Dealing with uncertainty may be a certainty for leaders as they approach 2021. To help guide them and their organizations in this new year, we’ve gathered some of the leading insights and observations from McKinsey’s Organization Practice.
Our first post in this three-part series shared observations from McKinsey’s Organization Practice in 2020 with a focus on organization design and culture and change. Our second post offered insights on inspiring individuals, strengthening talent management, and enabling reskilling.
This third and final post shares learnings to prioritize diversity, equity, and inclusion (DE&I) as a strategic effort.
2020 shined a spotlight on the importance of organizations’ DE&I efforts while illuminating some of their inherent challenges. A global rise in social justice movements shifted expectations for employers to reform and act on their DE&I strategies. Customers championed organizations that engaged in ethical behaviors and criticized those that did not. And the nature of work changed as organizations embraced remote work and the automation of simple tasks due to COVID-19.
Emerging from these trends, the insights below are compelling organizations to treat DE&I as both a business and societal imperative.
- The business case for DE&I is stronger than ever. Data from 15 countries and 1,000+ companies demonstrates the strengthened relationship between diversity on executive teams and the likelihood of financial outperformance. Companies that have made progress—“diversity winners”—are adopting systematic, business-led approaches to DE&I versus the disjointed sprinkling of diversity-related activities found at many organizations.
- Inclusion is often under-emphasized but critical to unlock the benefits of diversity for both organizations and individuals. Recent McKinsey research revealed that 39 percent of job seekers were more likely to turn down an opportunity due to a perceived lack of inclusion. Respondents were 47 percent more likely to stay with an organization—and seven times more likely to describe their organization as high performing—if it was inclusive. However, although there is a growing business case for inclusion, it has not translated to solid gains for the LGBTQ+ community, for instance, within the workplace itself.
- The shift to new ways of working also creates opportunities. Thoughtful action now can help teams build new habits, strengthen connections, and encourage growth of inclusive cultures that will better realize the full potential of all employees. Also, 93 percent of companies surveyed say they think more jobs can be performed remotely, opening up many organizations to more diverse talent pools in previously unavailable geographies.
- U.S. DE&I efforts should place emphasis on supporting the Black community. Black lives and livelihoods are being disproportionately affected by the pandemic. McKinsey’s annual Women in the Workplace study found that women of color, in particular, were negatively impacted by COVID-19 layoffs and furloughs. Additionally, while 63 percent of employees self-identify as allies to women of color, only 41 percent actively listen to their personal stories and only 29 percent take a public stand to support racial equality. Our research finds that the most promising way to create broad, permanent change is collective action across public, private, and social sectors.
- Organizations are at significant risk of backsliding on recent gains in women’s representation across the board and particularly in senior leadership. According to McKinsey’s Women in the Workplace study, one in four women have considered leaving the workforce or downshifting their careers since the start of the COVID-19 crisis. If all did so, corporate America would lose more than 2 million women and roll back progress made over the past six years.
- DE&I is more important than ever as companies innovate to find their “new normal.” Crises have historically pushed other strategic priorities higher on organizational agendas, thereby shifting attention away from DE&I. However, doing so may put companies at a disadvantage. In addition to potential impacts on customers’ perceptions of the company, the characteristics of diverse and inclusive companies—including innovation and resilience—are essential to COVID-19 recovery.