McKinsey reports say companies with more women and ethnic minorities in their workforce outperform their less diverse peers.
  • Kevin Dolan, a partner at McKinsey and the co-author of the report “Diversity Wins,” says companies that have greater gender and ethnic diversity outperform their less diverse peers. 
  • U.S. companies have boosted the number of women in the C-suite executive level from 17% in 2015 to 21% at present time.
  • More work needs to be done to fight institutional bias to retain and promote diverse candidates, says the report.

Kevin Dolan was born in the U.S. but grew up partly in Wales, where he felt like an outsider at many gatherings. It proved to be a valuable experience for his work as a senior partner at McKinsey & Company, shedding light on how companies can attract, retain and promote diverse talent.

“For about three years, when I was 12 to 15, I was the only American in this small village in Wales,” Dolan, originally from Midland, Michigan, told Karma. “It was the first experience I ever had where I was different.”

Dolan, 43, has worked at McKinsey for nearly two decades, advising companies on achieving peak performance goals in a range of areas, including their digital transformations. This year, he co-authored the global management consulting firm’s report “Diversity Wins,” the third installment in a series that shows companies that have greater gender and ethnic diversity outperform their less diverse peers.

Based on research from 1,000 large companies across 15 countries, the report shows that in 2019, “companies in the top quartile of gender diversity on executive teams were 25% more likely to experience above-average profitability than peer companies in the fourth quartile.”

A similar trend emerged for top-quartile companies with ethnic diversity that were 36% more profitable than their peers in the fourth quartile.

That success is one of the building blocks of any argument from impact investors — that diversity, along with other environmental, social and governance factors, does not hurt a company’s bottom line. It actually helps it.

The McKinsey report shows a correlation between the presence of a diverse workforce and financial gains but does not conclusively prove that diversity is the main factor driving financial success, since Dolan says other factors may also be behind the gains. Companies with a commercial mission, for example, may benefit from having diverse staff that can connect to a varied customer base, he said.

Progress on hiring, promoting women

The report lays out tools to help firms such as creating mentor and sponsor programs, where senior people endorse and help promote women and minorities.

“You need sponsors to actually go out on a limb and share their political capital to create opportunities and provide air cover [for diverse candidates],”  Dolan said.

In a separate McKinsey report about women in the workforce, Dolan says companies have improved in the hiring and promotion of women. The report surveyed several thousand employees and over 300 companies with more than 13 million workers shared their talent pipeline data. The report also covered LGBTQ workers and people with disabilities.

Since 2015, U.S. companies have boosted the number of women in the C-suite executive level from 17% to 21% at present time. Still, women and especially women of color are underrepresented at every level and the number is unlikely to advance unless companies solve the problem where women are not getting their first promotion to become managers, says the report.

“For every 100 men promoted and hired to manager, only 72 women are promoted and hired,” according to the report. “This broken rung results in more women getting stuck at the entry level and fewer women becoming managers.”

Train non-minorities to be allies 

Many companies have enabled underrepresented workers to form support groups, such as African American or Asian American workers groups. Although such forums are effective, McKinsey’s research shows that companies that succeed at creating a diverse workforce are doing so by training their non-minority employees on how to be allies.

“More companies are starting to build ally programs, which is another word for diversity and inclusion allies,” Dolan said. “They give white men tools to see bias, to call it out, to use their privilege to actually drive some of that change and coach others.”

The report highlights insurance giant MetLife, which launched a lengthy career advancement program for women that lasted for more than 14 months. The company identified entry-level talent and trained them for higher positions. It also trained its top brass to be mindful of biases. Now, more than half of the company’s managers and entry-level workers are women.

Over the years, Dolan has used his experience in Wales to understand how people have preconceived notions of how co-workers are supposed to behave as a result of their gender, race or sexual orientation. The knowledge has helped him support minority colleagues at McKinsey.

Dolan was often told by co-workers that he was “too nice, you’re not bold enough, you’re not edgy enough.” In the beginning, he thought to change. But these days, Dolan is comfortable with himself regardless of what biases people may have about how white males are supposed to behave.

“I came to realize that there are these cultural norms that people seem to want to fit people into,” Dolan told Karma. “I still get the feedback. But I’m like, ‘Well, at some point, this is me.’ It’s an immutable characteristic. It’s actually the meaning of my name. It’s the way I was raised. And I don’t think it’s a bad thing.”