global people team Rehberger, Julia Reichert, Beatriz Frances Brooks Taplett director and oversees the Women@ Reyero, Rafael Rilo, Michelle Director, Global People Team BCG agenda. She is based in Russell, Diana Sassu, Camilla Siess, BCG Boston Boston. Claire Tracey is a partner Mani Singhal, Haikal Siregar, +1 617 807 6146 and managing director in BCG’s Eduard Skolkay, Akino Tako, Burak [email protected] London office, focused on Tansan, Anna Chiara Tortorella, marketing and customer centricity Anna Velli, Laura Villani, Johnstuart Claire Tracey in financial services. She leads the Winchell, Ai Yokoyama, Kenny Partner and Managing Director external agenda for Women@BCG. Young, Nadjia Yousif, Tuvet Yu, and BCG London Miki Tsusaka is a senior partner Nerijus Zemgulys. +44 207 753 3922 and managing director in BCG’s [email protected] Tokyo office, a member of the firm’s The authors would also like to executive committee, and leader of thank their external collaborators: Miki Tsusaka BCG’s global marketing. She Ahmed Faqir Al-Bulushi and Senior Partner and Managing Director focuses on strategy, organization, Shamsa Al Harthy at Bank Muscat; BCG Tokyo and transformation in the Amanda Vermeulen at +81 3 5211 7939 consumer goods and retail Commonwealth Bank of Australia; [email protected] industries and other B2C Jacqueline Williams-Roll at General businesses. Mills; Sally Bonnywell and Liz Burton at GSK; Sue Dodsworth at Acknowledgments Kimberly-Clark; Umran Beba, The authors would like to thank the Deborah Rosado Shaw, and Cynthia following people for their Trudell at PepsiCo; and Alan Jope at contribution to this report: Katie Unilever. Abouzahr, Juliana Abreu, Dai Agawa, Priyanka Aggarwal, Farah Ahmed, In addition, the authors are grateful Zhanar Akhmetova, Michaela to Katherine Andrews, Gary Alhadeff, Tatsuro Asako, Agnes Callahan, Kim Friedman, Jeff Audier, Elias Bachir, Nicole Bennett, Garigliano, Abby Garland, Steven Dolors Borras, Julie Brummer, Jesse Gray, Hannah Holbrook, and Kate Carmichael, Jack Cheesewright, Myhre for their contributions to the Pablo Claver, Maurisa Croce, writing, editing, design, production, Marjolein Cuellar, Nan DasGupta, and marketing of this report. Gioia Ferrario, Alessandra Ferraro, Juan Ferrer, Anna Green, Elsa Haddad, Wieske Heinen Elgün, Leila Hoteit, Rosie Hudson, Mariam

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