McKinsey presentation

Presentation for Highways Agency/ WTS18th of September 2012

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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


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


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


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


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



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



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


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


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


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)


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


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


leadership positions, action

plan, but no companywide



leadership positions, action

plan, and companywide


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


• Quota of women in the high-potential pool


• Managers responsible for detecting of women and men pool entrants


• Inclusion of an HR contact in final decision on pool entrants


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


• Personalized identification of needs

for potential future women leaders


• Comprehensive tr aining program dedicated to present and future

women leaders


• Financing part of

executive training and further education for present and future

women leaders


• Personalized identification of needs

for potential future women leaders


• Financing for coaching sessions with an ex ternal coach


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 …… … …



– 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 … / … … / … … / … … / …



– 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 overall … / … … / … … / … … / …

– Women vs. men in “high-potential program” … / … … / … … / … … / …


… / … … / … … / … … / …

– 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


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



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


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


Financial services Consumer goods

Transport, logistics, tourism

Energy and basic materials

Media, telecom-munications, technology


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




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


N = 2016%

N = 1613%

N = 65%

N = 8166%


Why are so few companies successful?


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


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


CEO commitment

Targets for women's representation

in top positions

Consistency of company culture

with diversity objectives88

51

92

24

22

41


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



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


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?


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



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

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