Diversity was back in the news when agency Saatchi & Saatchi recently sacked chairman Kevin Roberts for saying (among other things) that the gender diversity debate in advertising is over. His widely reported remarks have turned into a PR disaster for Saatchi & Saatchi and for Roberts himself. Too many leaders still believe diversity doesn’t matter for company performance—or they can’t improve top team diversity anyway. Publicly firing a chairman won’t change these beliefs. What’s needed are facts that no C-suite leader can ignore. Let’s make the case (from my Forbes column).
For the record, I’m not a diversity expert or activist. I help leaders make change happen. But through my research I’ve discovered important facts that made numerous C-suite leaders listen.
Let’s put on the CEO hat for a minute. Most CEOs operate in cutthroat markets under huge financial pressures. It’s safe to assume these leaders spend their precious time on topics they deem most critical for the organization’s success. When diversity isn’t on the list, these C-suite leaders must have concluded that
1. Top team diversity doesn’t matter (enough) to the company’s performance or
2. Top team diversity does matter, but it doesn’t require senior leadership involvement
To make real progress on the diversity front, we have to prove these two premises wrong. Let’s look at them one by one.
Premise No. 1: Top team diversity doesn’t matter (enough) to the company’s performance.
Before showing some key data, let me share a personal experience. As a young male marketer, I was once asked to lead my company’s tampon brand. Puzzled at first, I quickly immersed myself into feminine hygiene research and did what I could to satisfy customers and my company. But to be frank, I wasn’t too effective. When a female colleague finally took over, she launched a breakthrough marketing campaign in her first six months based on an idea she had as a teenager. Asking a male to lead a female-focused brand was, at best, bad business judgment. Yet, it’s reflective of marketing’s wider diversity issue.
Best Buy pulled out of China, Walmart failed in Germany, and Dell’s pastel colored “Della” laptops for women went nowhere. The most cited common cause: poor customer understanding. However, most companies still believe the best people to crack all market challenges are white, straight, local male (WSLM) marketing leaders.
So how important is top team diversity for company success? As part of a major diversity initiative at McKinsey & Company, I once led a team that analyzed the effect of board diversity on company performance across several sectors and four major geographies. What we found was staggering: for companies ranking in the top quartile of executive-board diversity (we looked at age, gender, and nationality), return on equity (ROE) was 53% higher, on average, than the ROE for those in the bottom quartile. Simultaneously, EBIT margins at the most diverse companies were 14% higher, on average. In other words, companies with diverse top teams outperformed their peers in every single geography we looked at. Many newer studies, too, have come to similar conclusions.
Premise No. 1 of many CEOs and CMOs is simply wrong: top-team diversity does matter significantly for company performance.
Let’s look at the second premise then.
Premise No. 2: Top team diversity doesn’t require senior leadership involvement.
Not every C-suite leader is convinced diversity needs their involvement. “In our company, the best people will make it,” one CEO told me recently. Many senior leaders share the same sentiment. The argument goes like this: “We hire lots of non-WSLM talent (e.g., people of different gender, sexual orientation, ethnicity, or nationality). But we often find that non-WSLMs make different career choices along the way. That’s why we have so few of them in our top team.”
The meritocracy argument sounds plausible. Why push people up the ladder that don’t want it? Why not just hire them and let them succeed?
The reality is that today’s race for the top doesn’t take place on an equal playing field. Too many women have experienced sexual harassment. People of color talk about small daily discriminations—none of them big enough to call HR, but each of them enough reason to feel less valued. Many LGBT managers still hide their sexual identities at work, fearing the resulting disadvantages and jokes at their expense. All of this is happening as you read this article.
In my latest global marketing leadership research, 36% of career success was explained by what I call “self-mobilization” (Patrick Barwise and I write about it in the upcoming book, The 12 Powers of a Marketing Leader). Success as a leader isn’t just about hard work. It’s also about passion, about going the extra mile, and about the ability to inspire others. But the issues too many non-WSLM leaders still struggle with take energy away from what they really want to do: give their best.
But how can senior leaders increase top team diversity? For our McKinsey study, we closely examined the actions and strategies of the best performing companies. Besides diversity in recruiting, these companies, together with non-WSLM leaders, had developed tailored programs to tackle diversity barriers. Examples include tough enforcement of ethical behavior, mentorships, buddy programs, and awareness training. Most importantly, the company’s senior leaders gave diverse talent the most important thing: opportunities.
The case for senior leadership intervention isn’t about special treatment. It’s about creating an equal playing field. Reality proves that, without intervention from the top, diversity simply won’t happen any time soon.
The evidence demonstrates that premise No. 2 of many CEOs and CMOs wrong, too: top team diversity does require senior leadership involvement.
To return to the Saatchi & Saatchi case: Kevin Roberts’ interview remarks, in all fairness, were more nuanced. He hinted at the importance of the 65% of female staff at Saatchi, and he showed frustration that the company “can’t figure out” how to make more female employees successful.
But he—like many executives—gets two essential premises wrong by thinking: 1) Top team diversity doesn’t matter (enough) to the company’s performance, and 2) Top team diversity doesn’t require senior leadership involvement. These widespread beliefs are the real reason for the diversity problem we’re facing.
Top team diversity (especially in marketing) isn’t just “nice to have” company goal. It’s a fundamental driver of business performance, which senior leaders can actively influence.
The evidence is clear. It’s time to spread the word in the C-suite!