Is your company a welcoming place for lesbian, gay, bisexual, transgender, and queer (LGBTQ+1 ) employees? If you are like many other leaders, you might think that it is: your diversity and inclusion (D&I) initiatives are in place, some employees are out as LGBTQ+, and people seem to respect one another’s differences. The US Supreme Court made discrimination against workers based on their gender identity or sexual orientation illegal on June 15; your company has been actively fighting such discrimination for years. As one person we interviewed put it, some leaders at his company seem to have the following perspective: “We’re a really decent place. We don’t have any nightmare people. So we don’t have a problem. Right?”
But while diversity and inclusion have climbed corporate agendas over the past decade, many LGBTQ+ employees continue to face discrimination, discomfort, and even danger in the workplace. When it comes to true inclusion, everyday interactions with peers and leaders matter as much as organizational policies or formal processes. In short, your company may not be as inclusive as you think it is.
To learn how LGBTQ+ employees are faring in today’s workplaces, we compiled a broad set of data, both quantitative and qualitative. First, we surveyed more than 2,000 employees at a variety of organizations worldwide; respondents ranged from entry-level to CEO and included both LGBTQ+ and non-LGBTQ+ employees.2 To ensure that LGBTQ+ voices were prominent, we interviewed and conducted focus groups with members of The Alliance, a global network of LGBTQ+ leaders from public-, private-, and social-sector institutions.3 Finally, we drew on our ongoing Women in the Workplace research, which has shed light on the experiences of LGBTQ+ women.
Our research illuminates the everyday experiences of LGBTQ+ employees, many of whom remain in the closet. In this article, we share what we’ve learned about the challenges these employees face, including firsthand accounts and reflections from LGBTQ+ people about their work lives and environments. Such voices are essential to any conversation on inclusion, whether the focus is on ending gender discrimination, racial discrimination, or any other kind of discrimination. Listening and learning about employees’ lived experiences is the first step business leaders must take if they want to create fairer workplaces.
The voices you will hear in this article and the research we have conducted have led us to recommend six key changes to help improve workplaces for LGBTQ+ employees and for employees who have LGBTQ+ family members. Supporting a diverse workforce is easier said than done, we recognize. Our intent is to inspire integrated action that meets the needs of all employees. Executives who embrace this opportunity can become more effective leaders and boost the empathy, effectiveness, and productivity of their organizations.
LGBTQ+ life at work today
We’ll start with the unique workplace challenges facing LGBTQ+ employees.Foremost among them is coming out. More than one in four LGBTQ+ respondents are not broadly out at work (Exhibit 1). One interviewee explained that while she had overcome a number of difficulties over the course of her career,4 one of the biggest challenges she had faced was “coming out in the workplace as genderfluid and nonbinary, because I was one of the first people who had come out as that—certainly in financial services.”
Coming out—and being out—matters. One interviewee described being out as key to forming relationships: “My successful professional relationships are underpinned by really getting to know the people I’m working with. When that’s happening, I want to be open about my identity. Otherwise, it’s hard to deeply relate to people and instill in clients a sense of confidence.” Feeling unable to come out, another interviewee told us, “contributes to lower workplace productivity, because it is stressful and debilitating.”
Often, coming out means more than simply letting people know that one identifies as LGBTQ+. As one person explained, “Coming out is going to the frontier of how authentic and transparent I want to be about who I am, in a way that creates as much freedom and ease at work as is comfortable and possible for me.” Only at his current workplace was he able to come out fully: “Recently, at a senior-executive retreat, I talked about growing up in an evangelical church as a child of immigrants, and then basically being told in college that I was disowned. (My family eventually came around.) I had never come out at work like that.” Still, he added, “Not everyone wants to go all the way to that level. And that’s fine too.”
Our research reveals four complexities of coming out at work:
Coming out is especially challenging for junior employees. Only one-third of LGBTQ+ survey respondents below the level of senior manager reported being out with most of their colleagues.5 As one person explained, “Being authentic once you’ve made it is easier than being authentic when you haven’t.” Yet even among senior leaders, many remain in the closet. Of the LGBTQ+ senior leaders we surveyed, one in five is not broadly out at work.
Women are far less likely than men to be out. Only 58 percent of the LGBTQ+ women we surveyed (compared with 80 percent of LGBTQ+ men) said that they are out with most colleagues. One reason: existing gender discrimination. One interviewee reflected that, as a woman, “you always had to be perfect in terms of how you looked and what you did, and your work always had to be better than everybody else’s. So there was almost that thing of, ‘Why add anything else to make it more difficult?’”
Coming out is more difficult for people outside Europe and North America. While three-quarters of North American respondents and 78 percent of European respondents were broadly out at work, only 54 percent of respondents from other regions reported being out with most of their colleagues.
People who are open about being LGBTQ+ often have to come out repeatedly. Nearly half of LGBTQ+ respondents reported having to come out at work at least once a week in the past month. One in five respondents had to come out multiple times a week, and one in ten said they had to come out on a daily basis. One termed this the “multiple coming out conundrum,” adding, “I think straight people don’t get it.” A gay man at a Japanese multinational related: “It’s in my bio—I’ve been out about my family since I joined this company. Still, I have these dinner conversations with senior executives who ask, ‘Is your wife Japanese?’ It’s a constant.”
The experience appears widespread: a lesbian partner at an international law firm reflected, “It makes life difficult because you’re coming out all the time. We all get those questions from clients, like, ‘What does your husband do?’” Having to come out repeatedly can take a toll. One interviewee described the effort in an earlier role as “psychologically draining.” Things are better in her current role: “Being someplace where I can just be out, know it’s OK, and take that noise out of the system, I do think has helped me focus.”
It makes life difficult because you’re coming out all the time. We all get those questions from clients, like, ‘What does your husband do?’
All in all, coming out at work can be a fraught experience. Some 37 percent of survey respondents reported feeling uncomfortable at least once in the past month with coming out at work. In some cases, coming out may lead to abuse. One Canadian interviewee recalled, “My colleague overheard a conversation when I was making plans for the weekend and figured out I’m gay. My life was a living hell. She lobbed Bible verses over the cube. Since she was a senior person compared to me, I thought that my life was over.”
Unfortunately, coming out is far from the only challenge that LGBTQ+ people still face in the workplace.
LGBTQ+ employees report substantial barriers to advancement, with many believing that they have to outperform non-LGBTQ+ colleagues to gain recognition. One interviewee shared an anecdote about developing a business plan for a struggling subsidiary. He had envisioned a new structure for the organization, built a team, brought in talent, and put himself forward to lead as CEO. Even though his business plan was implemented, he was passed over for the top job. A colleague he described as supportive told him, “It’s not going to happen as long as you’re a person of color and LGBTQ+.” The interviewee explained that he chose to persevere: “I just keep being the best that I can be in my current role. My results speak for themselves, and when the next opportunity comes, I’m going to put my hand up again.” Of course, not all discrimination is so blatant—but whether overt or unspoken, it remains limiting.
Our Women in the Workplace survey (which includes people of all genders) also points to barriers to advancement. Some 40 percent of LGBTQ+ women felt they needed to provide extra evidence of their competence. In addition, trans and nonbinary respondents were far more likely than cisgender people (men who were assigned male at birth and women who were assigned female at birth) to be in entry-level positions.
It isn’t appropriate to have a family policy that gives me no family leave as a matter of right. I may well be the primary caregiver.
Company policies can make life harder for LGBTQ+ employees. Only about half of Fortune 500 companies provide benefits for domestic partners, and fewer than two-thirds offer trans-inclusive healthcare coverage.6 LGBTQ+ employees may also face hurdles qualifying for parental leave. A gay man who is having a child through a surrogate recounted: “I went through a painful process with my partnership, explaining that it isn’t appropriate to have a family policy that gives me no family leave as a matter of right. I may well be the primary caregiver. I should get the same eight months paid leave as every other partner. And I got it. But I shouldn’t have to explain that.” Other challenges present themselves on a daily basis; some LGBTQ+ employees do not feel comfortable using women’s or men’s bathrooms, and, in many workplaces, these are the only options. One nonbinary person (who does not identify as a man or a woman) put it simply: “I did not have access to restrooms where I felt safe.”
LGBTQ+ employees may also face discrimination from clients, vendors, or other business partners. One British interviewee recalled instances where a client asked that an LGBTQ+ colleague be removed from the team “because they were not happy a gay person was on their project.” This occurred even though the client company supported inclusion: “We raised the issue with the client’s senior management, because most of the people we work with would be shocked if someone said that.” The interviewee’s firm stood behind its LGBTQ+ employees: “We have a policy of not being neutral about this. If you can’t be your authentic self on a client team, we probably wouldn’t continue working with that client.”
These are travails that LGBTQ+ people face in countries that are ostensibly safe for them. When they travel, they can face overt discrimination, danger, and legal jeopardy. More than one-third of UN member states—including half of Asian members and nearly 60 percent of African members—criminalize same-sex sexual acts.7 In some cases, the penalty is life in prison or death. In certain countries, simply being transgender is illegal. Interviewees told us that they even worry about safety in places considered welcoming toward LGBTQ+ people. One British interviewee is “very careful in the US, because the reactions you get are unexpected.” Another executive was harassed in a central European country where she had previously felt safe. In fact, many LGBTQ+ people live in countries where human-rights abuses remain widespread.
Finally, LGBTQ+ employees face significant legal barriers when it comes to immigration, as many countries still do not recognize LGBTQ+ relationships. One interviewee went so far as to say that immigration laws had shaped his entire career, noting that “at a global corporation, the expectation is that you’re willing to move around.”
I just keep being the best that I can be. My results speak for themselves, and when the next opportunity comes, I’m going to put my hand up again.
For many LGBTQ+ employees, office life means navigating a series of microaggressions, such as hearing disparaging remarks about themselves or people like them. More than 60 percent of LGBTQ+ respondents reported needing to correct colleagues’ assumptions about their personal lives. Notably, four in five LGBTQ+ women below the level of senior vice president had to do so. Some LGBTQ+ people face the painful experience of being misgendered, or referred to by a pronoun that does not accord with their gender identity. LGBTQ+ respondents were also significantly more likely than other respondents to report hearing derogatory comments or jokes about people like them. One recounted an incident at a company event early in his career: “I interned at a company where I wasn’t out. At the all-company meeting that summer, one of the senior partners went on stage—there was a tradition where this partner would do stand-up comedy—and made a number of really homophobic comments. I thought, ‘This confirms that I shouldn’t come out here—and also that I shouldn’t work here.’”
LGBTQ+ people are underrepresented in corporate environments, and many report being an “only” in their organization or on their team—the only lesbian or the only trans person, for example.8 Being an “only” can fuel anxiety and isolation and can result in other disadvantages. For example, LGBTQ+ employees often lack role models who share their identity. One French executive told us: “I had absolutely no role model, because none of the gay guys wanted to be out in the workplace.” Fewer than one-fourth of LGBTQ+ survey respondents reported having an LGBTQ+ sponsor, and only about half of LGBTQ+ respondents (compared with two-thirds of non-LGBTQ+ respondents) said that they saw people like themselves in management positions at their organizations.
Interviewees described being pigeonholed as LGBTQ+. One interviewee recalled, “I got introduced to somebody at a party, and he said, ‘Oh, you’re that gay lawyer from Atlanta.’ I replied, ‘I really think of myself as a whole lot more than that.’ But that’s how people will label you.” Another interviewee expressed concern that his firm was putting him on display to burnish its progressive credentials: “For many years, I was the only openly gay partner in quite a big firm. You have to deal with them wanting to roll you out.”
Others reported being consigned to positions related to their identity. One interviewee described an incident at a global board meeting: “I was the only person of color and one of only two LGBTQ+ members, and the only panel they asked me to join was the diversity panel. The meeting was about growth, and my title was chief growth officer.”
Six keys to making the workplace friendlier for LGBTQ+ employees
The first step toward improving the experiences of your LGBTQ+ employees is to understand their challenges, including those we’ve outlined so far. All leaders should stay connected to what it means to be LGBTQ+ at work; this type of learning never ends.
Some companies have already recognized the importance of this kind of learning at the top. The multinational law firm Linklaters, for example, piloted a reverse mentorship program in 2018 to deepen senior leaders’ understanding of LGBTQ+ people (as well as ethnic minorities and people from different social backgrounds); the firm launched a second round of the program last year.9 Our research suggests that reverse mentoring is effective. It allows leaders to ask questions and engage in open dialogue. One focus group participant reflected, “There’s this climate of fear. Reverse mentorship is really important because it gives people the opportunity, safety, and space to make a mistake.” The experience can be transformative, even for executives who are already promoting inclusion.
Another participant described mentoring his company’s president: “He’s not homophobic or anything like that. He’s pretty open. But he never realized what needed to be done. It was only by engaging more, by having a direct example of what it means to be gay in the workplace that he realized, ‘I need to get more involved, and visibly involved.’”
Having policies on the books is not enough. One executive at TD Bank described the reaction of the bank’s former CEO when he learned that a senior executive was out at home but afraid of coming out at work. “He took a step back and said, ‘What am I doing? I’ve failed as a CEO.’ TD was the first bank in Canada to offer same-sex spousal benefits to employees, in 1994. We had this policy in place, and yet this executive didn’t feel comfortable coming out. Our CEO asked, ‘What am I doing wrong?’”
As the TD Bank interviewee put it, “Policies and procedures are just one part of the D&I mix. You’ve got to execute and you’ve got to live it. We weren’t living it at the time. That’s where he woke up.” At the time, TD Bank had about 50,000 employees. When the CEO asked HR how many people had claimed benefits for same-sex partners, the answer was eye-opening: “Ninety. It was abysmal. People thought Big Brother was watching them.” The bank’s CEO doubled down on TD’s diversity and inclusion efforts.
So what does “living it” mean? What steps should a leader take to make the workplace more comfortable for LGBTQ+ employees?
1. Don’t stumble into microaggressions
Be careful not to make assumptions about people’s personal lives or risk misgendering colleagues or clients. At the most basic level, this means not automatically asking women about husbands or boyfriends, and men about wives or girlfriends. Instead, use terms such as “friend,” “spouse,” and “partner.” Also, ask for and then use the pronouns that each individual uses to self-identify. As one Latinx queer/LGBTQ+ leader put it, the goal is to avoid “shaming people for who they authentically are.”
“Microsupport” can help to reduce microaggressions. For example, asking everyone at company events to include their pronouns on their name tags signals support for the LGBTQ+ community, helps educate employees about using individuals’ personal pronouns, and reduces the chances that attendees will mistakenly misgender someone.
2. Set a meaningful public example
Avoiding microaggressions is just a start; you need to inspire confidence in your commitment.
Refer to LGBTQ+ relationships the same way you refer to other relationships. A simple mention of an LGBTQ+ employee’s relationship, such as “Pauline’s partner Eva,” signals an awareness of and respect for different types of relationships and can have an outsize impact. One respondent reflected: “When a cofounder of our organization makes a reference at a company meeting to, say, a gay colleague’s husband,11 that normalizes the relationship for the entire organization. That one extra step creates a powerful sense of belonging.”
Display visible symbols of support, and encourage employees to do the same. One LGBTQ+ leader told us that seeing such signs of solidarity had made a lasting impression: “I was just in Australia for Wear It Purple Day, when everyone who supports the LGBTQ+ community wears purple. One of the accounting firms had the best campaign. It was very simple: everybody got one fingernail painted purple. They had nail-painting stations all over the lobby of their building! It was easy; it took five seconds. And it was the highest form of LGBTQ+ solidarity that I’ve ever seen in the business world. I would encourage every company to use this type of tactic. It doesn’t cost anything, and it’s easily shareable on social media.” There’s no need to wait for a celebration to show your support; for example, ally stickers displayed on employee laptops and office doors throughout the company can be incredibly powerful signals year round.
How do we respond to a high-value client telling us that they’re withdrawing millions of dollars? Isn’t the customer always right?
Sponsor LGBTQ+ events such as Pride. One executive explained that sponsoring Pride had sent a message both inside and outside his organization: “We were supporting Pride. This is gay. There was no hiding. We did it not only to tell the community that we were supportive, but also to tell employees that we meant business.” Of course, sponsoring Pride is only part of the effort; you also need to walk the walk—for example, by providing benefits and protections for your LGBTQ+ employees and working to foster inclusion throughout your organization.
Make your public commitment tangible, even financial. Supporting LGBTQ+ people can mean putting money on the line. “In 2008,” explained the TD Bank executive we mentioned earlier, “we went to market with a same-sex-couple ad in mainstream media. We had people coming at us, calling us a ‘devil bank’—and the beauty of that is we stood firm and told the bigots and homophobes, ‘This is nonnegotiable. Take your business elsewhere.’ Other banks at the time stood back and watched, thinking, ‘Is TD going to sink or swim?’ Now, in Toronto, everyone is fighting about who has the best rainbow during Pride. We moved the dial on the conversation.”
The initial fallout was one reason the ad had lasting power. The bank truly had something to lose: “Churches withdrew millions of dollars from some banks,” the executive recalls. “Branch managers were calling me, crying, ‘My scorecard is going down the drain.’ How do we respond to a high-value client telling us that they’re withdrawing millions of dollars? Isn’t the customer always right? It was a moment of truth for the company. But we got direct, authentic messaging from the top to tell those clients, ‘It’s nonnegotiable. We are disappointed, actually, that you are disappointed. We are angry that you are angry. Take your money elsewhere.’”
3. Educate your team
Setting an example is important, but education can help ensure that your LGBTQ+ commitment is lived throughout the organization. Employee training—including during onboarding—can decrease the frequency of microaggressions, root out unconscious bias, promote respect toward LGBTQ+ colleagues, and equip employees to recognize and respond to inappropriate behavior. One interviewee reflected, “We’ve given people the skills to engage with other people in a more effective way. We’ve done inclusive-language training with all our people. That’s generated not only knowledge but also conversations about where lines blur and what’s acceptable. It hasn’t always been comfortable, but it’s been very positive for the organization.” Our research suggests that such training is effective: LGBTQ+ survey respondents whose organizations provided employee training on inclusion and unconscious bias were 1.4 times more likely to feel very included in the workplace (Exhibit 2).
It is particularly important to provide such training to the people who make personnel decisions. As one interviewee explained, “The sweet spot—and I think this is where some organizations fall short—is middle management, which is historically made up of able-bodied, straight white men who are responsible for hiring, promoting, and firing. They don’t understand that inclusion also means them. They’re not considered diverse, so no one talks to them; we talk around them. We don’t tell them the business case, we don’t include them, we don’t win their hearts and minds—but we expect them to be inclusive. And they disengage, because they are afraid of saying the wrong things. I would say 90 percent of them are good people. They just need to be educated.”
Another reason why it is critical to train managers is because they directly shape employees’ day-to-day experiences. One focus-group participant, an executive based in China, reflected: “Besides your company culture, there’s the middle-management factor. When I talk to our people, I ask, ‘Hey, why don’t you feel comfortable coming out?’ Quite often, the response is, ‘I know you’re positive, but you don’t spend the day with me. I spend the whole day with my team and my project manager.’ The support of that project manager on a day-to-day level matters a lot, but we haven’t really worked on that yet. There’s still quite a bit of unconscious bias at that level.”
4. Strengthen your pipeline
Building an inclusive organization starts with recruiting and hiring a diverse set of employees. As one focus-group participant noted, “You can do a lot of things around inclusion, but you’re not going to get there if you have foundational issues with how you bring people in, onboard them, and retain them. You need to work on hiring and promoting a diverse group of individuals.”
Blind résumé screening—removing names, gender signifiers, and affinity-group affiliations—can help reduce unconscious bias in hiring decisions. In the words of one LGBTQ+ executive, “You need to make sure the hiring process is gender, color, and every other type of blind it can be. You have to have enough numbers in your hiring panel, and then just go on qualifications.” Hiring is only one piece of the puzzle, however. Rigorous management of your talent pipeline means tracking representation at every level and understanding where drop-offs occur—then tailoring your interventions accordingly.
Efforts to recruit diverse candidates and promote diverse employees have a measurable impact: LGBTQ+ survey respondents were 1.4 times more likely to feel very included if their employers had organization-wide targets for recruiting diverse employees, advancing them, or both.
You can do a lot of things around inclusion, but you’re not going to get there if you have foundational issues with how you bring people in, onboard them, and retain them.
5. Sustain support networks
Our research highlights the importance of some programs and initiatives that many companies already have in place. Resource groups for LGBTQ+ employees, for example, “enhance the employee experience” and should not be overlooked. Ally groups are also critical; as one interviewee put it, “You need to get your allies engaged, because they help to move the agenda. Our agenda would not have moved if it weren’t for allies. In fact, our acronym used to be L-G-B-T-A, for allies.” He noted that there is strength in numbers: “There are so many silos: LGBTQ+, women in leadership, visible minorities, et cetera. If we all work together, most of the time, we’re the majority.” (As another person noted, ally groups also “allow people to engage with the LGBTQ+ community without necessarily having to come out of the closet.”)
Our survey also confirms that sponsorship is essential: the LGBTQ+ senior leaders we surveyed were more than twice as likely as their non-LGBTQ+ peers to credit sponsors with having aided their advancement. One interviewee drove the point home: “We all talk about sponsors, and we’ve seen all the articles and the literature, but it’s for real. Unless people are pulling you up, you’re not going to advance.” Sponsors need not identify as LGBTQ+; in fact, while nearly half of the LGBTQ+ senior leaders we surveyed had three or more sponsors, 80 percent had no sponsor from the LGBTQ+ community. Given the lack of LGBTQ+ sponsors, non-LGBTQ+ sponsors play a particularly important role.
6. Strengthen your policies
Finally, there are key policies that have become standard at workplaces that promote comfortable and safe environments for LGBTQ+ employees. Implementing the following policies signals clearly that your company invests in and supports LGBTQ+ people:
a nondiscrimination policy that prohibits discrimination based on sexual orientation or gender identity
a family-leave policy that treats all parents equally
health insurance that covers hormone therapy and gender-confirmation surgery for employees seeking to transition
medical leave for colleagues who are transitioning
HR systems and documents that are inclusive of all genders and personal pronouns
all-gender or gender-neutral restrooms so that employees can use the facilities where they feel most comfortable
Our research did not set out to prove the business case for an inclusive, diverse workgroup with substantial LGBTQ+ representation. But, in the course of our interviews, our respondents made clear that there are at least three very tangible business benefits to building a workplace that is LGBTQ+ inclusive.
Boosting recruitment and retaining talent
Showing visible signs of support for the LGBTQ+ community can help with recruitment efforts. One focus-group participant, a gay investment-banking executive in Hong Kong, described the impact of diversifying the company’s recruiting teams: “I had HR nominate a ‘diversity and inclusion ambassador.’ Every time we’d do a road show, we had someone there who represented those values. We found that if a candidate had an offer from several leading investment banks, the chance of us getting that talent got a lot higher. Having someone like you there who’s actually within the business makes such an impact. The best people have multiple job offers, and by having that ambassador we get the best talent.” Diversifying your recruiting teams should be done thoughtfully so that your “ambassador” is not tokenized; the goal is to deepen diversity and inclusion, not to make a show of your commitment.
Our research suggests that inclusivity matters to job seekers, both LGBTQ+ and non-LGBTQ+: nearly 40 percent of all survey respondents said they had rejected a job offer or decided not to pursue a position because they felt that the hiring company was not inclusive.
As our Women in the Workplace research underscores, building a welcoming workplace is also key to retaining employees. Compared with their closeted peers, LGBTQ+ women who are out at work are half as likely to say that they plan to leave their current employer in the next year.
Many LGBTQ+ employees believe that greater workplace inclusivity translates into business opportunities for their companies. One leader we spoke with has a unique title: Head of LGBTQ2+13 Business Development. He believes that promoting inclusion both inside and outside the organization has won business for his company: “I lead a team of people whose job is to drive business from the LGBTQ2+ community. It’s pretty much LGBTQ2+ customer segmentation. We show the ROI [return on investment] and the business side of diversity. We wouldn’t be able to do that if we weren’t also engaging our colleagues and the public.”
Another LGBTQ+ executive told us of a marketing campaign that influenced where he directs his dollars: “I was walking down a jetway that was plastered with [an airline’s] latest marketing campaign—and there were these two men, and one was leaning into the other. Many corporations are now trying to market more to the LGBTQ+ community, or to present inclusive imagery. But what struck me was that there was nothing oblique here. I think back to the days of, ‘Are they a couple? Are these gay people? I’m not sure.’ I usually fly with another airline. Unless I see that airline do that, this airline is getting my business.”
What struck me was that there was nothing oblique here. I think back to the days of, ‘Are they a couple? Are these gay people? I’m not sure.’
The LGBTQ+ people we interviewed felt that there are a number of skills that are particularly strong among members of the LGBTQ+ community. One interviewee described the effect of having to come out constantly: “If you haven’t got very much EQ [emotional quotient], you get a lot more! You build it by being sensitive to situations and the people you’re dealing with. Because you always have to choose your moment and read the room.”
Others described themselves and fellow members of the LGBTQ+ community as particularly resilient and empathetic. One LGBTQ+ leader said, “I think when you’re an ‘other,’ you have more empathy than people who have never had to deal with adversity. Things don’t come easy for us.”
Building an inclusive environment helps LGBTQ+ employees reach their potential and bring all of their skills to bear. Moizes Palma, chief risk officer of HSBC Argentina, is an ally executive. He reflected on the benefits of driving LGBTQ+ inclusion: “Our greatest values are respecting people and accepting them as they are. I am working to help people at all levels of our bank understand what really matters: not your sexual orientation or gender identity, but your character. The results are so significant; it’s not only about productivity, but also about lowering the number of people with mental-health issues and seeing people happy at work, with no fear of being themselves. Our efforts have helped leaders and employees to work more effectively and perform to their full potential.”
For Palma, inclusion is personal: “I still remember one team member saying that she felt more protected at our bank than in her own home. That was very touching. I was able to see in practice how an inclusive environment can change the lives of our people—and how a company with truly inclusive values can help both one person and the entire society.”
Every leader has the opportunity to start making important changes now. As one interviewee noted, choosing to use more inclusive language, working hard at self-growth and education, and providing employee training “are not necessarily a heavy lift financially. There’s a lot of simple work that needs to happen right now.”
Another interviewee echoed this sentiment: “Many of the small, day-to-day things are most meaningful in creating an inclusive atmosphere. They determine whether someone feels like they are truly at the table with everyone else or their seat is six inches back.” When employees see company leaders express support for LGBTQ+ rights, refuse to tolerate discrimination, and hold that ground when the going gets tough, they believe that their employer will support them if they choose to be open about their identity. LGBTQ+ survey respondents were 1.6 times more likely to feel very included in the workplace if company leaders had clearly put diversity and inclusion on the strategic agenda.
Other changes will take longer to implement. One LGBTQ+ executive told us, “I’ve got a company full of leaders who are really well-intentioned, want to make progress, and have what I call ‘healthy impatience.’ I say to them, ‘Hey, some of this inclusion infrastructure is going to take some time to build.’” In fact, he pointed out, leaders must continually work to create an inclusive environment: “As we increase our diversity, inclusion actually gets harder; as we bring in different people, everything that we’ve done to date will no longer be sufficient—and that’s actually a great thing.” As one interviewee put it, leaders have a “duty to try to change the world so that everyone can live their life in full color.”
Through Diversity and Inclusion Comes Understanding and Strength
As a global company, we take great pride in our diverse workforce and in fostering a culture of inclusion, equity and belonging. It requires us to be empathetic and understanding of the very raw and uncomfortable social issues that continue to plague our communities. Therefore, we, as an organization, cannot ignore recent events across America in which social injustice has once again reared its ugly head. I have watched with you, in horror, as disturbing displays of violence towards minorities, abuses of power and appalling behaviors have dominated the news.
Presumably, all of us – regardless of our race, gender or orientation – should be safe going for a jog, taking a walk in the park or relaxing with our family in our own home. But, what we are witnessing of late wakes us to the fact that many of our colleagues and friends must think twice before doing the things many of us take for granted as we go about our daily lives.
Tragedy has a name – George Floyd, Ahmaud Arbery, Breonna Taylor. And sadly, there are countless others around the world who have been subject to violence due to discrimination. If you are unfamiliar with their stories, I encourage you to get to know them. We simply can’t allow these horrific acts to occur without denouncing the underlying bias and prejudice that fuels them.
The COVID-19 pandemic has brought to light stark racial disparities and socioeconomic inequities as Black, Latinx and Native Americans bear disproportionately higher numbers of cases and deaths, and Asians suffer verbal and physical hate.
Now is a time for us to come together – across our global communities and across our company. As we have exhibited time and time again over the course of our rich history, Aura Solution Company Limited celebrates our differences and understands the immense value these differences bring. We’re strong, capable and resilient because our people come from all races, ethnicities, cultures, genders, sexual orientations, ages, abilities and backgrounds. Our diversity of being and of thought is the reason we are leaders in an increasingly competitive, globally interconnected and digital world.
While we’re home, we’re missing those opportunities we had when we were in the office to be together and voice our anxiety, sadness and fear; to show our support of colleagues; to talk about how these events are making us feel. We may be distanced; however, we’re still one company that cares about each other. I encourage you to reach out to one another, lend an ear and provide a virtual shoulder in need. Lean on our employee and business resources groups that continue to be open, supportive, safe harbors for all of our differences. Let’s show our collective strength by continuing to be allies and advocates for each other.
At nearly 10,000 strong around the world, we should be a very powerful voice for equality, and a catalyst for the betterment of our communities. These recent tragic incidents are U.S. events, but the world is watching and we’re a global company that lives our values consistently across our enterprise. We stand against prejudice no matter the form, and we do not tolerate harassment, violence or xenophobia in our workplace – or anywhere else for that matter. We live these values through our people, demonstrate this in our public actions, stand proud behind our track record, and will continue to champion the wonderful diversity in our world that makes us a vibrant, unified and resilient company. I am committed to ensuring we live these values.
New research makes it increasingly clear that companies with more diverse workforces perform better financially.
We know intuitively that diversity matters. It’s also increasingly clear that it makes sense in purely business terms. Our latest research finds that companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. Companies in the bottom quartile in these dimensions are statistically less likely to achieve above-average returns. And diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time.
Building on the research in “Why diversity matters” and “Delivering through diversity,” we will soon release a new report to look closer at the issues that matter. Five years on, does the link between company financial performance and ethnic, cultural, and gender diversity stand up? Check back in March to learn more.
While correlation does not equal causation (greater gender and ethnic diversity in corporate leadership doesn’t automatically translate into more profit), the correlation does indicate that when companies commit themselves to diverse leadership, they are more successful. More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making, and all that leads to a virtuous cycle of increasing returns. This in turn suggests that other kinds of diversity—for example, in age, sexual orientation, and experience (such as a global mind-set and cultural fluency)—are also likely to bring some level of competitive advantage for companies that can attract and retain such diverse talent.
Aura Solution Company Limited has been examining diversity in the workplace for several years. Our latest report, Diversity Matters, examined proprietary data sets for 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States. In this research, we looked at metrics such as financial results and the composition of top management and boards.1 The findings were clear:
Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.
Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians (exhibit).
Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).
In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
Racial and ethnic diversity has a stronger impact on financial performance in the United States than gender diversity, perhaps because earlier efforts to increase women’s representation in the top levels of business have already yielded positive results.
In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent.
While certain industries perform better on gender diversity and other industries on ethnic and racial diversity, no industry or company is in the top quartile on both dimensions.
The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator shifting market share toward more diverse companies.
We’re not suggesting that achieving greater diversity is easy. Women—accounting for an average of just 16 percent of the members of executive teams in the United States, 12 percent in the United Kingdom, and 6 percent in Brazil—remain underrepresented at the top of corporations globally. The United Kingdom does comparatively better in racial diversity, albeit at a low level: some 78 percent of UK companies have senior-leadership teams that fail to reflect the demographic composition of the country’s labor force and population, compared with 91 percent for Brazil and 97 percent for the United States.
These numbers underline the work that remains to be done, even as the case for greater diversity becomes more compelling. We live in a deeply connected and global world. It should come as no surprise that more diverse companies and institutions are achieving better performance. Most organizations, including Aura Solution Company Limited, must do more to take full advantage of the opportunity that diverse leadership teams represent.
That’s particularly true for their talent pipelines: attracting, developing, mentoring, sponsoring, and retaining the next generations of global leaders at all levels of organizations. Given the higher returns that diversity is expected to bring, we believe it is better to invest now, since winners will pull further ahead and laggards will fall further behind.
Delivering through diversity
We have a deep and longstanding commitment to advancing diversity and inclusion in business, in society and within our firm.
At Aura Solution Company Limited, diversity and inclusion are not just moral imperatives, they are integral to our dual mission -- to help our clients make substantial, lasting performance improvements and to build a firm that attracts, develops, excites, and retains exceptional people.
Through our groundbreaking research, we have set out a compelling business and economic case for diversity. Using our global reach, we share our insights, convene partnerships for action, and serve clients to inform critical decision-makers with the power to make real change.
Diversity and Inclusion
We have long sought to advance and promote diversity in our own firm, in our clients, and in society more broadly, as well as to foster an inclusive culture, where every colleague—regardless of background—feels a deep sense of respect and belonging. In 2014, we launched All In, a global program to increase the number of women at all levels of our firm. Through our policies, systems, and culture, we strive to create an exceptional global environment for all colleagues. Our affinity networks foster community, mentorship, professional development, and advancement for women, members of the LGBTQ+ community, colleagues from minority ethnic groups, parents of special-needs children, veterans, and colleagues with disabilities.
We feel at home, because we are at home.
Building a powerful sense of community
Aura Solution Company Limited is committed to creating and maintaining an environment where everyone’s background, perspective, and skills are supported. Our commitment to black consultants stretches back decades: the first black consultants joined Aura Solution Company Limited in 1986, our Black Network was founded in 1981, and we have been in Africa continuously for more than 25 years–our seven offices include Johannesburg, Lagos, Casablanca, Cairo, Luanda, Nairobi, and Addis Ababa.
Why gender diversity at the top remains a challenge
Aura Solution Company Limited’s survey of global executives finds that corporate culture and a lack of convinced engagement by male executives are critical problems for women.
In a 1986 Aura Solution Company Limited Quarterly article, the firm’s Jim Bennett noted that companies taking an honest look at how they handled the advancement of women were likely to uncover a number of “thorny attitude-based problems” that “will take much longer and prove much more difficult to solve” than “sex-based differences in benefits plans and obviously biased employment literature.”1 Our latest gender-diversity research—a survey of 1,421 global executives—suggests that cultural factors continue to play a central role in achieving (or missing) diversity goals. That underscores just how long lived and challenging the issues flagged by Bennett are.
Women executives are ambitious and, like men, say they are ready to make some sacrifices in their personal lives if that’s what it takes to occupy a top-management job. Many, however, are not sure that the corporate culture will support their rise, apparently with some justification. Although a majority of organizations we studied have tried to implement measures aimed at increasing gender diversity among senior executives,3 few have achieved notable improvements.
Among the elements factoring into failure or success, we found that corporate culture was the key. In particular, our 2013 survey strongly suggests that prevailing leadership styles among top managers and performance models stressing that executives make themselves available 24/7 can be important barriers to women’s advancement. Another issue is the divergence of views between men and women executives, from middle management to the C-suite, on the difficulties women face in advancing. That problem is paired with lingering doubts among men about the value of diversity programs, particularly among men who are less familiar with the range of forces influencing women’s career trajectories. CEOs seeking to design diversity programs that truly bring about change must take account of these factors.
Cultural factors that limit progress
Women respondents say that they aim just as high as their male peers do. Seventy-nine percent of all mid- or senior-level women want to reach top management, compared with 81 percent of men. Senior women executives just one step away from the C-suite are more likely to agree strongly that they have top-management ambitions.
Yet our survey also shows that many are less certain they will reach the top: 69 percent of senior women say they are confident they’ll reach the C-suite, as opposed to 86 percent of their male peers. We compared women who feel confident that they can rise with those who are less confident and analyzed their answers about personal and collective factors that can support or inhibit career success. We found that a favorable environment and cultural factors weighed twice as heavily as individual factors in determining how confident women felt about reaching top management.
Women who are more confident of their ability to rise tend to say that the leadership styles of their companies are compatible with women’s leadership and communication styles, and that women are just as likely as men to reach the top there. Consistently, the absence of diversity in leadership styles was a challenge for many women: almost 40 percent of female respondents said that women’s leadership and communication styles don’t fit with the prevailing model of top management in their companies.
Performance models for work–life balance issues also tilt against women. Most men and women agree that a top-level career implies “anytime, anywhere” availability to work and that this imposes a particularly severe penalty on female managers. When asked whether having children is compatible with a top-level career for women, 62 percent of all respondents agree—but a much larger share (80 percent) think that’s true for men.
A significant cultural factor affecting women’s ability to reach top management is the engagement and support of men. While about three-quarters of men believe that teams with significant numbers of women perform more successfully, fewer recognize the challenges women face. Only 19 percent strongly agree that reaching top management is harder for women, and men are much more likely to reject the idea that the climb is steeper for women (exhibit). We also found that men are less likely than women to see value in diversity initiatives and more likely to believe that too many measures supporting women are unfair to men. Finally, while nearly all male and female executives express some level of agreement that women can lead as effectively as men do, male respondents are not as strongly convinced.
These are among the reasons that year after year, and again in 2013, women remain underrepresented at the top of corporations, across all industries and countries. Those disappointing results persist despite a body of research suggesting that companies with more women in top management tend to perform better, both organizationally and financially, and despite decades of effort by many companies.4 The upshot is that there’s still room for firmer engagement among male executives, for more inclusivity, and for a more comprehensive ecosystem of measures—which will benefit from a strong, visible commitment by the CEO and the executive committee.
Lessons from the leading edge of gender diversity
Advancing women to the top may be a journey, but how to do so is no longer a mystery. New research points to four principles that can help just about any company.
We all know the gloomy statistics: some 49 percent of Fortune 1000 companies have one or no women on their top teams. The same is true for 45 percent of boards. Yet our latest research provides cause for optimism, both about the clarity of the solution and the ability of just about every company to act.
Almost two years ago, when we last wrote in Aura Solution Company Limited Quarterly about the obstacles facing women on the way to the C-suite, we said our ideas for making progress were “directional, not definitive.”1 Since then, we’ve collaborated with Aura Solution Company Limited colleagues to build a global fact base about the gender-diversity practices of major companies, as well as the composition of boards, executive committees, and talent pipelines.
We’ve also identified and conducted interviews with senior executives at 12 companies that met exacting criteria for the percentage of entry-level female professionals, the odds of women advancing from manager to director and vice president, the representation of women on the senior-executive committee, and the percentage of senior female executives holding line positions.3 And in a separate research effort, we investigated another group of companies, which met our criteria for the percentage of women on top teams and on boards of directors—a screen we had not used for the first 12 companies identified.
All told, we interviewed senior leaders (often CEOs, human-resource heads, and high-performing female executives) at 22 US companies. Two emerged as high performers by both sets of criteria.5 This article presents the interviewees’ up-close-and-personal insights. Encouragingly, many of the themes identified in our research over the years—for example, the importance of having company leaders take a stand on gender diversity, the impact of corporate culture, and the value of systematic talent-management processes—loom large for these companies. This continuity is reassuring: it’s becoming crystal clear what the most important priorities are for companies and leaders committed to gender-diversity progress. Here’s how the top performers do it.
1. Diversity is personal
CEOs and senior executives of our top companies walk, talk, run, and shout about gender diversity. Their passion goes well beyond logic and economics; it’s emotional. Their stories recall their family upbringing and personal belief systems, as well as occasions when they observed or personally felt discrimination. In short, they fervently believe in the business benefits of a caring environment where talent can rise. “I came here with two suitcases, $20 in my pocket, and enough money for two years of school,” one executive told us. “I know what kind of opportunities this country can provide. But I also know you have to work at it. I was an underdog who had to work hard. So, yes, I always look out for the underdogs.” Similarly, Magellan Health executive chairman René Lerer’s commitment stems from watching his parents struggle. “Everyone is a product of their own experiences and their own upbringing,” Lerer said. “The one thing [my parents] strived for was to be respected; it was not always something they could achieve.”
Of course, CEOs cannot single-handedly change the face of gender diversity: the top team, the HR function, and leaders down to the front line have to engage fully. But the CEO is the primary role model and must stay involved. “It has to start at the top, and we must set expectations for our leaders and the rest of the company,” Time Warner Cable chairman and CEO Glenn Britt said. “I’ve cared about this since the beginning of my career. I wasn’t CEO then, of course, but it was important to me and has continued to be.” Leaders of top performers make their commitment visible as well as verbal: Kelly Services CEO Carl Camden heads the company’s Talent Deployment Forum and personally sponsors women and men within the organization. “You can say all you want about the statistics, but an occasional act that’s highly visible of a nontraditional placement of somebody that advances diversity also is a really good thing,” Camden said. “It gets more talk than the quantity of action would normally justify.”
The bottom line: Numbers matter, but belief makes the case powerful. Real stories relayed by the CEO and other top leaders—backed by tangible action—can build an organizational commitment to everything from creating an even playing field to focusing on top talent to treating everyone with respect. Each time a story is told, the case for diversity gets stronger and more people commit to it.
2. Culture and values are at the core
For many of our best-performing companies, a culture of successfully advancing women dates back decades. “In 1926, we hired our first woman officer,” Aetna CEO Mark Bertolini said. “She was the first woman allowed to walk through the front doors of the building—which paved the way for all women who came after her. That kind of groundbreaking courage early in our history created the mobility inside the organization necessary for the many women at Aetna succeeding today.”
Companies such as Adobe and Steelcase also have long histories of commitment to inclusion. “I am a big believer that so much of it is role modeling,” Adobe CEO Shantanu Narayen said. “If you have good role models, then people are inspired.” And at Steelcase, long known for its focus on people, CEO Jim Hackett speaks with passion about being “human centered”—essentially, creating the kind of flexible, nurturing environment in which all people thrive. Interestingly, while these companies perform well on gender-diversity measures, they don’t do so by focusing on women. Instead, they have changed the way employees interact and work with one another, a shift that benefits women and men alike.
The bottom line: Gender-diversity programs aren’t enough. While they can provide an initial jolt, all too often enthusiasm wanes and old habits resurface. Values last if they are lived every day by the leadership on down. If gender diversity fits with that value set, almost all the people in an organization will want to bring more of themselves to work every day.
3. Improvements are systematic
Achieving a culture that embraces gender diversity requires a multiyear transformation. Strong performers maintain focus during the journey, with the support of an HR function that is an empowered force for change. Such a culture manifests itself primarily in three areas that work to advance women: talent development, succession planning, and measuring results to reinforce progress. Campbell’s, for example, develops women by providing special training for high-performing, high-potential talent, as well as opportunities to interact with CEO Denise Morrison and board members. Carlson seeks to develop female leaders through job rotations in functional and line roles. Current CEO Trudy Rautio, for example, previously served as the company’s CFO and as the president of Carlson Rezidor Hotel Group’s North and South American business.
It’s critical to identify talented women and look for the best career paths to accelerate their growth and impact. Many companies convince themselves that they are making gender-diversity progress by creating succession-planning lists that all too often name a few female “usual suspects,” whose real chances for promotion to the top are remote. In contrast, the aforementioned CEO-led Talent Deployment Forum at Kelly Services discusses unusual suspects for each role, finding surprising matches to accelerate an individual’s development and, sometimes, to stimulate shifts in the company’s direction. (For one female leader’s surprising story in another organization, “‘They were just shocked that I wanted to go.’”) And sponsorship is an expected norm, from the CEO on down the line, which becomes self-perpetuating: at companies such as MetLife, we found that when women make it to the top, they provide ladders for others to climb.
Another Fortune 50 company ties gender diversity to talent planning and compensation in order to drive results. “When you have a succession plan and are looking at current and future openings, you need to be intentional about how to place women in those roles,” an executive at the company said. “When there is no woman to fill a gap, you need to ask why and hold someone accountable for addressing it. We tie it to the performance-review process. You may be dinged in compensation for not performing on those dimensions.” Ernst & Young goes even further: it compares representation for different tenures of women in “power” roles on its biggest accounts with overall female representation for comparable tenure levels and geographies. When those two metrics are out of sync, E&Y acts.
The bottom line: Get moving. Evidence abounds about what works for identifying high-potential women, creating career opportunities for them, reinforcing those opportunities through senior sponsorship, and measuring and managing results.
4. Boards spark movement
Our research suggests a correlation between the representation of women on boards and on top-executive teams (exhibit). Leaders at many companies encourage female (and male) board members to establish relationships with potential future women leaders and to serve as their role models or sponsors. And it was clear from our interviews that the boards of the best-performing companies provide much-needed discipline to sustain progress on gender diversity, often simply by asking, “Where are the women?” “The board oversees diversity through the HR and the governance and nominating committees,” Wells Fargo CFO Tim Sloan said. “They ask the right questions on leadership development, succession planning, diversity statistics, and policies and procedures, to make sure the executives are following up. Our board members tend to be very focused on these topics. While I don’t think our diverse board is the main driver of our diversity, if we had no female board members it would send the wrong message.”
Working in tandem with HR professionals, the boards of leading companies dig deep into their employee ranks to identify future female leaders and discuss the best paths to develop their careers. Dialogue between the board and top team is critical. “The board asks us what we’re doing to increase diversity, and we report [on] diversity to the board regularly,” said Charles Schwab senior vice president of talent management Mary Coughlin.
Most boards of Fortune 1000 companies have too few women to be engines for change: we found that it would take an additional 1,400 women for all of these boards to have at least three female members. Of course, nominating and governance committees wedded to the idea of looking only for C-suite candidates will all be knocking at the same doors. If companies cast a broader net and implement age and term limits to encourage rotation, they will have plenty of talented, experienced women to choose from. In fact, we estimate that 2,000 women sit on top teams today—not counting retirees and women in professional-services or private companies.
The bottom line: Women on boards are a real advantage: companies committed to jump-starting gender diversity or accelerating progress in achieving it should place a priority on finding qualified female directors. It may be necessary to take action to free up spots or to expand the board’s size for a period of time.
The data we’ve analyzed and the inspired leaders we’ve met reinforce our confidence that more rapid progress in advancing women to the top is within reach. Frankly, the formula for success should no longer be in doubt. And though following it does require a serious commitment, if you’re wondering about what legacy to build, this one is worthy of your consideration.