Shifting the Needle - 30% Club

SHIFTING THE NEEDLE Increasing the number of Women in UK Partnerships

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For the reader

▪

The results in this document are aggregated for Law firms and for Accounting and Consulting firms and therefore reflect averages. Individual firms might score higher or lower than these averages. Each firm will have its own individual results

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Percentages showing the opinion of employees are deduced from the results of the Talent Survey held as a part of this project, and represent the opinion of about 700 respondents from all 17 participating firms

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Recommendations in the document are meant to serve as a menu of potential ideas for firms to explore, they are in no way binding or mandatory and should be adjusted to the specific challenges each firm faces

The approach ▪

The goal of the 30% Club Initiative for Professional Services Firms is to increase the number of women at partner level in the UK

▪

10 Law Firms and 7 Accounting/Consulting Firms participated in a 10 week project, which was facilitated by McKinsey & Company

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Data has been collected in three different ways B

A Interviews: with HR/Diversity heads and partners

C Quantitative data: on pipeline and talent processes (e.g. promotion rates)

Online talent survey: ~700 responses on what talent values in PSFs

Qualitative assessment 2. Commitment to gender diversity

Quantitative assessment

Qualitative assessment

You r ratin g 1 1

Place on the strateg ic agend a

2

Management commitment to gen der diversity

2 3 4 3. Women development programs

Not on strategic agenda

Women metrics

N/A

Qualitative assessment

On strategic A top-10 priority A top-3 priority on Your rating agenda but not on strategic strategic agenda in top 10 1 agenda 2 3 3. Women development

4 programs

5

1

4

Women representation

2008

2009

…

…

…

2010

Women metrics

• Share of women in total headcount (%)

Women re presentation

N/A

– Overall 5

2007

Conversion rate (p erce nt ag e of a popu lation promo ted

– N-3 to CEO in leadership positions … le ve l … … during the year to the next sig nificant up) – N-2 to CEO in leadership positions … of men …promoted … • Sha re of wo men p ro moted / sh are

4 Tailo red mentoring programs with in tern al mentors • Mentoring program

3

2007

Quantitative assessment

N/A

Not in place Lim ited Suffi cient Suffici ent scope Comprehensive Your rating geographi cal or scope; limited and scope; intense 1 3 4 5 Visibly committed Visibly committed committed 2 functional Visibly communication; communication; and effective but no specific wi th actions to limited with acti ons to scope; low women average women communication; Not in place Lim ited Sufficient Sufficient scope Comprehensive acti on to foster foster gender communication; foster gender participation participation high wom en geographical or scope; limited and scope; intense gender diversi ty diversi ty,l ow but women no diversity and participation functional communication communication; and effective communication of communication of participation scope; limi ted and low wom en average women communication; results results communication; parti cipation participati on high women low women participation partici pation • Group CEO 1 Networking For men and Specific to Specific to Does not exist (further defined wom en og rams women present and events/pr as N l evel ) future women dedicated to leaders • Group CEO wo men N-1 level • Personalized Exists women network Does Exists not exist • Internal Does not exist identificati on of needs management • Internal women network Exists Does not exist for potenti al future team specifically for present women leaders and future leaders • Match between m entors Informal Forums to Formal • Group CEO and m entorees facilitate mentorassi gning a • M ulti-company netExists Does not of exist N-2 level m entoree m entor to each working initi ative for management m eeting m entoree present and future wom en team • Mentor for potenti al Yes No 2 Wo men leadership future women leaders is Clear No gender Quantitative Quantitative Quantitative skill buildin g CEO l evel N-2 or above quantitative diversi ty targets targets for targets for targets for prog rams • Cross-company wom en Exists Does not exist targ ets for for leadership leadership leadership leadership Personali zed Exists Does not exist women positions m entoring positions but no • positions, action positions, action i dentification of needs toon plan representation 5 Prog ram acti pl an, but no plan, and for potential future companywide increase share o f in leadership com panywide women leaders of communication of w omen in the high positions communication p oten tial pool • results Com prehensive training Exists Does not exist results program dedicated to • Age and tenure criteria Exists Does not exist present and future to enter the highwomen leaders potenti al pool Con sisten cy Company culture Com pany culture• Company culture • Measure to neutralize Exists culture Does not exist Not applicable F inancing part of Company Exists Does not exist of compan y creates strong does not actively com prises training an actively fosters the impact of maternity executive and leave on foster the criteria culture with bi as for male gender implicit gender diversi ty further education for • Target share of women Exists Does not exist gender leadership diversity preference for present and future in the high-potential diversity gender womendiversity leaders pool objective • Q uota of wom en i n the 3 Wo Exists men coaching Does not exist high-potenti al pool sessions with • Managers responsible extern Exists al co aches Does not exist for detecting of women and m en pool entrants • Personali zed Exists Does not exist 6 i dentification of needs • Inclusion of an HR Exists Does not exist for potential future contact in final decision women leaders on pool entrants 9 • F inancing for coaching Exists Does not exist sessions with an external coach 8

Not committed to gender diversity

– To N-3 level i n l eadership positions – N-1 to CEO in leadership positions … – To N-2 level i n l eadership positions …

– CEO

– To N-1 level i n l eadership positions

– Board of Directors

…

6

2

Recruiting

…

…

…

…

…

…

… …

…

…

…

…

…

program”

… …(def ined …as N-3… senior management to the CEO o r above po sitions)

– Overall … … … 7 Gender differe nces: participation in flex ible programs – N-3 to the CEO and above in leadership positions … … …

• Share of women who turned •down a of recruiting offer Sha re wo men a nd me n

… … part using… flex-ti me p rograms: vs. share of men (% of offers made) time, reduced work week, matern ity leaves, etc.

W / M

W / M

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

• N-2 and N-3 to the CEO in leadership positions

…

…

…

…

• N-1 to the CEO in leadership positions

…

…

…

…

Gender differe nces: geographic mobilit y

•

… / … … / …

… / … … / …

… / … … / …

… / … … / …

… …

– Women vs. men i n senior management (def ined as N-3 … … … … to the CEO o r above po sitions) 8

20 10

W / M

… / …

… / … … / …

…

– Overa ll Gender difference: salary (average FTE salary for women divided by the average for men) – Women vs. men i n a “hi gh -potenti al program”

• Overall

4

2009

W / M

… / …

… …

…

• Share of women new hires (% – of Women total new vs.hires) men i n

3

20 08

… …

Gender differe nces: job sa tisfaction (answering ‘sat isfied’ to ‘very sat isfied in i nterna l surveys)

• Share of women applicants (% of total applicants) … – Women vs. men overal l • Share of offers to women (% of– total offers) … Women vs. men i n a “hi gh -potenti al

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

… / …

Sha re of wo men a nd me n in mobilit y pro grams (%)

Share of women in high-potential programs (%)

– Women vs. men overal l

• Share of women in high-potential pool – Women

… / …

… al program” … vs. men i n “h igh-po tenti

…

…

• Share of women in mentoring programs – Women

… …(def ined …as N-3… vs. men i n senior management to the CEO o r above po sitions)

• Share of women in succession-planning pools for senior

…

…

…

… / … … / …

… / … … / … … / …

… / … … / … … / …

… / … … / … … / …

…

management (for N-3 or above 9 Attritio positions) n rates (%) – For wo men vs. men in “high-potential p rogram”

… / …

… / …

… / …

… / …

3 men i n senior management (def ined as N-3 – Women vs. to the CEO o r above po sitions)

… / …

… / …

… / …

… / …

4

▪

We collaborated with all participants to build supporting facts, identify main barriers and devise recommendations

3

While diversity is an important topic, only one in six partners is a woman…

90%

Diversity in partnership is important

15%

17%

Law Firms

Accounting/ Consulting Firms

SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

4

... and not everybody is convinced it makes a difference

90% 70% 55%

Diversity in partnership is important

More female partners would be good

Respondents to Talent Survey who (completely) agree SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

Diverse partnership improves performance 5

The world is changing

Digitisation

Recession More flexible, innovative client service models

Globalisation

Evolving talent needs Increasing competition

Commoditisation Ageing population


6

Talent needs are evolving

39% 50%

50%

do not see themselves staying with the firm for more than 2–3 years

do not see their superiors as inspiring role models

do not believe the evaluation system assesses them at their true merit

Respondents to Talent Survey SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

…of men! 7

Issue is too big to ignore

20,000

…Female professionals in your firms, representing 43% of the total

2,300

…Women hired by you last year, 55% of new hires for Law Firms, 41% for Accounting and Consulting Firms


31,000

…Female undergraduates earning a First Class degree, 55% of the total

8

Women contribute to better performance Average EBIT margin, 2007–09

17% +56% 11%

No female executives SOURCE: McKinsey Women Matter research

Top quartile female executives 9

Our clients demand diversity from us

“Clients have asked us to respond on gender diversity indicators when evaluating our proposal – we need to meet their KPIs to get the deal”

SOURCE: 30% Club Professional Services Firms Initiative 2012

“We’ve entered pitches with an allmale team to come across a team with 50% women on the client’s side and faced an adverse reaction”

10

Our clients are making progress… Female representation on Executive Committees

11%

4%

3% 2007

SOURCE: McKinsey Women Matter research

10%

2011

2007

2011

11

…but we aren’t Female representation at participating firms Law Firms (Equity) Partner Non-Equity Partner/ Associate Partner Senior Associate/ Manager

15%

Accounting/Consulting Firms 17%

+0%

+1%

30%

39%

49%

41%

Associate/Consultant

55%

46%

Trainee/Analyst

54%

47%


12

Women leaving is not the main problem…

Women Men

Average attrition rates for men and women 2009–11 Law Firms (Equity) Partner Non-Equity Partner/ Associate Partner

7%

8%

6%

7%

17%

24%

Associate/Consultant

13% 14%

12%

Senior Associate/ Manager

Trainee/Analyst

Accounting/Consulting Firms

18%

21%

21%

22%

21%

22% 10% 13%


24% 20% 21%

13

…but promotion is Law Firms

Accounting/Consulting Firms

10x

3x

Same cohort at partner level Cohort at analyst/ trainee level


14

The future Should we want to reach 20% by 2020, then 3 out of 10 new partner elects need to be women… …and to reach 30% by 2020, 6 out of 10 new partner elects need to be women SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

15

We do think diversity is important

Diversity is a top 10 strategic priority for 80% of firms

70% of Managing Partners are highly committed


16

And we are doing a lot Position on the Firm’ s strategic agenda Commitment to gender diversity

Actions to increase firm-wide awareness about gender diversity Managing Partner commitment to gender diversity Quantitative targets for women in leadership positions Gender representation at different levels in the organisation

Gender diversity indicators

Attrition rates by gender Job satisfaction by gender Gender representation in promotion rounds Control in appraisals over gender differences Control in recruiting over gender differences

Talent management processes

Actions to improve share of female applications and offer acceptances Adaptation of the evaluation system to flexibility choice Process to retain top performers who want to leave Networking events/programmes dedicated to women

Women’s development programmes

Women coaching sessions with external coaches Women leadership skill building programmes Tailored mentoring programmes with internal mentors Concierge services at the office

Infrastructure

Mobility administrative support In-house or externalised childcare facilities


17

To get to the next level, we need to face the difficult truths of the system 75% of you say you monitor gender differences in appraisal processes

Over 75% of you have women’s networks in place

You say: “We are doing it all”

But

We have seen the imbalance in promotion rates

But

Only 55% of your women feel wellconnected to people at senior levels

But

Less than half of your people feel real progress has been made over the last 2–3 years


18

We see 3 main challenges 1. Headline commitment has been given to gender diversity as a priority but is perceived as lacking impact 2. Imbalances in evaluation systems and promotion processes that inhibit progress in making more women partners have not been addressed 3. Women express their ambitions less explicitly and have developed detrimental adaptive responses to the discouraging environment they are in


19

Challenge 1

Commitment does not cascade down 70%

41%

38% 25%

Managing partner

Equity partners

Non-equity partners/ Associate partners

Senior managers/ Senior associates

Percentage very high or high commitment to diversity SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

20

Women

Challenge 1

Weak commitment is echoed by employees

Our partnership is visibly committed to gender diversity My manager is visibly committed to gender diversity

Men

58% 72% 47% 56%


21

Women

Challenge 2

Men

Women’s promotion rates are lower at all levels Average promotion rates for men and women 2009–11 Law Firms (Equity) Partner

Accounting/Consulting Firms 6%

6%

8%

14%

8%

11%

21%

23%

2% Non-Equity Partner/ Associate Partner

7%

Senior Associate/ Manager

9%

12%

Associate/ Consultant

34%

35%

9%

14%

Trainee/Analyst SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

22

Women

Challenge 2

Employees see improvement potential in evaluation systems

Men

The evaluation system… … is fair

35%

… allows equal opportunities for men and women

38%

… is adapted to flexibility choices … is adapted to leadership styles

21% 26%

45% 74% 31% 35%


23

Challenge 3

Women are less explicit in expressing their ambition I have the ambition to become partner

Men Women

I have the Men desire to advance to Women the next level Respondents to Talent Survey who (completely) agree SOURCE: 30% Club Professional Services Firms Initiative 2012, McKinsey analysis

24

Challenge 3

Women think differently about partnership Men

Women

Work must be No. 1 priority

59%

71%

I am willing to do ‘what it takes’

66%

31%

Less inspiring role models at the top

I see inspiring role models I can relate to

65%

40%

Less perceived support on the way to the top

My partners/project managers give me enough visibility on the path to firm leadership

47%

33%

Different perception of required commitment to make it to partner

Less willing to do what (they believe) is needed


25

Five ideas to explore

1

Create real commitment

2

Think talent, not diversity

3

Fix the system, not the women

4

Update working practices

5

Join forces


26

5 ideas –13 recommendations

1 2

Create real commitment through a fully supportive firm culture

Think talent, not diversity

▪ ▪ ▪

Strengthen all partners’ commitment to act, as a partnership and in their daily activities Set a clear ambition on a number of diversity indicators and assign accountability Create a supportive culture in the whole organisation

▪ ▪

Train managers and partners on how to effectively coach and develop male and female talent Build a sponsorship structure around senior women to support them on their way to partnership Continue women’s development programmes but tailor them to identified challenges and leverage best practices

▪ ▪

3 4 5

Fix the system, not the women

Update working practices to unlock the full potential of talent Collectively work together to achieve structural change

▪

Remove imbalance in performance evaluation criteria, promotion process and leadership appointments Create flexible pathways to partnership for top talent, which allow for changes in career path direction and pace over time Review work allocation model to ensure fair distribution of career opportunities

▪

Develop innovative, more flexible client service models

▪ ▪ ▪

Reconvene participating firms to review progress Share approach and findings to inspire action Involve clients on an ongoing basis

▪


27

1 Detailed recommendations

Create real commitment through a fully supportive firm culture (1/2) Strengthen all partners’ commitment to act, as a partnership and in their daily activities

▪ Share findings of this effort with senior leaders within each Practice

▪ ▪ ▪

Set a clear ambition on a number of diversity indicators, and assign accountability

Group/Business Unit, including outcomes of this diagnostic and the benefits of a more diverse partnership (most powerful is to use your own firm’s individual results). Involve these leaders in defining key challenges, priorities for the coming months and approaches to address these. Be careful about positioning: Often ‘Talent’ works better than ‘Diversity’ Jointly devise a list of collective and individual actions that partners can take to support and promote women Appoint the heads of Practice Groups/Business Units as ambassadors to broaden support for priorities and measures to make more women successful Have male and female partners openly and honestly share their road to partnership and their experiences of being a partner at events and in their mentoring relationships. Highlight those who have gone through inflexion points – e.g. a break to care for family, a secondment

▪ Set ambitious but realistic goals on a number of key indicators. Involve senior ▪ ▪

leaders in defining aspiration levels for important indicators such as hiring, promotion, and partner election candidates Assign responsibility for these aspirations to individual leaders and formally review responsibilities in performance dialogues Track progress rigorously and communicate results broadly; discuss results within partnership and follow up with actions if progress is slow


28


Create real commitment through a fully supportive firm culture (2/2) Create a supportive culture in the whole organisation

▪ Write/sharpen the compelling story for your own firm behind the quest for a ▪ ▪ ▪

more diverse partnership (including the outcomes of this diagnostic along with the reasons for wanting and benefits of having more women at senior levels) Provide support to senior leaders to personalise and communicate this story in a convincing way within their Practice Groups/Business Units Communicate the compelling story for your firm throughout the organisation (e.g. through town halls, intranet, and other forums) Celebrate successes internally and keep employees regularly informed of progress


29


Think talent, not diversity Train managers and partners on how to effectively coach and develop male and female talent

▪ Introduce modules into existing leadership training programmes on how to

Build a sponsorship structure around senior women to support them on their way to partnership

▪ Build enabling network of sponsors for women on partnership track to ensure a

Continue women’s development programmes but tailor them to identified challenges and leverage best practices

▪ Start/continue women-specific training to enhance the skills required at various

▪ ▪

provide effective coaching to talent, especially women, including elements such as awareness of gender differences, unconscious bias training, and advice for leading diverse teams Start evaluation meetings with a reminder of assessment best practices Put together a guide with relevant information, concrete suggestions and practical advice on how to coach talent and disseminate it among all managers

strong support base, optimal professional opportunities, providing coaching and advocating effectively for the individuals and setting clear priorities for the journey to partnership. Engage mentors, direct managers, PD/HR, and senior female partners in the sponsorship structure.

▪

levels, using the outcomes of the diagnostic to address the specific needs of women at junior levels (where possible tailored to individual firm results). Relevant training sessions could include communication, personal presence, networking, and building confidence Start/continue other development programmes relevant to women such as coaching, mentoring, and women’s networks, drawing on the best practices of other firms


30


Fix the system, not the women (1/2) Remove imbalance in performance evaluation criteria, promotion process and leadership appointments

▪ Review evaluation criteria for performance reviews, promotion processes and

▪ ▪ ▪ ▪

Create flexible pathways to partnership for top talent which allow for changes in career path direction and pace over time

leadership appointments: balance output- and input-based criteria; include competency and skill based measures such as client, people and team leadership; use 360°feedback Apply the same criteria across the organisation (in all Practice Groups and Business Units) to ensure consistency of evaluation across divisions and levels Communicate details of the evaluation processes openly and frequently in the organisation Ensure objectivity and limit imbalance by training evaluators and having a third party sitting in on decision meetings Adapt evaluation systems for different flexibility options and inform/train evaluators of policies and procedures

▪ Introduce pathways within firms that will allow talented employees to reach

▪ ▪ ▪

partnership by more flexible, non-conventional routes – e.g. moving temporarily into a knowledge or functional role. Position these programmes as high potential opportunities and make them available to high flyers to avoid their becoming a ‘dead end’ Adapt evaluation systems to fairly assess those on non-conventional paths Put a support system in place to ensure a successful return to the partner track Communicate these new ways to partnership broadly in the organisation and highlight people on these tracks as ambassadors


31


Fix the system, not the women (2/2) Review work allocation model to ensure fair distribution of career opportunities

▪ Ensure women have access to the right career development opportunities by ▪

establishing a systematic work allocation process, based on objective criteria such as competencies or experience Create opportunities for women to receive necessary exposure to and visibility in the eyes of senior management


32


Update working practices to unlock the full potential of talent Develop innovative, more flexible client service models

▪ Engage in open dialogue with clients to discuss innovative ways of working ▪

▪ ▪

together in terms of service models, priorities, timelines and end deliverables Critically reassess “the way we work” within firms in order to create a more sustainable work/home-life balance and improve people’s long term perspective on their career – e.g. by setting clear team norms at the beginning of projects, or discussing rotational availability of team members Reward high performing teams, share their best practices and celebrate successes Consider variability and customisation in structuring fee contracts to facilitate implementation of new ways of working


33


Collectively work together to achieve structural change Convene participating firms to review progress

▪ Convene participating firms in 2014 to facilitate a review of actions and progress

Share approach and finding to inspire action

▪ Engage other interested professional services firms to share approach and

▪

▪ ▪

Involve clients on an ongoing basis

made since 2012 Reconvene participating firms on a quarterly basis to share interim results and learn from each other on what works and doesn’t work

findings and encourage broader application of the recommendations Use project as an inspiring case example for other sectors on how a joint approach by peers can help to make a breakthrough on gender balance Share the approach and key findings with your offices in other countries to inspire them to launch a similar effort

▪ Involve clients to share findings and consider opportunities on an ongoing basis for collaboration with clients and evolution of the advisory relationship to help implement the recommendations. Potential topics of discussion could include – Developing more innovative, flexible client service models – Learn from each other on effective approaches to improve gender balance


34

If you really want to shift the needle Remember this is a long-term journey, not an action list, which requires continuous effort in the coming years… …Only collective action can make a difference: we – and our clients – must work together to make it happen… … Treat it as an opportunity to make your firms future proof

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