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Women Matter 2012: Making the breakthrough, examines the gender-diversity programs of 235 large European companies. The report investigates what initiatives companies are taking, what is working well or less well, and why. The research found that most companies are now taking gender diversity issues extremely seriously, devoting real resources to redressing the gender imbalance. But many companies also expressed frustration that their efforts do not always create the expected impact.
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Presentation for Highways Agency/ WTS18th of September 2012
CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of McKinsey & Company is strictly prohibited
Women Matter:
Making the Breakthrough
McKinsey & Company | 1SOURCE: Press search
Getting more women to the top of organizations is a hot topic
McKinsey & Company | 2
McKinsey has been researching the topic of gender diversity for many years and has by now global coverage
SOURCE: McKinsey
McKinsey & Company | 3
Our Women Matter reports give fact based answers to the Why? and How? questions for more women at the top of organizations
2007
Positive link
between a
company’s
performanceand proportion of
women in its
governing body
2008
Positive impact
of female leadership styles on
organizational
health
2009
Importance of
female
leadership
behaviors in the
post-crisis world
2010
Defining the key elements of an effective diversity strategy
2012
Helping
companies to
realize the final breakthrough
SOURCE: McKinsey & Company – Women Matter research
McKinsey & Company | 4
McKinsey & Company | 5
Average return on equity
In our 1st Women Matter report we found that companies with more than 30% women at the top of their organisation have better financial performance
SOURCE: McKinsey & Company – Women Matter research
Correlation does not imply causality
13.7
9.7
+41%
Top quartile
for female
representation
at executive
level
No women at
executive level
13.9
9.1
+53%
Top quartile
for female
representation
at executive
level
No women at
executive level
Percent, EU companies 2007-09
Average EBIT margin
McKinsey & Company | 6
In our 2nd report we looked at the impact of female leadership on organizational health
EXTERNALORIENTATION INNOVATION
WORK ENVIRONMENT
AND VALUES
DIRECTION
ACCOUNTABILITYCOORDINATION AND CONTROL
MOTIVATIONCAPABILITIES
LEADERSHIPTEAM
SOURCE: McKinsey & Company – Women Matter research
McKinsey & Company | 7
We found that leadership behaviours more frequently applied by women improve organizational health
Leadership behaviors… … improve organizational performance
Women apply moreand slightly more
Women and men apply equally
Men apply more
Individualistic decision making
Control and corrective action
Role model
Expectations and rewards
People development
Inspiration
Participative decision making
Intellectual stimulation
Efficient communication
INNOVATION
EXTERNAL ORIENTATION
DIRECTION
ACCOUNTABILITY COORDINATIONAND CONTROL
MOTIVATIONCAPABILITIES
LEADERSHIP TEAM
Inspiration
Control and corrective action
Individualistic decision making
People development
Expectations and rewards
Role model
Inspiration
Intellectual stimulation People
development
Efficient communication
WORK ENVIRONMENTAND VALUES
People development
Participative decision making
SOURCE: McKinsey & Company – Women Matter research
McKinsey & Company | 8
1 Comprised of 2nd and 3rd quartiles
Great news… since we know from extensive research that healthy companies are more profitable companies
6848
31 2.2x
6252
31 2.0x
585338
Mid¹
1.5x
TopBottom
Likelihood that OHI quartile has above-median financial performance, %
SOURCE: McKinsey Organisational Health Index data mining effort
Growth in enterprise value/ book value
Growth in net income/sales
EBITDA margin
McKinsey & Company | 9
In 2010 we wanted to find out how companies can really make this happen: Having a balanced diversity eco-system is key
CEO and executive team's explicit support for gender diversity programs
CEO commitment
HR processesand policies
Gender diversityindicators
Infrastructure
… supported by collective enablers
Gender diversity on top of the strategic agenda
Developing women as leaders …
Mentoring
Training and coaching
Networks and role models
SOURCE: McKinsey & Company – Women Matter research
McKinsey & Company | 10
McKinsey & Company | 11SOURCE: McKinsey proprietary database, 2011
Despite all attention for diversity, progress made in European countries is slow
CountryExecutive committeesPercentage of total, 2011
Corporate boardsPercentage of total, 2011
8
3
8
4
3
4
0
1
2
6
1
3
4
5
12
12
-2
2
5
5
3
6
8
8
8
11
11
15
21
10
Germany
Italy
Czech Rep
France
Netherlands
Belgium
United Kingdom
Norway
Sweden
16
5
10
20
19
11
16
35
25
17
Evolution since 2007
(Percentage points)
European average
EU announced draft proposal for companies to have 40% of women in their Boards by the end of 2019
McKinsey & Company | 12
Getting more women to the top is driven at societal, governmental, company and individual level
SOURCE: McKinsey Women Matter 2012
Norms, Values and Beliefs
Government
Company Women
1
3 4
2
▪ Tax
▪ Legislation (e.g. quota)
▪ Infrastructure (e.g. day care facilities)
▪ ‘Eco-system’
▪ Management commitment
▪ Development programs
▪ Collective enablers
▪ Mindsets and behaviors
▪ Perception
▪ Cultural Historical factors (e.g. war history, political situation)
▪ Socio – Economic factors (e.g. labor intensity, salary levels)
McKinsey & Company | 13
For our Women Matter 2012 report we benchmarked European companies on the types and effectiveness of their diversity policies
Interviews
6
Qualitative assessment2. Commitment to gender diversity
1 Place on the
st rategic agenda
Not on strategic
agenda
On strategic
agenda but not in top 10
A top-10 priority
on s trategic agenda
A top-3 priority on
strategic agenda
4 Consistency
of company culture with
gender diversity
objective
Company culture
creates strong bias for male
leadership
Company culture
does not actively foster gender
diversity
Company culture
comprises an implicit
preference for gender diversity
Company culture
ac tively fosters gender diversity
2 Management commitment
to gender diversity
Not committed to gender diversity
Visibly committed but no specific
action to foster gender diversity
Visibly committed with ac tions to
foster gender diversity, but no
communication of results
Visibly committed with actions to
foster gender diversity and
communication of results
Your rating
1 2 3 4 N/A
• Group CEO (further defined
as N level)
• Group CEO
N-1 level management
team
• Group CEO
N-2 level management team
3 Clear quantitative
targets for women
representation in leadership
positions
No gender diversity targets
for leadership positions
Quantitative targets for
leadership positions but no
action plan
Quantitative targets for
leadership positions, action
plan, but no companywide
communication of results
Quantitative targets for
leadership positions, action
plan, and companywide
communication of results
9
Qualitative assessment 3. Women development programs
• Age and tenure criteria to enter the high-potential pool
Does not existExists
• Personalized identification of needs for potential future women leaders
Exists Does not exist
• Mentor for potential future women leaders is CEO level N-2 or above
Yes No
• Cross-company women mentoring
Exists Does not exist
• Match between mentors and mentorees
Informal Formal assigning of a mentor to each mentoree
Forums to facil itate mentor-mentoree meeting
• Mentoring program Specific to women
For men and women
Does not ex istSpec ific to present and future women leaders
• Measure to neutral ize the impact of maternity leave on the cri teria
Does not existExists Not applicable
Your rating
1 2 3 4 N/A5
Not in place Limited geographical or
functional scope; l imited
communication; low women participation
Sufficient scope; limited
communication; low women
participation
Sufficient scope and
communication; average women
participation
Comprehensive scope; intense
and effective communication;
high women participation
Tailored mentoring programs w ith internal mentors
4
• Target share of women in the high-potential pool
Does not existExists
• Quota of women in the high-potential pool
Does not existExists
• Managers responsible for detecting of women and men pool entrants
Does not existExists
• Inclusion of an HR contact in final decision on pool entrants
Does not existExists
Program to increase share of women in the high-potential pool
5
8
Qualitative assessment
• Internal women network Ex ists Does not exis t
Not in place Limited
geographical or functional scope; limited
communication; low women
partic ipation
Sufficient
scope; l imited communication and low women
participation
Suffic ient scope
and communication; average women
participation
Comprehensive
scope; intense and effec tive communication;
high women par ticipation
1 Networking
events/programs dedicated to women
2 Women leadership skill building
programs
3 Women coaching
sessions with external coaches
3. Women development programs
Your rating
1 2 3 4 N/A5
• Internal women network
specifically for present and future leaders
Ex ists Does not exis t
• Multi-company net-
working initiative for present and future women
Ex ists Does not exis t
• Personalized identification of needs
for potential future women leaders
Ex ists Does not exis t
• Comprehensive tr aining program dedicated to present and future
women leaders
Ex ists Does not exis t
• Financing part of
executive training and further education for present and future
women leaders
Ex ists Does not exis t
• Personalized identification of needs
for potential future women leaders
Ex ists Does not exis t
• Financing for coaching sessions with an ex ternal coach
Ex ists Does not exis t
A
Quantitative data
3
Quantitative assessmentWomen metrics
1 Women representation
• Share of women in total headcount (%)
2 Recruiting
3 Gender di fference: salary (average FTE salary for women
divided by the average for men)
4 Share of women in high-potential programs (%)
– Overall …… … …
– N-3 to CEO in leadership positions …… … …
– N-2 to CEO in leadership positions …… … …
– N-1 to CEO in leadership positions …… … …
– CEO …… … …
– Board of Directors …… … …
• Share of women applicants (% of total applicants) …… … …
• Share of women new hires (% of total new hires) …… … …
– Overall …… … …
• Share of women who turned down a recruiting offer
vs. share of men (% of of fers made)
…… … …
• Overall …… … …
• N-2 and N-3 to the CEO in leadership positions …… … …
• N-1 to the CEO in leadership positions …… … …
• Share of women in high-potential pool …… … …
• Share of women in succession-planning pools for senior
management (for N-3 or above positions)
…… … …
• Share of women in mentoring programs … … … …
– N-3 to the CEO and above in leadership positions …… … …
2010 2007 2008 2009
• Share of of fers to women (% of total offers) …… … …
4
Quantitative assessmentWomen metrics
• Share of women and men in mobility programs (%)
• Share of women and men using flex-time programs: part time, reduced work week, maternity leaves, etc.
• Share of women promoted / share of men promoted
Women representation
Gender differences: job satisfaction (answering ‘satisfied’to ‘very satisf ied in internal surveys)
6
Gender differences: participation in flexible programs 7
Gender differences: geographic mobility8
Attrition rates (%) 9
Conversion rate (percentage of a population promoted during the year to the next significant level up)
5 W / M W / M W / M W / M
– To N-3 level in leadership positions … / … … / … … / … … / …
– To N-2 level in leadership positions … / … … / … … / … … / …
– To N-1 level in leadership positions … / … … / … … / … … / …
– Women vs. men overall … / … … / … … / … … / …
– Women vs. men in a “high-potential program” … / … … / … … / … … / …
– Women vs. men in senior management (defined as N-3 to the CEO or above positions)
… / … … / … … / … … / …
– Overall … / … … / … … / … … / …
– Women vs. men in a “high-potential program” … / … … / … … / … … / …
– Women vs. men in senior management (defined as N-3 to the CEO or above positions)
… / … … / … … / … … / …
– Women vs. men overall … / … … / … … / … … / …
– Women vs. men in “high-potential program” … / … … / … … / … … / …
– Women vs. men in senior management (defined as N-3 to the CEO or above positions)
… / … … / … … / … … / …
– For women vs. men in “high-potential program” … / … … / … … / … … / …
– Women vs. men in senior management (defined as N-3
to the CEO or above positions)
… / … … / … … / … … / …
2010 2007 2008 2009
B
Online womensurvey
D
On line company survey
C
SOURCE: McKinsey Women Matter 2012 report
▪ Woman Matter 5 study has benchmarked companies’ diversity policies on a
country level and within their European sector
▪ 235 organizations in 7 European countries participated: France, the UK,
Germany, Belgium, Czech Republic, Italy and the Netherlands
▪ We collected data in 4 different ways
▪ Our participants received an individual feedback report with its key challenges as
well as a recommendation on the most impactful measures to address these
McKinsey & Company | 14
Women are underrepresented at all hierarchical levels, not only at top management
1 Companies with more than 10,000 employees and/or revenues greater than €1 billion, and that provided data
Number of companies = 1301
Odds of advancement for
men over those for women…
37
22
14
9
2
Seats on executive
committee
Senior management
and vice president
Middle management
Total company
CEO
5.0x
1.8x
2.1x
1.7x
SOURCE: McKinsey Women Matter 2012 report
McKinsey & Company | 15
Each sector has its own challenges
1 Companies with more than 10,000 employees and/or revenues greater than €1 billion, and that provided data
Number of companies = 1301
9
0
49
22
13
7
50
30
18
11
9
15
10
27
19
0
25
16
15
119
0
Total company 34
Middle management 20
Senior management
and vice president17
Seats on executive
committee
CEO
SOURCE: McKinsey Women Matter 2012 report
Financial services Consumer goods
Transport, logistics, tourism
Energy and basic materials
Media, telecom-munications, technology
McKinsey & Company | 16
On the positive side…The number of companies that sees gender diversity as a top strategic priority has doubled since 2010
33
14
36
33
2011
0
Among top 3 itemson strategic agenda
Don’t know
Not on the strategic agenda
On the strategic agenda, but not in top 10
Among top 10 itemson strategic agenda
41
12
20101
3
20
8
Percentage of respondents, number of companies = 235
1 The 2010 figures are from the Women Matter 2010 survey. There were 1,560 respondents to this survey
1.9X
SOURCE: McKinsey Women Matter 2012 report
McKinsey & Company | 17
Number of companies = 1231
But…. Although some companies are making progress with diversity, most companies still have a long way to go
20% (top quartile)
Operating with a diversity advantage
Limited diversity practices
Making progress with diversity
Investing in diversity, but no impact yet
1 Companies with more than 10,000 employees and/or revenues greater than €1 billion, and that provided data for women at these 2 levels
13% (average)
Percentage of women at executive committee and senior
management/vice president level
Number of measures
25%
0
5
10
15
20
25
30
35
40
45
0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
SOURCE: McKinsey Women Matter 2012 report
N = 2016%
N = 1613%
N = 65%
N = 8166%
McKinsey & Company | 18
Why are so few companies successful?
SOURCE: McKinsey Women Matter 2012 report
Many measures are not implemented in the most effective way in terms of visible actions, frequent communication, participation levels
What’s on paper is not the same as what happens in practice
Focus over the last few years has been on getting top management involved, but middle management has been largely overlooked
Commitment at the top does not necessarily cascade to middle management
Not knowing the exact challenges (the facts) and not involving ‘the target audience’ themselves has resulted in ineffective programs. Measures too scattered, not the right ones…
Lack of focus
McKinsey & Company | 19
Women’s development programs
Collective enablers
Management commitment
There is a gap between the measures in place and those that are ‘well implemented’
1 Measures were rated on a scale of 1 - 5, with the exception of management commitment measures, which were rated on a scale of 1 - 4.
Percent, number of companies = 235
Well implemented
Fairly well implemented
In place
Networking programs/events
Leadership skill building programs
Mentoring programs/events 69
47
5815
13
16
Indicators
HR processes and policies
Infrastructure, e.g., child care
facilities43
60
5618
25
14
SOURCE: McKinsey Women Matter 2012 report
CEO commitment
Targets for women's representation
in top positions
Consistency of company culture
with diversity objectives88
51
92
24
22
41
McKinsey & Company | 20
While CEO commitment remains high and visible, it does not cascade to lower management levelsPercent, number of companies = 235
29
32
28
2232
39
8 1120
25Well implemented
Fairly well
implemented
In place
Not in place
Middle managers
100
13
Senior managers
and vice
presidents
100
CEOs
100
41
SOURCE: McKinsey Women Matter 2012 report
McKinsey & Company | 21
Percentage of respondents who “strongly agreed”; number of respondents = 1,7681
Men’s and women have differing views on gender diversity issues
1 Web survey participants. Some 35% of the respondents were female
Women
Men
SOURCE: McKinsey Women Matter 2012 report
4064
Do you believe that gender diversity is an important driver of company performance?
2713
Do you believe top management is committed to gender diversity?
65
30Does the evaluation system in your company treat men and women equally?
McKinsey & Company | 22
McKinsey & Company | 23
What do we recommend companies to REALLY make this happen?
More visible senior management commitment
Target initiatives at your particular challenges
Address mindsets
1
3
2
SOURCE: McKinsey Women Matter 2012 report
McKinsey & Company | 24
We believe that implementing a successful diversity strategy is similar to a transformational change journey
SOURCE: Scott Keller and Colin Price, Beyond Performance, 2011
spireWhat are your ambitions in terms of diversity?
rchitect
What do you need to do to address these challenges?
ct
How do you manage the journey?
ssess
What are the specific challenges for your organization?
dvance How do you keep moving forward?
AA
A
A
A
▪ Convincing business case▪ Clear aspiration▪ Targets at a granular level
▪ Committed senior leaders▪ Balanced diversity ‘eco-
system’ with clear
prioritization and focus ▪ Interventions to create
lasting change
▪ Implementation plan▪ Engage the organization
▪ Analyze the numbers▪ Evaluate the effectiveness
of existing policies
▪ Deep understanding ofmindsets
▪ Track progressBuild capacity for
continuous improvement
McKinsey & Company | 25