McKinsey&Company September 21, 2018
the Shortlist
Weekly need-to-know content
Welcome to the Shortlist: new ideas on timely topics, plus a few insights into our people. Subscribe to get it in your inbox on Fridays. Scroll down to see this year’s finalists for the Financial Times and McKinsey Business Book of the Year award.
The drive to make workplaces more diverse is often rooted in social justice and the idea that different experiences and points of view make for a more engaging work environment. But awareness of the business case for inclusion is also on the rise, as companies begin to see diversity as a source of competitive advantage and an enabler of growth.
In two comprehensive reports published in 2015 and last year, McKinsey found a strong correlation between gender diversity and a company’s bottom line. In the most recent survey, companies in the top quartile of executive-level gender diversity worldwide had a 21 percent likelihood of outperforming their fourth-quartile industry peers in earnings before interest and taxes, and a 27 percent likelihood of outperforming on longer-term value creation.
Nevertheless, gaps persist. Our recent study of Asia–Pacific, arguably the most dynamic economic region in the world, found that advancing women’s equality could add $4.5 trillion to its collective annual GDP in 2025, a 12 percent increase over the business-as-usual trajectory.
AsiaPacific Bottlenecks
And in corporate America, women remain underrepresented at every level, despite earning more college degrees than men for 30 years and counting. That is especially problematic in line roles—typically revenue-generating positions that act as incubators of future CEOs—versus staff positions. Many companies also overlook the realities of women of color, who typically face the greatest obstacles with the least support.
Women are chronically underrepresented in the US tech sector, and the trend is headed in the wrong direction. The percentage of computing roles women hold has largely declined over the past 25 years. And tech companies’ recent public struggles on gender-related issues have demonstrated there are real, immediate costs that result from a lack of inclusion and diversity—lost stock value, lower market share, and higher HR and public-relations costs, among other problems.
The reality is the same in North American financial services, where women account for over half of the entry-level workforce, but less than 20 percent of the financial-services C-suite, according to new research conducted by McKinsey and LeanIn.Org. This is despite strong support for gender diversity among firms we’ve surveyed.
Here at McKinsey, our new global managing partner, Kevin Sneader, has acknowledged that we haven’t progressed as much on diversity as we’d like. Kevin has made this a top priority, saying, “We won’t rest until 51 percent of the people who join our firm are female. We won’t rest until we have female representation in our partnership that’s at least above 40 percent.”
Many organizations are making such efforts, so the news is not all bleak. They understand that more diverse workplaces are better able to improve their customer orientation, employee satisfaction, and decision making. Those that demonstrate a commitment to diversity—gender, as well as cultural and ethnic—throughout their organization can also attract top talent more easily.
Open banking’s next wave | The notion of open banking has been central to the conversation in financial services for many months. The CEOs of Ping Identity, Plaid, and Tink share their views on its prospects and the pressing need for players to develop a data and customer strategy.
Going, going, gone: A quicker way to divest assets | When it comes to divesting assets, speed matters—not just in the initial decision but also in how quickly the process is executed. And make no mistake, the longer it takes to separate, the more anxious employees, customers, and investors can get.
The public cloud in China: Sunnier skies ahead? | China’s delay in moving to the enterprise cloud is one major factor behind its low digitization rates. But business leaders now acknowledge that their low cloud-usage rates are a liability and are moving to change that.
Penny Pritzker
‘We’re going to work with you’ is music to her ears
Penny Pritzker, the former US secretary of commerce and founder of PSP Partners, weighs in on successful examples of cross-sector collaboration, philanthropy’s role in workforce development, and how public–private partnerships can close the skills gap.
“We have too much income inequality, and I believe education, better training, and greater support for our workforce are the great equalizers,” she told McKinsey. “The most valuable thing you can do for individuals is help them get a job and develop their career. Access to opportunity is what drives me, and I believe education and workforce training are foundational elements of the solution.”
Capitalism and its (dis)contents
It’s almost time to crown a winner of the Financial Times and McKinsey Business Book of the Year award (Financial Times paywall). Now in its 14th year, the award goes to the “most compelling and enjoyable” business book from a meaty list of titles. This year’s contestants all focus on the ups and downs of capitalism.
There are six finalists:
Give People Money by Annie Lowrey, on the case for a universal basic income
The Billionaire Raj by James Crabtree, on the rise of India’s new billionaire class
Capitalism in America by former Fed chairman Alan Greenspan and Adrian Wooldridge, which gives a history of the United States’ rise to an economic powerhouse
Bad Blood by John Carreyrou, on the rise and fall of the blood-testing firm Theranos
The Value of Everything by Mariana Mazzucato, on the difference between value creation and value extraction in the global economic system
New Power by Jeremy Heimans and Henry Timms, on how bottom-up movements organize and develop in the networked age
The winner will be announced in London on November 12. Last year’s prize went to Amy Goldstein for Janesville: An American Story, about how the closure of a General Motors assembly plant affected a Wisconsin community.
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