Understanding the current workplace landscape is key to boosting leadership diversity. Analysing recent data and trends helps organisations address challenges and implement practices for more inclusive, high-performing executive teams
CREDIT: This is an edited version of an article that originally appeared on The HR Director
McKinsey’s latest diversity report reveals that companies in the top quartile for ethnic and gender diversity are more likely to achieve higher profitability compared to their peers. In contrast, companies in the bottom quartile for both diversity metrics are now 66% less likely to outperform on average. This indicates that a lack of diversity is becoming increasingly expensive.
The Current Landscape
A SHRM study of Fortune 100 companies reveals a significant shift in executive tenure: in 1980, 44% of senior executives were “lifers,” having spent their entire careers with one company. Today, only 19% of senior executives are ‘lifers,’ while over 26% of senior roles are now filled through external executive searches.
McKinsey’s 2021 report on Women in the Workforce shows that companies with greater gender diversity are 25% more likely to achieve superior financial performance compared to their competitors. However, only 38% of companies have set gender diversity targets for their executive teams.
From 1980 to 2001, senior roles increasingly went to younger individuals. However, this trend has reversed since 2001, potentially due to improved health among older workers. This shift may hinder younger professionals from advancing within organisations, prompting them to seek senior roles elsewhere. These changes underscore the urgent need to reform organisational structures to enhance diversity at the executive level.
Identifying Potential
Identifying the next generation of leaders requires evaluating employees through key performance indicators and potential assessment tools to spot high-potential individuals. While achieving diversity at supervisory and management levels is generally more attainable than at the C-Suite level, companies can start developing tomorrow’s diverse leaders by focusing on talent within these earlier tiers.
Removing Obstacles
To ensure a level playing field for next-generation candidates, organisations can improve recruitment and career advancement practices. Implement blind recruitment to reduce bias, create inclusive job descriptions that demonstrate the company’s commitment to diversity and standardise interviews with diverse panels. Additionally, provide bias training for hiring executives and enhance onboarding with mentorship programs and cultural competence training.
Professional Progression
Establish formal workplace policies that support inclusivity, such as creating employee resource groups. Promote work-life balance and offer inclusive benefits, including parental leave and mental health support. Regularly conduct internal surveys to drive continuous improvement. Provide mentorship opportunities to offer guidance to aspiring leaders, helping younger professionals build skills, confidence and visibility.
To effectively foster diversity and advance the next generation of leaders, organisations must address both systemic and procedural changes. By implementing inclusive recruitment practices, enhancing mentorship programs and establishing supportive workplace policies, companies can not only improve their diversity metrics but also drive better performance and employee satisfaction.
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