Almost 15 years have passed since McKinsey published its first Women Matter report, a pioneering study that established a strong positive correlation between the presence of women in top management and better organizational and financial performance by their companies. Further research has since investigated other forms of diversity, such as diversity of origins and sexual orientation.
These studies have established a positive correlation between this broader concept of diversity and better economic performance. We estimate, for example, that organizations ranking in the first quartile for ethnic diversity have on average a 59 percent probability of achieving EBIT margins above the national median for their sectors.
Organizations that have reached maturity in gender parity are now addressing broader issues of diversity and inclusion: national and socioeconomic origins, culture, educational levels, work experience, sexual orientation, and disabilities. Organizations in some countries—such as Brazil, the United Kingdom, and the United States—have developed metrics assessing all forms of diversity. In France, however, the regulatory and cultural environment makes it difficult to gather data on any aspect of diversity beyond gender and age (see sidebar, “Methodology”).
Two kinds of diversity
To shed factual light on types of diversity among senior managers in France, McKinsey and Club 21e Siècle joined forces to create the French Corporate Diversity Barometer. The barometer is designed to measure, for the first time in France, the sociocultural diversity of the executive ranks of large companies and to help organizations advance in this area.
It measures two complementary factors: diversity of national origins and socioeconomic diversity. We hope it will help companies develop oversight mechanisms based on objective criteria and act as a catalyst for progress.
The executives of the companies in the survey do see diversity of origins as a strategic issue: more than half of the respondents at the executive-committee level and one level down consider it to be one of the top five priorities of their organizations (Exhibit 1). Almost 70 percent of the executives knew about specific actions or programs implemented by their companies to achieve diversity. Yet nearly 40 percent say that the level of effort invested ranges from middling to very low.
The barometer did show that executives of the companies in the sample are, in some senses, very diverse: 77 percent of these executives are diverse by national origins or socioeconomic background. Yet when we break down the figures, we find fundamentally different dynamics at work in these two aspects of diversity.
Of the executives in our sample with diverse origins, nearly half—46 percent—are foreign nationals or have dual nationality, French and one other. A large majority of the international executives in our sample are European
(19 percent) or North American (9 percent). Very few of these executives (1 percent) come from Africa, excluding the Maghreb (northwest Africa). The high level of internationalization of top-management teams seems to reflect the business of our sample’s companies, which are increasingly international, both in geographic footprint and target markets. In fact, these companies generate an average of 71 percent of their sales revenues outside France. The diverse origins of their executives enables such companies to be more aware of the cultures of the regions where they operate and to adapt their strategies accordingly.
Among the French executives in our sample, 39 percent have foreign ancestry, at least in part. Of these, 15 percent have at least one parent of foreign nationality. If we include the nationality of the grandparents, the proportion rises to 18 percent. Six percent are dual nationals or acquired French nationality without having any French ancestors. In the French population as a whole coming from immigration, 30 percent have at least one foreign ancestor (Exhibit 2).
Let’s compare these people, in both groups, with at least one immigrant ancestor. In both, about half have one or more ancestors from the countries of the European Union. Some 10 and 3 percent, respectively, in both groups have one or more ancestors from Africa, excluding the Maghreb or from North America. But when we consider the descendants of people from the descendants of the remaining groups, we find two significant differences between executives of French nationality and the French population as a whole. First, among the whole French population with at least one immigrant ancestor, 29 percent have ancestors from that region, but only 16 percent of the corresponding group of executives in our sample do. Conversely, descendants of people from the rest of the world are twice as common (19 percent) among executives with French nationality and at least one immigrant ancestor than they are among all French people with French nationality and at least one immigrant ancestor (10 percent).
Our analyses also point to a significant gap between diversity as measured by our objective criteria, on the one hand, and diversity as perceived by the respondents themselves, on the other. Sixty-four percent of the executives in our sample had objectively diverse national origins, yet 36 percent of the executives do not perceive themselves as diverse (Exhibit 3). These are mainly people from geographically and culturally close areas (the European Union and North America, in 75 percent of all cases) or French executives who trace their foreign ancestry back to their grandparents, usually from Europe (60 percent).
Conversely, 2 percent of the executives in our sample perceive themselves as having diverse national origins despite meeting none of our criteria. Most of these executives have strong regional identities (notably Corsicans and Bretons), specific historical attachments (for instance, the descendants of French settlers in Algeria), or multicultural life stories (such as people who spent a long time abroad as children).
Our Diversity Barometer also shows that 60 percent of the executives in our sample have socioeconomically diverse backgrounds by virtue of their social mobility or level of educational qualifications (to meet our criteria for diversity, these must be no higher than a bachelor’s degree). But if we break down the 60 percent figure, we find that it is inflated, largely by the presence in our sample of international executives.
Of the executives measured as socioeconomically diverse, the vast majority (83 percent) are socially mobile: their parents did not come from privileged socioprofessional categories. French and international executives differ significantly in this respect. International ones are far more socially diverse: 72 percent had parents from nonprivileged categories, as opposed to 38 percent of their French counterparts. International executives are actually four times more likely to be children of manual workers (Exhibit 4).
As for education, the great majority of the executives in our sample have at least a master’s degree (Exhibit 5). Only 5 percent of the French executives hold educational qualifications at the bachelor’s level or below. Clearly, educational achievement remains a key determinant of professional advancement in France. The international executives are more socioeconomically diverse: 28 percent have only a bachelor’s degree or less. For them, professional experience seems more important than academic levels for professional advancement. What’s more, only 32 percent of the French respondents were the first in their families to hold university degrees, while 42 percent of their international counterparts were.
Four important levers
Our previous work identified best practices developed by companies that have successfully implemented diversity programs. By combining this work with the insights from our experience at such companies and our information from the participants in the barometer, we have identified four courses of action to promote sociocultural-diversity initiatives in organizations.
1. Treat sociocultural diversity as a strategic goal for top management
The first step for companies keen to progress more quickly toward sociocultural diversity is to make it a strategic priority under the responsibility of top management. Interviews with executives from companies leading the way in this area show that their efforts amount to nothing less than a cultural revolution. Action to achieve sociocultural diversity—closely overseen by top management—must be part of a transformation project for the company as a whole. Organizations cannot make progress unless top management not only believes that diversity, in its broadest sense, is a competitive advantage but also embraces an ambitious change management program spearheaded by the CEO. The mobilization of the management team and the whole organization must be strong and visible, both to employees and to external stakeholders such as consumers, investors, the media, and the general public.
Changes to promote sociocultural diversity should be rolled out at every level of the corporate hierarchy. It is particularly important to reinforce the inclusive-leadership capacities of executives and middle managers (through training programs, for example). Measurement and evaluation tools that help the leaders of diversity initiatives to quantify progress over time and to act objectively can support such initiatives (Exhibit 6).
The companies in our sample have all made diversity a major strategic priority. Organizations have arrived at this goal through different routes: it may be a long-standing commitment, part of a wider need to reinvent and innovate, or a policy implemented in response to a triggering or accelerating event. At two of the nine companies surveyed in our barometer, for example, the year 2020 and the COVID-19 crisis accelerated the commitment to diversity, which is now an objective of their new large-scale transformation plans.
2. Introduce clear indicators
One of the first, indispensable steps toward increasing diversity is to implement and monitor indicators for it. These quantitative measurements—reflecting the vision, the level of ambition, and the strategic targets of the program to increase diversity in the executive ranks—help make progress transparent. They are also the most efficient and reliable way to focus efforts, to consolidate progress by creating a common language, and to identify bottlenecks and gaps.
The most relevant indicators, for example, measure the proportion of socioculturally diverse people in each business line, at each level of management, and among new hires. These indicators can also track and compare the attrition rates of different kinds of diverse employees in similar functions or the time these employees spend in each stage of professional development. A particularly telling indicator is the proportion of different categories of diverse people eligible for promotion who are actually promoted—essential for helping organizations take stock of the gaps they must address.
These tools should be used to guide the most important actions, to record advances, and if necessary to adapt the diversity program to a changing situation. Finally, they are a powerful lever for communicating progress, celebrating successes, and maintaining a program’s momentum.
3. Design and oversee an action plan
Once an organization has determined its strategy for achieving sociocultural diversity and chosen the relevant indicators, these must be used to create an actionable road map. The leadership will need to strike the right balance between long-term structural initiatives and effective short-term moves—“quick wins”—that help trigger change and encourage rapid buy-in by employees.
The action plan, which may be based on a test-and-learn approach to change, relies on three dimensions of an organization’s HR policy:
- The integration of different kinds of socioculturally diverse people into the recruitment process. The proportions of each should correspond to the strategic approach determined earlier. For example, one of the companies in our sample historically recruited most of its French managers from French business and engineering schools. It now aims to recruit graduates of French universities beyond the elite grandes écoles, whose graduates used to enjoy an advantage in hiring.
- Personalized career management support. The goal here is to ensure that the pool of diverse talent does not evaporate in the higher echelons. Two of the companies in our survey have strong traditions of internal promotion and strive to implement meritocratic criteria. One of these companies recently started working to promote nonmanagers into management positions through a “high flyers” program. A third company, using its newly implemented dashboards, has determined that international diversity is already strong among its staff. The challenge now is to remove barriers to the promotion of diverse employees to higher levels of responsibility.
- Neutral, performance-based evaluations. These indicators help ensure an objective, unbiased evaluation process.
To bear fruit and be adopted by the entire organization, the action plan must be managed with the same rigor, the same level of ambition, and the same methods as a full-on transformation program. It should therefore be supported by a complete change management process and a communication program that includes, for example, a change story, a company-wide dissemination plan, change agents, and the like.
Leadership must strike the right balance between long-term structural initiatives and short-term moves to achieve an effective sociocultural diversity strategy.
4. Develop an inclusive work culture
Companies must embed the diversity effort and action plan in a broader approach to inclusiveness implanted in the organization’s very culture. All employees should feel not only authorized but also encouraged to express every component of their personalities in their professional settings and daily activities.
Three pillars support such a culture:
- Openness. All employees should feel that the work environment allows them to express their ideas, thoughts, and concerns—without any pressure to censor themselves.
- Belonging. All employees should be able to develop bonds or affinity networks that help them feel at home in the organization.
- Equality. All employees should feel confident that their opportunities for career development depend solely on fair criteria and processes.
The adoption of such an inclusive culture, which is essential to the action plan’s success, calls for specific training programs at every level of the company. A zero-tolerance policy is crucial to eliminate discriminatory talk or behavior and to help management and staff identify and deal with microaggressions. Companies may also establish internal behavioral standards promoting openness. Regular internal surveys can ask executives and the rank and file how they and their teams comply with these standards and quantify their sense of belonging.
The French Corporate Diversity Barometer outlines the contours of diversity beyond gender. Its findings suggest that while large French companies do rank sociocultural diversity among their strategic priorities, they are still looking for tools and action levers to make progress, particularly in diversifying their executive ranks.
McKinsey and Club 21e Siècle hope that French companies of all sizes and sectors will participate in our efforts to extend this barometer—both the number of companies involved and the dimensions we study. That broadening of scope will enable the French economy to move forward collectively and more widely on the topic of diversity, promote constructive exchanges between companies on this subject, and help them to share relevant best practices.
This article has been translated into English from French.