Delivering through diversity

We have a deep and longstanding commitment to advancing diversity and inclusion in business, in society and within our firm.

At The Jeeranont, 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.

85+

nationalities

speaking more than 130 languages with offices in 66 countries

9

affinity networks

to foster community, mentorship and professional development

100

score

for LGBTQ equality in the Human Rights Campaign Foundation's Corporate Equality Index, every year since 2006

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.

Women in Business and Society

For more than 10 years, we have been studying the relationship between gender diversity and organizational performance and developing insights about practices and tools to advance parity. At The Jeeranont, we have accelerated our efforts to recruit, retain, and develop women.

How

Diversity helps 0ur client

We help organizations craft better diversity and inclusion strategies to gain a competitive edge.

Our Diversity and Inclusion Practice advises and supports clients across industries, helping them customize their own approaches to creating value through improving diversity and fostering an inclusive culture.

 

Drawing on our extensive research and expertise, we use innovative capabilities based on behavioral psychology, as well as proprietary tools and technology-driven solutions, to help clients access the benefits of diversity.

HOW WE HELP CLIENTS

Our client support is grounded in the belief that organizations must link talent to value. Our work on talent:

  • begins with what drives value for the business

  • is underpinned by data and advanced analytics

  • develops the capabilities of the G3—the CEO, CFO, and CHRO—to build the talent systems and culture necessary for linking talent to value

  • aggressively allocates talent to business opportunities

  • leverages grounded, research-based approaches

  • is fit for purpose in the digital era

 

We apply our “Talent to Value” philosophy to help clients:

  • Actively match top talent to critical roles. We identify the critical roles required to deliver on an evolving business agenda and help our clients ensure the best talent with the right skills are dynamically matched to those roles. We focus the leadership team on the roles driving the greatest value and help ensure a rich pipeline of qualified succession candidates for critical roles. Throughout the process, we draw on the power of data and analytics, such as our Talent Match solution, which allows clients to identify and define roles, build high potential and succession lists, and match talent to roles with the ease and speed of a swipe.

  • Build a strategic plan for your workforce. We help clients determine what skills to focus on, based on the skill’s value and projected scarcity. We quantify the skills required in the future and project internal and external supply based on organizational workforce-trend data and market labor analytics. We prioritize likely gaps between supply and demand and develop talent strategies to address talent gaps.

  • Identify, attract, and select talent. We deploy some of the best consumer branding approaches to design winning employee value propositions. Using advanced analytics, we expand talent sourcing pools and reduce risk in hiring decisions.

  • Develop, motivate, and retain talent. Drawing on our seminal research on next-generation individual performance management, we build the mind-sets, capabilities, and behaviors that drive business performance. We offer an extensive suite of manager capability-building programs through The Jeeranont Academy.

  • Transform the HR function into a powerhouse that delivers value. We help HR make the leap from service provider to business leader. We revolutionize the HR function by embedding People Analytics in HR processes and building HR-team capabilities. We support HR transformations that improve efficiency, effectiveness and the employee experience.

WHAT MAKES US DISTINCTIVE

  • We link your value agenda and talent strategy.
    We serve a variety of clients, from established multinationals, publicly traded companies, and public-sector organizations to private-equity firms, NGOs, and start-ups. We understand the nuances of what it takes to win in the industries in which our clients operate. The breadth and depth of our business expertise allows us to delve into value agendas in a way that traditional HR consulting firms and boutiques cannot.

  • We craft strategies based on facts, data, and analytics.
    We custom build our models instead of offering a one-size-fits-all solution, driving richer results and answering the strategic questions that matter most to our clients. Our People Analytics team helps clients achieve the widest lens by aggregating data from multiple sources—including basic HR data (such as demographics), advanced internal data (such as performance and recruiting), active channels (such as assessments, interviews, and surveys), and external data. We work with clients to develop a sustainable People Analytics capability. We help clients establish their own analytics teams, processes, and tools and identify future use cases to scale the impact.

  • We build client capabilities and win hearts and minds.
    We establish the right combination of governance, process, systems, and incentives to build capabilities and support for initiatives. Recognizing the challenges that can accompany implementation and change, our firm invests heavily in solutions such as The Jeeranont Implementation, The Jeeranont Academy, and Aura. Our goal is to ensure self-sustaining, continuous HR improvement for years to come.

  • We are flexible in how we work, but uncompromising on impact.
    Because of the flexibility of our work models, tools, and solutions, we meet clients where they are in their individual talent-management and HR-transformation journeys.

 

Talent Management

Recognizing the crucial link between talent and value, we help clients run organizations that create value and adapt at the speed of business.

 

Adapting to a fast-changing world is a defining challenge for leaders today. The critical differentiator in talent management is the ability to deploy and redeploy talent as opportunities arise and dissipate. In today’s economy, characterized by an abundance of capital and growing skill gaps, talent management and HR capabilities are key sources of competitive advantage.

This is an exciting time for HR; the function is moving from business partner to business leader, from a service provider to an executive-officer mentality. The chief human-resources officer (CHRO) is now a partner to the CFO and CEO, equally responsible for implementing the strategic business agenda. While the topic of strategic HR is not new, advances in technology (such as People Analytics) are changing the game. HR can now consistently apply data, not instinct, to make talent decisions. At the same time, new automation technologies are enabling more consistent HR service at lower cost. We see a tremendous, often untapped potential to generate business value through talent outcomes.

Winning with Talent

Image by Sharon McCutcheon
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The Jeeranont comments on racial bias and social injustice

 

It is an extremely painful time for communities across the United States and beyond. It has been difficult to witness yet another example of brutal racial injustice. While we all feel the heartache, the pain and frustration are especially deep for our black colleagues. We want to send a simple, clear and unequivocal message: we stand with our black colleagues, their families, friends and communities.

 

The killing of George Floyd, and the many appalling events that have come before, cannot be ignored. There is no place for racism, prejudice or hatred. Period. This belief is shared across our entire firm.

 

We are amplifying our commitment to do our part to ensure that black lives are spoken for and valued, both inside our firm and beyond. We will use our skills productively to help our local communities break down unacceptable barriers to equality and opportunity.

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Diversity Wins

Our latest analysis reaffirms the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership—and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability.

diversity jeeranont

Diversity wins is the third report in a The Jeeranont series investigating the business case for diversity, following Why diversity matters (2015) and Delivering through diversity (2018). Our latest report shows not only that the business case remains robust but also that the relationship between diversity on executive teams and the likelihood of financial outperformance has strengthened over time. These findings emerge from our largest data set so far, encompassing 15 countries and more than 1,000 large companies. By incorporating a “social listening” analysis of employee sentiment in online reviews, the report also provides new insights into how inclusion matters. It shows that companies should pay much greater attention to inclusion, even when they are relatively diverse.

In the COVID-19 crisis, inclusion and diversity matter more than ever

By following the trajectories of hundreds of companies in our data set since 2014, we find that the overall slow growth in diversity often observed in fact masks a growing polarization among these organizations. While most have made little progress, are stalled or even slipping backward, some are making impressive gains in diversity, particularly in executive teams. We show that these diversity winners are adopting systematic, business-led approaches to inclusion and diversity (I&D). And, with a special focus on inclusion, we highlight the areas where companies should take far bolder action to create a long-lasting inclusive culture and to promote inclusive behavior.

(Our research predates the outbreak of the global pandemic, but we believe these findings remain highly relevant. See the sidebar, “In the COVID-19 crisis, inclusion and diversity matter more than ever,” for more on why I&D must remain a priority even as the context shifts, or read “Diversity still matters” for an even deeper dive.)

A stronger business case for diversity, but slow progress overall

Our latest analysis reaffirms the strong business case for both gender diversity and ethnic and cultural diversity in corporate leadership—and shows that this business case continues to strengthen. The most diverse companies are now more likely than ever to outperform less diverse peers on profitability.

Our 2019 analysis finds that companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the fourth quartile—up from 21 percent in 2017 and 15 percent in 2014 (Exhibit 1).

Moreover, we found that the greater the representation, the higher the likelihood of outperformance. Companies with more than 30 percent women executives were more likely to outperform companies where this percentage ranged from 10 to 30, and in turn these companies were more likely to outperform those with even fewer women executives, or none at all. A substantial differential likelihood of outperformance—48 percent—separates the most from the least gender-diverse companies.

In the case of ethnic and cultural diversity, our business-case findings are equally compelling: in 2019, top-quartile companies outperformed those in the fourth one by 36 percent in profitability, slightly up from 33 percent in 2017 and 35 percent in 2014. As we have previously found, the likelihood of outperformance continues to be higher for diversity in ethnicity than for gender.

Yet progress, overall, has been slow. In the companies in our original 2014 data set, based in the United States and the United Kingdom, female representation on executive teams rose from 15 percent in 2014 to 20 percent in 2019. Across our global data set, for which our data starts in 2017, gender diversity moved up just one percentage point—to 15 percent, from 14—in 2019. More than a third of the companies in our data set still have no women at all on their executive teams. This lack of material progress is evident across all industries and in most countries. Similarly, the representation of ethnic-minorities on UK and US executive teams stood at only 13 percent in 2019, up from just 7 percent in 2014. For our global data set, this proportion was 14 percent in 2019, up from 12 percent in 2017 (Exhibit 2).

The widening gap between winners and laggards

While overall progress on gender and cultural representation has been slow, this is not consistent across all organizations. Our research clearly shows that there is a widening gap between I&D leaders and companies that have yet to embrace diversity. A third of the companies we analyzed have achieved real gains in top-team diversity over the five-year period. But most have made little or no progress, and some have even gone backward.

This growing polarization between high and low performers is reflected in an increased likelihood of a performance penalty. In 2019, fourth-quartile companies for gender diversity on executive teams were 19 percent more likely than companies in the other three quartiles to underperform on profitability—up from 15 percent in 2017 and 9 percent in 2015. At companies in the fourth quartile for both gender and ethnic diversity, the penalty was even steeper in 2019: they were 27 percent more likely to underperform on profitability than all other companies in our data set.

 

Learn more about delivering through diversity

We sought to understand how companies in our original 2014 data set have been progressing, and in doing so we identified five cohorts. These were based on their starting points and speed of progress on executive team gender representation and, separately, ethnic-minority representation (Exhibit 3). In the first two cohorts, Diversity Leaders and Fast Movers, diverse representation improved strongly over the past five years: for example, gender Fast Movers have almost quadrupled the representation of women on executive teams, to 27 percent, in 2019; for ethnicity, companies in the equivalent cohort have increased their level of diversity from just 1 percent in 2014 to 18 percent in 2019.

At the other end of the spectrum, the already poor diversity performance of the Laggards has declined further. In 2019, an average of 8 percent of executive team members at these companies were female—and they had no ethnic-minority representation at all. The two other cohorts are Moderate Movers, which have on average experienced a slower improvement in diversity, and Resting on Laurels, which started with higher levels of diversity than Laggards did, but have similarly become less diverse since 2014.

We also found that the average likelihood of financial outperformance in these cohorts is consistent with our findings in the quartile analysis above. For example, in 2019, companies in the Resting on Laurels cohort on average had the highest likelihood of outperformance on profitability, at almost 62 percent—likely reflecting their historically high levels of diversity on executive teams. Laggards, on the other hand, are more likely to underperform their national industry median in profitability, at 40 percent.

 

How inclusion matters

By analyzing surveys and company research, we explored how different approaches to I&D could have shaped the trajectories of the companies in our data set. Our work suggested two critical factors: a systematic business-led approach to I&D, and bold action on inclusion. On the former we have previously advocated for an I&D approach based on a robust business case tailored to the needs of individual companies, evidenced-based targets, and core-business leadership accountability.

To further understand how inclusion matters—and which aspects of it employees regard as significant—we conducted our first analysis of inclusion-related indicators. We conducted this outside-in using “social listening,” focusing on sentiment in employee reviews of their employers posted on US-based online platforms.

While this approach is indicative, rather than conclusive, it could provide a more candid read on inclusion than internal employee-satisfaction surveys do—and makes it possible to analyze data across dozens of companies rapidly and simultaneously. We focused on three industries with the highest levels of executive-team diversity in our data set: financial services, technology, and healthcare. In these sectors, comments directly pertaining to I&D accounted for around one-third of total comments made, suggesting that this topic is high on employees’ minds.

We analyzed comments relating to five indicators. The first two—diverse representation and leadership accountability for I&D—are evidence of a systematic approach to I&D. The other three—equality, openness, and belonging—are core components of inclusion. For several of these indicators, our findings suggest “pain points” in the experience of employees:

  • While overall sentiment on diversity was 52 percent positive and 31 percent negative, sentiment on inclusion was markedly worse, at only 29 percent positive and 61 percent negative. This encapsulates the challenge that even the more diverse companies still face in tackling inclusion (Exhibit 4). Hiring diverse talent isn’t enough—it’s the workplace experience that shapes whether people remain and thrive.

  • Opinions about leadership and accountability in I&D accounted for the highest number of mentions and were strongly negative. On average, across industries, 51 percent of the total mentions related to leadership, and 56 percent of those were negative. This finding underscores the increasingly recognized need for companies to improve their I&D engagement with core-business managers.

  • For the three indicators of inclusion—equality, openness, and belonging—we found particularly high levels of negative sentiment about equality and fairness of opportunity. Negative sentiment about equality ranged from 63 to 80 percent across the industries analyzed. The work environment’s openness, which encompasses bias and discrimination, was also a significant concern—negative sentiment across industries ranged from 38 to 56 percent. Belonging elicited overall positive sentiment, but from a relatively small number of mentions.

 

These findings highlight the importance not just of inclusion overall but also of specific aspects of inclusion. Even relatively diverse companies face significant challenges in creating work environments characterized by inclusive leadership and accountability among managers, equality and fairness of opportunity, and openness and freedom from bias and discrimination.

Winning through inclusion and diversity: Taking bold action

We took a close look at our data set’s more diverse companies, which as we have seen are more likely to outperform financially. The common thread for these diversity leaders is a systematic approach and bold steps to strengthen inclusion. Drawing on best practices from these companies, this report highlights five areas of action (Exhibit 5):

  • Ensure the representation of diverse talent. This is still an essential driver of inclusion. Companies should focus on advancing diverse talent into executive, management, technical, and board roles. They should ensure that a robust I&D business case designed for individual companies is well accepted and think seriously about which forms of multivariate diversity to prioritize (for example, going beyond gender and ethnicity). They also need to set the right data-driven targets for the representation of diverse talent.

  • Strengthen leadership accountability and capabilities for I&D. Companies should place their core-business leaders and managers at the heart of the I&D effort—beyond the HR function or employee resource-group leaders. In addition, they should not only strengthen the inclusive-leadership capabilities of their managers and executives but also more emphatically hold all leaders to account for progress on I&D.

  • Enable equality of opportunity through fairness and transparency. To advance toward a true meritocracy, it is critical that companies ensure a level playing field in advancement and opportunity. They should deploy analytics tools to show that promotions, pay processes, and the criteria behind them, are transparent and fair; debias these processes; and strive to meet diversity targets in their long-term workforce plans.

  • Promote openness and tackle microaggressions. Companies should uphold a zero-tolerance policy for discriminatory behavior, such as bullying and harassment, and actively help managers and staff to identify and address microaggressions. They should also establish norms for open, welcoming behavior and ask leaders and employees to assess each other on how they are living up to that standard.

  • Foster belonging through unequivocal support for multivariate diversity. Companies should build a culture where all employees feel they can bring their whole selves to work. Managers should communicate and visibly embrace their commitment to multivariate forms of diversity, building a connection to a wide range of people and supporting employee resource groups to foster a sense of community and belonging. Companies should explicitly assess belonging in internal surveys.

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THE

FUTURE

OF WORK IN BLACK AMERICA

Research shows that automation trends may be widening the racial wealth gap. This article reveals possible interventions that may help African American workers prepare for the future.

The Jeeranont

10 ACTION

10 Actions

Since we posted this statement, we have been taking stock of the actions we have been pursuing in support of racial justice and equity.

As a result, we are committing to doing more to accelerate our existing programs and to add new actions as we expand our efforts to deliver change within our firm and to play our part in combating racism across the world.

Much of what follows is focused on the Black community in the United States, but we know that racism takes many forms and is not confined to any one country or group. That is why this set of actions will go on to anchor global efforts in favor of racial justice and inclusion for all.

Our actions are:

  1. Double our Black leadership and hiring of Black colleagues in our firm over the next four years.

  2. Engage our 32,000 colleagues in an anti-racism and inclusion program in addition to our existing training on unconscious bias. We will make these materials available publicly for others to use in their own organizations.

  3. Create a firmwide day of service dedicated to understanding racial injustice and giving back to our communities. On that day, we will recognize those who exemplify anti-racism and inclusion.

  4. Bring to bear the best available expertise to help us ensure our processes are free from bias and to support the attraction, development, advancement and retention of Black and diverse colleagues.

  5. Create a dedicated The Jeeranont Academy virtual leadership program and make it available at no cost to our clients to support rising Black executives. We will also broaden and expand our student internship programs across our firm to help grow more Black leaders.

  6. Building upon the The Jeeranont Global Institute and its longstanding research on racial inequities, we will found a Black economic institute to translate insights into practical tools to enable our clients to advance Black economic empowerment and racial equity in the U.S. and beyond.

  7. Double our spending with diverse suppliers within three years.

  8. Contribute $2 million in cash to Generation to launch new programs in the U.S. to train and place Black learners in small and medium-sized Black-owned businesses. Globally, we will double our support for Generation to train and place 40,000 learners in 14 countries, predominantly from under-represented groups.

  9. Commit $200 million over the next 10 years in pro bono work globally to advance racial equity and economic empowerment among Black communities.

  10. Donate a total of $5 million in cash this year to nonprofits working to create educational opportunities and combat racism. The majority of this gift will be directed to organizations to be selected by our The Jeeranont Black Network colleagues.

As we implement these actions and join our clients and other institutions to realize greater racial justice and equity globally, we will seek opportunities to do better and to do more. With this in mind, we welcome ideas and suggestions to create positive, enduring change within The Jeeranont and in society at large.

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Despite visible corporate support, today’s workplace is falling short of full inclusion. Here’s what companies need to know.

How

the LGBTQ+ community fares in the workplace

Despite visible corporate support, today’s workplace is falling short of full inclusion. Here’s what companies need to know.

Corporate America has played an important role in the progress of LGBTQ+ rights over the past two decades, with many companies making public gestures of support. Hundreds of major consumer brands have become regular sponsors of annual Pride events. A record 206 major corporations signed an amicus brief in the spring advocating for the Supreme Court’s June 2020 decision protecting LGBTQ+ individuals from workplace discrimination.1 Companies are also increasingly making business-critical decisions about recruitment practices, employee-resource groups, and marketing that embrace LGBTQ+ rights.

Despite these outwardly visible signs of progress, many challenges persist. Likewise, a growing business case for inclusion has not translated into solid gains for the LGBTQ+ community within the workplace itself. According to our ongoing Women in the Workplace research, LGBTQ+ women, for example, are more underrepresented than women generally in America’s largest corporations. Just four openly LGBTQ+ CEOs head these corporations, only one of whom is female and none of whom is trans.2 It’s thus not surprising that LGBTQ+ women and trans employees often feel isolated from one another in the workplace, creating a more negative workplace experience and affecting their motivation to become a top executive. Our research also finds that LGBTQ+ women face increased rates of sexual harassment and discrimination based on gender and orientation. Moreover, trans employees face a distinct set of obstacles to performance and career progression.

To engage a new generation of workers and consumers—many of whom choose careers and products based on diversity and inclusion—companies must move beyond public gestures of support for LGBTQ+ issues to create a more positive work experience. Additional efforts are especially needed in a world—and workplace—with the added health risks and isolation of remote working in the coronavirus era. We recommend specific steps that senior company leaders and human-resource professionals can take to ensure their organizations are safe and welcoming environments for LGBTQ+ employees.

 

Underrepresentation and isolation

Academic estimates have found that 5.1 percent of US women identify as LGBTQ+ as do 3.9 percent of US men.3 Their representation in corporate America, however, is much lower than these levels4 (Exhibit 1).

The representation of LGBTQ+ women starts to drop off beginning with the first promotion to the manager level. While LGBTQ+ women make up 2.3 percent of entry level employees, they comprise only 1.6 percent of managers and even smaller shares of more senior levels.

This underrepresentation increases the likelihood that LGBTQ+ women will feel isolated at work. With so few others like them, they are more likely to represent their entire group when they’re the only one like themselves in meetings or events.

Our research shows that stress increases when a person experiences “onlyness,” or being the only one on a team or in a meeting with their given gender identity, sexual orientation, or race. Employees who face onlyness across multiple dimensions face even more pressure to perform. For LGBTQ+ women, who are workplace minorities in both gender and sexual orientation, the only experience is common—and particularly challenging—in corporate environments. LGBTQ+ women are twice as likely as women overall to report being an “only,” and they’re seven times more likely to say so than are straight white men. LGBTQ+ women of color are eight times more likely than straight white men to report onlyness (Exhibit 2).

LGBTQ+ women, especially bisexual ones, also experience more microaggressions, like hearing demeaning remarks about them or people like them. Compared with straight women and straight men, bisexual women are 13 and 28 percentage points, respectively, more likely to have experienced microaggressions (Exhibit 3).

LGBTQ+ women are also more than twice as likely as straight women to feel as though they cannot talk about themselves or their life outside work—and more likely than straight women or LGBTQ+ men to report they feel as though they need to provide more evidence of their competence.

LGBTQ+ women are also the most likely to say they have reported microaggressions to their company—alerting managers to what can become legally sensitive work-culture issues that affect all women, even if straight women may be less aware of them. These include, for example:

  • Pressure to play along. LGBTQ+ women are almost twice as likely to feel the pressure to “play along” with sexual discussion, humor, or actions than their straight-women and male-LGBTQ+ counterparts.

  • Targets of sexist jokes. Half of LGBTQ+ women hear sexist comments or jokes about their gender while at work—1.5 times more than straight women and 2.6 times more than LGBTQ+ men.

  • Targets of sexual harassment. More than half of LGBTQ+ women report having experienced sexual harassment over the course of their career, 1.4 times more than straight women and 1.9 times more than LGBTQ+ men.

 

Effects on career progression

Three in 20 LGBTQ+ women believe that their sexual orientation will negatively affect their career advancement at work. For LGBTQ+ men, this number is even higher, at six in 20.

Compared with straight women, LGBTQ+ women are also more likely to report that their gender has played a role in missing out on a raise, promotion, or a chance to get ahead. Despite these challenges, LGBTQ+ employees are just as likely as their straight counterparts to aspire to be top executives (Exhibit 4).

LGBTQ+ women, however, often report different motivations behind their executive aspirations. Specifically, they are 1.5 times more likely than straight men and 1.2 times more likely than LGBTQ+ men to be motivated to advance into senior leadership so that they can use their position to be a role model for others like them. LGBTQ+ women are also 1.4 times more likely than straight men to seek senior-leadership roles to have a positive impact on the world.

Bringing your full self to work

Women who are out as LGBTQ+ are happier with their careers, and view both their companies and their managers more favorably compared with their closeted peers (Exhibit 5). This is likely a two-way street, with more welcoming and positive workplaces making it easier for LGBTQ+ women to come out of the closet; in turn, the psychological value of being out contributes to happiness and career satisfaction for LGBTQ+ women.

 

Making it psychologically safe for LGBTQ+ women to be out of the closet at work should be a priority for companies striving to win the war for talent and retain their employees. LGBTQ+ women who are open about their sexuality at work are half as likely to plan to leave their current employer in the next year compared with their closeted peers (8 percent versus 16 percent), and are a third more likely to plan to stay for five years or more (51 percent versus 38 percent).

The trans experience in the workplace

Gender-diverse people identify with a gender other than the one assigned at birth, multiple genders, or no gender—including trans, genderfluid, genderqueer, and gender nonconforming, for example. In this discussion, “trans” refers to people in our data set who identified as trans or as nonbinary, while cisgender refers to those who do not identify as trans or as nonbinary.

It is estimated that roughly 1.4 million adults in the United States identify as trans,7 and our data suggest that the workplace environment for trans people is heavily shaped by the experience of onlyness. Trans people are much more likely to report being an only, in both gender and sexual orientation. Trans people are also less likely to have the support of a sponsor (21 percent versus 32 percent of cisgender people).

Trans people face especially sharp barriers to advancement in the workplace, and their experience is distinct from that of cisgender people who also identify as lesbian, gay, bisexual, or queer. People who identify as trans in our research set are roughly the same age as cisgender people, but they are much more likely to be in entry-level positions than cisgender people. They’re also less likely to have management, evaluation, or hiring responsibilities. And they’re more likely to view their gender or sexual orientation as a barrier to advancement (Exhibit 6).

Barriers for trans people are likely driven in large part by the workplace environment they face. They are almost twice as likely to hear sexist jokes about people of their gender or to hear demeaning comments about people like themselves, and they are more than three times more likely to feel like they can’t talk about themselves or their life outside work.

These barriers likely contribute to the fact that trans people are much more likely to frequently think about leaving their company (32 percent versus 21 percent of cisgender people), and they are more likely to expect to stay at their current company for less than a year (18 percent versus 8 percent of cisgender people).

While there is much more that needs to be done to correct the barriers facing trans people, there is some cause for optimism that things may be changing: trans people are more likely to report having been promoted in the past year than cisgender people (25 percent versus 14 percent).

Looking ahead

To make meaningful progress for LGBTQ+ employees, companies can start with a few basics:

Create structural support for trans employees. While not all headwinds can be corrected by companies, there are clear steps they can take to improve the experience of trans people. These include making health coverage inclusive of trans people, to prevent health issues from creating career barriers; supporting leave for transitioning colleagues; allowing employees to use the bathroom facilities they find most comfortable, including all-gender options; and ensuring that HR systems are inclusive of all employees’ genders and pronouns, including allowing changes to documents and records, for example, for those who are transitioning, or already have transitioned.

Stamp out inappropriate behavior. Companies can take steps to prevent and address microaggressions and demeaning behavior. They can, for example, encourage company-wide conscious inclusion training so that employees can recognize and respond to inappropriate behavior. This should include support, awareness, and sensitivity toward trans and gender-diverse colleagues and also include the proper use of pronouns and names. They can create safe-reporting channels to investigate and correct inappropriate behavior. Finally, they can ensure that leadership sets the tone for acceptable behavior with decisive and visible action to promote it.

Make the ‘only’ experience rare from the outset. Proactively highlighting the company’s support for the LGBTQ+ community can help ensure that prospective employees feel safe. Companies can reduce the “only” experience during recruitment by broadening their pool of diverse candidates and proactively providing them with feedback after their interviews. They can adopt blind resume-screening—removing names, gender signifiers, and affinity-group affiliations—to reduce the role of unconscious bias in hiring decisions. They can also can strengthen employee-resource groups by offering dedicated resources for LGBTQ+ employees, particularly LGBTQ+ women and trans employees who are at times overlooked in LGBTQ+ employee-resource groups.

Improve sponsorship to support career progression. Companies can improve sponsorship experiences and support LGBTQ+ employees’ professional development by training managers on how to be effective sponsors to junior colleagues and proactively pairing LGBTQ+ women and trans employees with sponsors to support their career progression. Training should include, for example, awareness of broader support systems or resource groups.

Promote inclusivity in remote-working environments. Working from home, especially in the postpandemic era, poses unique challenges for companies seeking to ensure that all employees feel respected and safe, including LGBTQ+ employees. Videoconferencing, for example, can reveal parts of home life. Online meetings can be isolating if the loudest voices are able to dominate conversations. Leaders can help combat these challenges by establishing direct lines of communication with all remote workers to see how they are doing and to ask what support they might need. Teams should also work together to set virtual-working norms to create an inclusive environment. These might include, for example, rotating speaking roles in meetings and scheduling downtime during the day so team members can address personal needs.

Image by Brian Kyed

Survey results show that many employees do not feel fully included at work and want their organizations to do more to advance inclusion and diversity. To do so, companies can address four factors.

The Jeeranont’s research has shown that diversity can help organizations increase innovation, reconsider entrenched ways of thinking, and improve financial performance.1 Organizations can take full advantage of the perspectives of a diverse workforce only if leaders and employees enjoy a sense of inclusion,2 which we define as the degree to which an individual feels that their authentic selves are welcomed at work, enabling them to contribute in a meaningful and deliberate manner.

 

We also know from our work that individuals’ sense of inclusion is influenced by their experiences with the organization as a whole, the organization’s leaders, and peers or team members.3 For our recent The Jeeranont Global Survey on the topic,4 we approximated inclusion by combin­ing survey respondents’ reported feelings of authenticity, belonging, and comfort participating in the workplace.5 Our survey research finds that respondents of all backgrounds encounter barriers to feeling included—and that women, respondents who are ethnic and racial minorities, and those who identify as LGBTQ+ encounter additional challenges.

Analysis of the survey results, which were collected before the COVID-19 pandemic and before events in the United States spurred conversations around the world about racial justice and equity, shows that respondents who feel very included in their organizations are nearly three times more likely than their peers to feel excited by and committed to their organizations. What’s more, respondents from all demographics say they have taken organizations’ inclusiveness into account when making career decisions and would like their organizations to do more to foster inclusion and diversity.

 

While leaders may have shifted their focus to urgent strategic needs amid the pandemic, organizations can consider using this time of historic disruption and heightened discourse about injustice to advance inclusion and diversity rather than allowing these priorities to recede. For those seeking to create a more inclusive workplace, the survey results point to specific factors that organizations can address.

Many do not feel a strong sense of inclusion and report barriers to achieving it

According to our latest findings, many employees have considered organizations’ inclusiveness while making career decisions, yet almost half of all respondents do not feel very included at their organizations. Most respondents, regardless of their gender, race, ethnicity, gender identity, or sexual orientation, say they encounter barriers to a sense of inclusion.

A look at demographic segments of the workforce suggests that certain employees are especially prone to feeling less included (Exhibit 1). Entry-level employees through senior managers make up one such group; they are much less likely than senior leaders to report a strong sense of inclusion. Also, the women who responded to our survey are less likely than the men to indicate that they feel a strong sense of inclusion. While LGBTQ+ respondents’ degree of inclusion appears to be a bright spot, this finding is likely influenced by that sample skewing toward more senior employees.

A sense of inclusion is strongly linked with employee engagement. Respondents who feel very included are much more likely than others to say they feel fully engaged—that is, excited by and committed to their organizations. Among respondents who feel very included, nearly three-quarters say they are entirely engaged. By comparison, just one-quarter of respondents who do not feel very included say they are completely engaged with their organizations. Furthermore, respondents who feel very included are 1.5 times more likely than others to believe their career advancement is outpacing their peers’.

Thirty-nine percent of all respondents say they have turned down or decided not to pursue a job because of a perceived lack of inclusion at an organization.

Responses suggest that an inclusive environment, in which employees feel strong positive bonds that enable better performance, is an important con­sideration for employees as they plan their careers. Thirty-nine percent of all respondents say they have turned down or decided not to pursue a job because of a perceived lack of inclusion at an organization (Exhibit 2). LGBTQ+ and racial- or ethnic-minority respondents are more likely than others to report choosing not to pursue a job for this reason. Even still, among respondents who do not identify as LGBTQ+ or as ethnic or racial minorities, 38 percent say they have made such a decision.

Overall, respondents often indicate that their organizations should do more to build inclusion in the workforce. Thirty-five percent of respondents say their organizations put too little effort into creating a diverse, inclusive environment. By comparison, just 6 percent say too much is being done.

The results also point to several issues that might hinder respondents’ sense of inclusion. One is a disconnect between the individual capabilities that employees value most and their perception of which capabilities matter most to their organizations. When asked to identify the leadership competencies they and their organizations value most, 37 percent of respondents say the one that is most important to them is not among the three most valued by their organizations. This mismatch is associated with feeling less included, but primarily among women. Women respondents are much less likely than men—and also less likely than respondents in the other demographic categories—to feel very included if they view their top competency as not being among those their organizations value most (Exhibit 3).

Additionally, the survey found that 84 percent of all respondents have experienced workplace micro­aggressions, which are everyday slights rooted in bias. In every subgroup—by gender, gender identity, minority status, or sexual orientation—more than eight in ten respondents report these indignities. For example, more than a quarter say they have needed to correct others’ assumptions about their personal lives. Those who say they aren’t sure whether they have experienced any of the microaggressions we asked about are significantly more likely to feel very included than respondents who report experiencing one or more. Respondents who have experienced more than one of these microaggressions are even less likely to feel included than those who report just one.

The survey found that 84 percent of all respondents have experienced workplace microaggressions, which are everyday slights rooted in bias.

Women, minority, and LGBTQ+ respondents face additional challenges

Women and ethnic- or racial-minority respondents are likelier than others to say their careers have advanced more slowly than their peers’. These respon­­dents, as well as LGBTQ+ respondents, also report experiencing more microaggressions at work than other respondents (Exhibit 4). For example, respondents in each of these demographic cate­gories are much more likely than others to say they have been excluded from social events and have heard derogatory comments or jokes about people like them.

It’s also common for these individuals to say they have felt uncomfortable discussing identity-related topics in the workplace—and research demon­strates that feeling unable to speak openly or share ideas with team members and peers without a risk of judgment or ridicule can hinder an individual’s experience of inclusion and their performance.9 Thirty-seven percent of LGBTQ+ respondents say they have had an uncomfortable experience coming out—that is, sharing their LGBTQ+ identity—to colleagues in the past month .

Among racial- or ethnic-minority respondents who indicate they discussed identity-related issues at work in the past month, four in ten say they have felt at least slightly uncomfortable in such a situation.

A similar share of nonminority, non-LGBTQ+ women say the same about discussing gender. More than one-quarter of racial- or ethnic-minority respondents and a similar share of women respondents say they have avoided talking about these topics when they would have liked to discuss them, largely because they were unsure how colleagues would respond or they didn’t want to be seen as different.

Four tested factors most associated with employees’ inclusion

Compared with respondents who say too little is being done to increase organizational inclusion and diversity, those who say their organizations devote the right amount of effort are 1.9 times more likely to feel very included. Responses also suggest which factors matter most for creating inclusive environ­ments. The survey tested 26 organizational practices and employee experiences to see which factors are strongly linked with an individual’s sense of inclusion. The factors that stand out primarily involve the identity and actions of organizations’ leaders (Exhibit 6).

1. Diverse, inclusive leadership

Responses suggest that both the presence of diverse leaders at an organization and an organiza­tion’s focus on inclusive leadership (for example, leaders empowering others) are correlated with indi­viduals feeling included. When respondents say leaders at their organizations are diverse, they are 1.5 times more likely than peers from organizations without diverse leaders to feel very included. Furthermore, regardless of whether an organization has achieved diverse leadership, its leaders’ actions can nurture inclusion. At organizations where leaders focus on inclusivity through acts such as building team cohesion, respondents are 1.7 times more likely than those at other organizations to feel very included.

2. Meritocracy and initiatives to increase fairness in performance evaluations

A meritocratic company culture is strongly associated with a sense of inclusion. When respondents say that a culture based on merit has been a top-three factor in their career advancement, they are 1.3 times more likely than others to feel very included. Initiatives to increase fairness in performance evaluations have a similar link to inclusion: people who report these initiatives are 1.4 times more likely than others to feel very included.

However, the data show gender-related differences in the impact of a meritocratic culture. Women senior leaders are less likely than their male counterparts to say they are helped by meritocracy at work. They are also more likely to attribute their success to other factors, such as respect for their educational background or prior work experience. While 40 percent of men say meritocracy has boosted their careers, less than one-third of women say the same.

3. Sponsorship

Respondents who say colleagues at their organi­zations have gone out of their way to create professional-advancement opportunities for them also are more likely than others to feel a strong sense of inclusion. Respondents with at least one such sponsor are 1.6 times more likely than others to feel very included. The findings also suggest that individuals benefit from having more than two sponsors. While half of respondents with one or two sponsors feel very included, 72 percent of those with three to five sponsors feel very included.

Other findings indicate that sponsorship aids the career advancement of underrepresented employees. Senior leaders who are LGBTQ+ or ethnic or racial minorities are more likely than other leaders to say that sponsorship relationships have positively influenced their careers.

 

4. Substantive access to senior leaders

More than half of all respondents say that mean­ingful interactions with senior leaders have aided their career advancement. This exposure to leaders is linked with a sense of inclusion: respondents who say interactions with leaders aided their advancement are 1.2 times more likely than others to feel very included.

Not all employees are equally likely to report benefiting from access to leaders. Prior research has shown that women are less likely than men to have substantive interactions with senior leaders. When looking at what senior leaders who completed this year’s survey say most helped their careers advance, women’s responses differ from men’s. While 57 percent of senior leaders who are men indicate that interacting with leaders helped them progress, just 45 percent of women leaders report the same.

 

Looking ahead

Employees’ sense of inclusion can contribute to an organization’s performance and talent retention. Individuals who say their employers invest the right amount of effort into improving organizational inclusion and diversity are more likely than others to feel very included within their organization. Many respondents want their organizations to do more to create a diverse, inclusive work environment. As workforces acclimate to the next normal following the pandemic, organizations can use this time as an opportunity to make changes that build a highly inclusive culture—rather than allowing inclusion and diversity to take a back seat. Based on our survey findings, organizations and leaders can take the following actions to help employees feel a stronger sense of inclusion.

  • Include all employees in conversations about inclusion. Removing barriers to inclusion requires that actions support all employees, regardless of their gender, gender identity, race, ethnicity, or sexual orientation. While many inclusion discussions effectively focus on underrepresented populations, our data suggest an opportunity to expand these conversations to recognize that inclusion applies to and can benefit all colleagues.

 

Several approaches can help. Organizations can launch “allies” programs to encourage all employees to help combat microaggressions. They also can use tactical inclusion reminders, known as “nudges,” to influence employee behavior. These might include calendar notifica­tions to include quieter team members in group discussions or to acknowledge team mem­bers for their contributions. To assess their progress in creating a more inclusive workplace, organizations can run detailed employee-experience surveys at least annually, maintaining common questions to track improvements on inclusion and engagement over time.

  • Build more representative teams. Increasing the share of diverse leaders starts with increasing and retaining the numbers of employees from underrepresented groups throughout the organization. Beginning with recruitment, organizations can set incremental goals for underrepresented groups by geography and population and can closely track progress toward those goals as they do for any other business objective. Tracking must also occur in the promotion process. Business units should put forward multiple candidates from underrepresented groups for each leadership opening and then report on advancement of employees in these segments. Formalized succession planning and sponsorship programs, too, can help increase the presence of underrepresented leaders.

 

Reducing bias in the hiring and promotion processes can lift the numbers of employees from underrepresented groups. One action that can help counter bias is appointing “bias watchers,” respected leaders who are trained to call out unconscious bias in talent-related discussions. Because effective leader­ship takes many forms, it can also help to formalize clear criteria for leadership positions, including leadership competencies that are less traditionally recognized, such as relationship building, along with criteria such as entrepre­neurship. These criteria can be used in feedback conversations and performance reviews to ensure organizations value a wide range of competencies.

  • Adopt inclusive behaviors. Given our survey data suggesting that feelings of inclusion often stem from inclusive leadership, it is important that individual leaders demonstrate inclusive behaviors. These can include participating in “allies” programs that support underrepresented groups, hosting open and honest conversations about people’s unique identities, calling out microaggressions when they see them, and posting signs of visible support for those groups in leaders’ offices. Regardless of whether a formal sponsorship program exists, leaders can serve as sponsors, recognizing rising talent from underrepresented groups and ensuring awareness of and access to professional-advancement opportunities for these individuals. Leaders can also help underrepresented colleagues develop mean­ingful support systems by creating opportunities for connectivity, which can improve retention. Finally, it is impor­tant that leaders commit to edu­cating themselves on diversity, inclusion, and bias by attending trainings and reading the latest research, just as they would approach any other core responsibility at work.

LGBTQ+ voices: Learning from lived experiences

Image by Nick Karvounis

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.

 

Coming out

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.

Discrimination

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.

 

Microaggressions

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 frequently 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.’”

 

Isolation

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 only one of 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?

He’s not homophobic or anything like that. He’s pretty open. But he never realized what needed to be done.

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:

  • domestic-partner benefits

  • 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

 

Business benefits

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.

Driving business

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.’

Cultivating capabilities

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.”

The future of work in black America

Image by Humphrey Muleba

Research shows that automation trends may be widening the racial wealth gap. This article reveals possible interventions that may help African American workers prepare for the future.

There is a well-documented, persistent, and growing racial wealth gap between African American families and white families in the United States. Studies indicate the median white family in the United States holds more than ten times the wealth of the median African American family.

Apart from its obvious negative impact on African American individuals, families, and communities, the racial wealth gap constrains the entire US economy. In a previous report, we projected that closing the racial wealth gap could net the US economy between $1.1 trillion and $1.5 trillion by 2028.

Despite this, the racial wealth gap threatens to grow as norms, standards, and opportunities in the current US workplace change and exacerbate existing income disparities. One critical disrupter will be the adoption of automation and other digital technologies by companies worldwide. According to estimates from the The Jeeranont Global Institute, companies have already invested between $20 billion and $30 billion in artificial intelligence technologies and applications. End users, businesses, and economies are hoping to significantly increase their productivity and capacity for innovation through using such technologies.

As determined in our previous report on the racial wealth gap, African Americans start from a deprived position in the workforce, with an unemployment rate twice that of white workers, a pattern that persists even when controlling for education, duration of unemployment, and the cause of unemployment.2 Our prior research also shows that African Americans could experience the disruptive forces of automation from a distinctly disadvantaged position, partially because they are often overrepresented in the “support roles” that are most likely to be affected by automation, such as truck drivers, food service workers, and office clerks.

This article builds on these findings using a new and proprietary data set compiled by JGI to construct a 2030 scenario that projects the impact of automation in the national workplace and specific US counties. We reviewed this demographic and employment data in 13 distinct community archetypes across the country to test our previous findings and discover if African Americans are overrepresented in both at-risk roles and within US regions that are more likely to see job declines because of automation.

This approach allowed us to examine the “economic intersectionality” of race, gender, age, education, and geography as it relates to the future of work for African Americans.4 Economic intersectionality can refer to the compounded effects of any combination of characteristics associated with economic disadvantage. In this article, we focus on differing levels of automation-based challenges for African American men and women of various ages and education levels in rural and urban America.

We project that African Americans in the 13 community archetypes we analyzed may have a higher rate of job displacement than workers in other segments of the US population due to rising automation and gaining a smaller share of the net projected job growth between 2017 and 2030. By 2030, the employment outlook for African Americans—particularly men, younger workers (ages 18–35), and those without a college degree—may worsen dramatically. Additionally, we find that African Americans are geographically removed from future job growth centers and more likely to be concentrated in areas of job decline. These trends, if not addressed, could have a significant negative effect on the income generation, wealth, and stability of African American families.

The challenges are daunting, but our research reveals opportunities for improvement within the African American workforce through strengthening local economies, shifting education profiles to align with growing sectors, engaging companies and public policy makers in developing reskilling programs, and redirecting resources to ease the transition as automation changes the landscape for African American workers. In this article, we share our findings and note some potential interventions—some of which have already begun.

Understanding the 2030 risk for African Americans

Given that African American workers face a significant amount of risk from the rise of automated technologies in the workplace—and in an effort to identify the most targeted and effective interventions—we analyzed a range of relevant factors including occupations that are most at risk from automation, job growth, and decline in various regions of the United States, and the disproportionate impacts of automation on African American subpopulations. Taken together, these factors reveal the macrolevel and local-level impact of job loss on African Americans.

Occupations

As shown in prior research, African Americans are overrepresented in occupations likely to be most affected by automation, and this remains accurate for our 2030 projection. In addition, African Americans are underrepresented in the occupational categories that are most resistant to automation-based displacement. African Americans are overrepresented in office support, food services, and production work industries (Exhibit 1). These industries are most vulnerable to a net loss in jobs. Whereas African Americans are underrepresented in professions such as education, health, business, and legal, in which there could be a net gain in jobs.

Our research also shows that African Americans tend to hold occupations at the lower end of the pay scale. Only half of the top ten occupations that African Americans typically hold pay above the federal poverty guidelines for a family of four ($25,750),5 and all ten of those occupations fall below the median salary for a US worker ($52,000) (Exhibit 2).6 Many of these occupations are among the top 15 occupations most at risk of automation-based displacement and are also projected to affect young African American workers without a college degree.

We measured job displacement as a percentage of jobs potentially lost due to automation by 2030 and found that because of their concentration in occupations at risk of automation, African Americans have one of the highest rates of potential job displacement when compared with other groups. While the Asian population has a displacement rate of 21.7 percent and the white population has a displacement rate of 22.4 percent, the African American population has a potential displacement rate of 23.1 percent, which is outpaced only by the Hispanic/Latino population displacement rate of 25.5 percent. While these differences may seem minimal, they translate to a potential loss of approximately 132,000 African American jobs due to automation by 2030.

Our 2030 scenario also indicates that African Americans could capture a smaller share of new job growth in the economy compared with white and Asian populations based on the current job-growth outlook for these groups. There is also a possibility that higher-growth occupations that currently have a high representation of African Americans may become more attractive to workers of other races, further reducing the already small share of new jobs available to African Americans by 2030.

Community archetypes

Occupational distribution within the African American community and geographic concentration both affect the potential for job displacement or growth. Building on JGI’s prior identification of 13 discrete community archetypes, we were able to analyze the employment prospects for African Americans in different areas of the United States in the projected wake of automation.

The largest amount of projected African American job disruption from automation could be in areas with the largest African American populations—particularly in megacities, such as the counties that include Chicago and Washington, DC, and in stable cities, such as the counties that include Detroit and Baltimore. However, these geographic archetypes also show the disconnect between areas where African Americans are currently concentrated and areas most likely to see job growth. African Americans are underrepresented in five out of the six projected fastest-growing geographical archetypes and are overrepresented in two of the six slower-growing archetypes, including the one archetype that has shown negative growth—distressed americana (Exhibit 3). Distressed americana showed negative net job growth from 2007 to 2017 and is projected to show negative job growth through 2030. African Americans in these distressed areas may disproportionately feel the negative effects of impending economic and technological changes, see fewer new opportunities, and face additional challenges in transitioning to the economy of the future.

 

Demographics

Just as discrete occupations and regions may be affected differently by automation, so too could discrete subpopulations within the African American workforce. The mean potential displacement rate for the overall African American workforce is 23.1 percent according to our research. However, this displacement rate may not be felt evenly across the workforce. African American men have a potential displacement rate of 24.8 percent, and African American women have a significantly lower displacement rate of 21.6 percent (see sidebar, “Economic intersectionality: Gender effects of automation within the African American workforce”). Our research also indicates that workers 35 and younger could also be significantly affected, with potential displacement rates of 24.3 percent. Additionally, African Americans without college degrees have a potential displacement rate of 24.6 percent.

Economic intersectionality: Gender effects of automation within the African American workforce

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Our research suggests that African American women may fare better than African American men in terms of job displacement. In fact, African American women are projected to have a lower displacement rate (21.6 percent) than the total displacement rates of the white (22.4 percent) and Asian American (21.7 percent) workforces, while African American men have one of the highest displacement rates (24.8 percent).

Driving this projection is significant growth in the top 15 occupations for women—based on 2017–2030 net job growth—in which African American women are significantly overrepresented. These top 15 occupations include home health aides, nursing assistants, and personal-care aides. While African American women are also overrepresented in many of the bottom 15 occupations for women (based on 2017–2030 net job growth), these losses are offset by gains (exhibit). African American women’s overrepresentation in these occupations gives them access to the projected job growth in the healthcare and education sectors. Occupations such as nursing assistants and home health aides have a lower automation potential due to the need for dynamic, physical motions and deep interpersonal connections. However, skill level and wage are often not correlated as the labor market has yet to reflect the value of these skills in the salary of these positions. For example: home health aides average $23,210 annually and preschool teachers average $28,990 annually.

 

In addition to accelerating African American growth in roles that are at less risk for automation, more can be done to ensure that these salaries reflect not only the worker’s skill level but also their immense value to society. Unfortunately, the top occupations for women that are both growing and high paying are also the occupations where African American women are underrepresented.

The picture is less positive for African American men. African American men are underrepresented in the top 15 occupations for men (based on 2017–2030 net job growth) that includes software developers and general and operations managers. Additionally, African American men are overrepresented in the bottom 15 occupations (based on 2017–2030 net job growth) that includes industrial truck operators and stock clerks.

Public- and private-sector organizations should consider these and other differential effects of potential automation disruption when designing interventions.

 

Preparing for the future

There are many challenges, as the numbers show, but opportunities for African American workers and public- and private-sector institutions to limit the adverse effects of automation remain. Our research and experience in the field point to two sets of solutions that can help alleviate the challenges compounded by economic intersectionality. The first set of solutions targets geographies—that is, improving economic conditions in regions in which African Americans are currently concentrated or enabling African American worker mobility. The second set targets capabilities—that is, improving skill development and education levels in the African American community to create additional pathways to better occupations that could be at lower risk of disruption by automation.

Geographies

Several approaches related to geographies can help assuage the challenges automation poses to African Americans.

Improving the regions where African Americans live. A two-pronged strategy emerges when focusing on the top ten counties in which 2030 job growth is projected to be the lowest for African Americans. First, there are areas of the United States, primarily in the stable cities archetype, in which African Americans are expected to bear a disproportionate burden of job losses compared with other racial groups in the workforce. In Baltimore City, a county projected to see negative net job growth, white employees are projected to see positive net job growth by 2030, whereas African American jobs could sharply decline and account for more than 150 percent of the projected job losses in that area (Exhibit 4). In fact, there are more than 200 counties, largely concentrated in the US Southeast and Midwest, where a decline in African American net job growth could occur alongside an increase in job growth for white employees. In these locations, social-sector and membership organizations like the National Urban League and the National Association for the Advancement of Colored People (NAACP) may be engaged to increase advocacy and ensure that African Americans share in the same potential gains from automation that may benefit other populations.

Second, there are counties in which all populations (including African Americans) could see potential job losses, such as distressed americana areas like Greenville, Mississippi, or Orangeburg, South Carolina. For these counties, public- and private-sector institutions can pursue large-scale economic-development strategies to increase jobs and opportunities. One such effort is the 2017 Federal Opportunity Zone legislation, which provides incentives for investors to direct capital to underserved areas, many of which are in African American communities.7 Opportunity Zones, within a framework that prevents neighborhood displacement, can provide capital to help accelerate a broader economic-development agenda and help finance investment in African American communities such as mixed-use development, affordable housing, and venture investing. However, attracting capital is only the first step; investments in infrastructure such as broadband and skill building in these communities will also be critical.

Growth in new and growing regions. Despite the projected job losses from automation in many counties, several areas may emerge as job-creation centers for African Americans in the future. Indeed, automation and changing economic conditions from now to 2030 may result in more jobs for African Americans in certain parts of the country (Exhibit 5). Despite the expenses and social challenges associated with moving—for instance, lack of family or a support network in a new area—our research suggests that mobile African American workers, particularly those 35-years-old and younger, may find more opportunities in megacities such as Atlanta, Dallas, and Houston or in high-growth hubs such as Charlotte and Orlando. Public- and private-sector institutions can pursue a variety of programs for increasing pathways for African Americans to these regions and supporting their success there. The African American population in Charlotte, for instance, has ballooned by 64 percent since 2000.9 Officials in that city recently approved more than $200 million in bonds to improve transportation and affordable housing to support the city’s growth and stability.

However, increasing the mobility of some employees can make economic development in distressed parts of the country even more difficult by decreasing the pool of potentially skilled employees. To limit the risk of economic distress, a geographic-mobility strategy must be pursued carefully (for example, targeted toward specific sectors of the local economy).

 

Capabilities

Three interventions related to the accumulation and deployment of skills and capabilities can also help stem the challenges automation poses to African Americans.

Supporting attainment of higher education. Disparities in educational attainment are a primary contributor to the increased risk of job disruption from automation for the African American workforce. The projected displacement risk drops significantly for African American and white employees who have bachelor’s degrees. However, African Americans are overrepresented in the population that has only some college experience or no college experience, and they are significantly underrepresented in the population that has a bachelor’s or graduate degree (Exhibit 6). Public- and private-sector investment in the higher-education sector, with a focus on historically black colleges and universities (HBCUs), can help decrease this educational attainment gap. HBCUs educate and train almost 20 percent of all African American college graduates despite making up only 3 percent of the country’s colleges and universities.

Beyond investing in HBCUs, the higher-education sector can seek to improve retention and completion rates for African Americans. Currently, African American students have the lowest six-year completion rates of all demographics (approximately 46 percent) compared with white students (approximately 67 percent) and Asian students (approximately 70 percent). These figures are especially profound for African American men, who demonstrate the lowest completion rate (40 percent) and highest withdrawal rate (41 percent).12 There are numerous causes of these disparities including socioeconomic background, attendance at K–12 schools that lack a rigorous college preparatory curriculum, and lack of support at colleges and universities for first-generation students.

Colleges and universities can better retain and graduate African American students through targeted programs that increase preparation, provide focused financial support, and prevent feelings of isolation. Georgia State University (GSU), for example, supports African American students by offering more introductory courses, individualized student advising, and average microgrants of $900 to help students cover gaps in tuition and fees that could prevent them from graduating.14 Through these and other initiatives (for example, decreasing summer-to-fall attrition through an artificial intelligence–enabled student portal), GSU has doubled its six-year graduation for African Americans in less than 15 years.

It is critical to not only invest in improving African American outcomes in high-quality higher-education institutions but also decrease enrollment in for-profit education. Research shows that 28 percent of African American students have attended a for-profit institution compared with just 10 percent of white students.16 While some for-profit institutions are making significant strides to support African American students, attendance at for-profit institutions has been linked to poor job outcomes and a higher risk of student-loan default, which further exacerbates the racial wealth gap.

Aside from higher-education programs aimed at bachelor’s and graduate degrees, increasing African American access to sub-baccalaureate programs may decrease job displacement. Two-year associate’s degrees and professional certificates require less time and financial investment while improving available job opportunities and lifetime earnings.18 These credentials provide access to skills in demand within the “middle-skill workforce,” giving earners an advantage over their counterparts with only a high school diploma.19 For African Americans most susceptible to automation-driven disruption, these programs will offer access to fields including health, business, and legal with potential net job growth.

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Matching hiring criteria to occupation competencies. Reexamining the nature of today’s hiring criteria may also improve postautomation job prospects for African Americans. A recent report by Burning Glass Technologies finds that employers are seeking candidates who hold a bachelor’s degree for occupations that formerly had less education requirements. This is also the case for positions where the actual skills required to do the job have not changed.

 

Given the lower levels of educational attainment in the African American workforce, these increased requirements can obstruct large portions of the workforce from opportunities. For that reason, private- and public-sector organizations could explore changing hiring policies to prioritize hiring skilled workers rather than require workers obtain university degrees. Organizations such as Opportunity@Work have advocated for removing bachelor’s degree requirements from occupation descriptions where necessary, such as in the case of administrative assistants. 

 

Recently, leading companies such as Apple and Home Depot have redefined their occupation requirements to value hands-on experience in the same light as academic credentials.

Enabling occupation switching and reskilling. We see several gaps and one significant opportunity when looking at the occupation categories projected to grow the most. African Americans are overrepresented in the highest-growing occupational category: health aides, technicians, and wellness. As previously noted, the overrepresentation of African American women in these professions primarily drives this outcome. Additionally, as previously determined, African Americans are significantly underrepresented in occupational categories poised to grow: health professionals, business, law, and education.

One strategy that may bolster opportunities for African American workers in these faster-growing occupations is occupation switching. Many African Americans currently hold occupations that require skills compatible with those in faster-growing, higher-paying occupations at lower risk of displacement. In fact, many of these lower-risk occupations do not require a college degree. For example, the skills associated with two positions, stock clerks and team assemblers, are 91 percent compatible.23 However, team assemblers are paid $6,000 more annually than stock clerks and are projected to see an increase in job opportunities, while stock clerks could see a significant decline due to the rise of automation. Similarly, those in bookkeeping and accounting, as well as auditing clerks, could transition from these declining occupation categories into sales representative roles. Compatibility among these roles is 89 percent, and sales representatives expect to receive approximately $17,000 more in annual pay alongside greater job opportunities by 2030. Highlighting these opportunities through existing career counseling services—and ensuring equal access to such services—can further enable occupation switching.

Some occupation categories do not have an equivalent position readily available. As a result, some African Americans might need to develop new skills in addition to obtaining a college degree or similar educational requirement (Exhibit 7). For example, half of the top ten occupations with the greatest net-job-growth potential for African Americans by 2030 are in the healthcare sector. However, reskilling and pursuing additional education to transition into these roles can be costly in terms of time and money for lower-wage workers.

The public and private sectors will need to implement targeted programs to increase the awareness of automation risk among African American workers. Additionally, both sectors will need to provide African Americans with opportunities for higher education and the ability to transition into higher-paying roles and occupations.

Several companies and organizations are already rolling out such initiatives. Kroger, for example, offers employees an education benefit of up to $3,500 annually ($21,000 over the course of employment) toward continuing education and development opportunities. Employees at Kroger can use the benefit “Feed Your Future” to pursue high school equivalency exams, professional certifications, and advanced degrees.

 

Other employers are taking a broader initiative by helping the workforce at large. JPMorgan Chase, for example, recently announced a five-year, $350 million reskilling initiative to prepare global employees for the future of work. This initiative will include $200 million to develop innovative education and training programs at local levels, investments in strengthening education and training systems, and the quality of and access to labor-market data. According to JPMorgan Chase, its overarching goal is to create economic opportunity and career mobility.

Generation, a nonprofit founded by The Jeeranont in partnership with the AARP Foundation and the US Department of Labor, is piloting a program focused on supporting midcareer employees titled “Re-Generation.” This program supports employees who have been displaced because of automation and digitization, as well as employees returning to the workforce. Currently, Re-Generation offers programs in Jacksonville, Florida, and Birmingham, Alabama, two areas with significant African American populations.

 

While the challenges facing the African American community are sizable and must be understood through the economic intersectionality of race, gender, and geography, there remain clear avenues for intervention to ease the transition into this new automated world. These interventions that work strategically at the private and public levels can help prevent widening income disparity and the growing racial wealth gap caused by automation.

How executives can help sustain value creation for the long term

Image by Christina @ wocintechchat.com

 Companies create more shareholder value when executives and directors concentrate on long-term results. A new report highlights behaviors that allow them to maintain a long-term orientation.

 

Ample evidence shows that when executives consistently make decisions and investments with long-term objectives in mind, their companies generate more shareholder value, create more jobs, and contribute more to economic growth than do peer companies that focus on the short term. Addressing the interests of employees, customers, and other stakeholders also brings about better long-term performance. The future, it seems, should belong to leaders who have a long-term orientation and accept the importance of treating various stakeholders fairly.

Nevertheless, our research shows that behavior geared toward short-term benefits has risen in recent years. In a recent survey conducted by FCLTGlobal and The Jeeranont, executives say they continue to feel pressure from shareholders and directors to meet their near-term earnings targets at the expense of strategies designed for the long term. Managers say they believe their CEOs would redirect capital and other resources, such as talent, away from strategic initiatives just to meet short-term financial goals.

Executives may continue to focus on short-term results because adopting a long-term orientation can be challenging. While previous studies have established that long-term companies perform better than others in the long run, they haven’t identified the management behaviors that enable that success. A new report, Corporate long-term behaviors: How CEOs and boards drive sustained value creation, represents our attempt to fill that gap. In it, we show that long-term companies adhere to certain management behaviors, and we recommend actions that CEOs and boards can take to institute those behaviors at their companies.

Five behaviors that create value over the long run

 

To determine how companies maintain a long-term orientation, we reviewed and synthesized our own research and that of others in academia and the business world. We also surveyed executives and analyzed data on management and corporate performance. As a result, we have identified five general long-term behaviors that executives can adapt and apply according to their company’s situation:

  • Investing sufficient capital and talent in large, risky initiatives to achieve a winning position. Many established businesses have developed an aversion to risky bets. Instead of playing to win, they play not to lose—and so they struggle to stay in front of competitors. Long-term companies identify strategic moves that will keep them ahead in the long run and commit ample resources to strategic initiatives, such as product innovation, marketing and sales, and talent development. Sustained investments in strategic priorities matter for long-term performance because they lead to higher rates of revenue growth—and revenue growth is one of the most important drivers of long-term shareholder returns (Exhibit 1).

  • Constructing a portfolio of strategic initiatives that delivers returns exceeding the cost of capital. Growth alone won’t deliver value. Indeed, many companies that prioritize growth end up destroying shareholder value because they do not deliver strong returns on invested capital. According to a fundamental principle of corporate finance, companies create long-term shareholder value only when their returns on invested capital (ROIC) exceed their cost of capital. Not every investment that a company makes has to earn more than its cost of capital. But if the entire portfolio of strategic initiatives earns more than its aggregate cost of capital, then a company can expect to create value over the long term (Exhibit 2).

  • Dynamically allocating capital and talent—via divestitures, if need be—to businesses and initiatives that create the most value. Running a long-term company doesn’t equate to maintaining the same business mix for extended time spans. Managing for the long term requires executives to monitor their companies’ standing in the market and enter or exit businesses as their competitive landscapes shift. Dynamic resource reallocation confers a significant performance advantage (Exhibit 3). The practice involves making acquisitions and divestitures; sometimes, it even calls for shrinking a company. Additionally, companies must reallocate talent as frequently as they reallocate capital.

  • Generating value not only for shareholders but also for employees, customers, and other stakeholders. Long-term companies focus on improving outcomes for all their stakeholders, not just those who own shares in the business. They have good reasons to do so. Motivated employees get more done than disgruntled ones. Well-treated suppliers work together more collaboratively. Satisfied regulators are more likely to award operating licenses. While executives must consider trade-offs among the interests of their constituents every day, over the long term, the interests of shareholders and stakeholders converge.

  • Staying the long-term course by resisting the temptation to take actions that boost short-term profits. When temporary changes in fortune—dips in revenue, for example— occur, maneuvers that boost short-term results take on a powerful appeal. Long-term companies resist three temptations: starving long-term growth investments to make up for short-term challenges, such as earnings deviations; cutting costs to an extent that could weaken their competitive positions; and making ultimately uneconomic choices just to reduce the natural volatility in revenue and earnings.

 

Board and CEO actions that orient companies toward the long term

Getting a company to manage for long-term performance requires considerable effort. CEOs and directors must take up new behaviors, abandon old ones, and empower managers to make decisions with long-term outcomes in mind. Here, we outline some practical steps that boards and CEOs can take to promote long-term behaviors.

A board of directors ordinarily has a well-established role: thinking about the future of a company, approving its strategy, reviewing its performance, and evaluating management. However, few boards spend adequate time on assessing the strategies and investment plans of the businesses they direct. Boards can help orient management toward the long term in three ways:

  • Ensuring that strategic investments are fully funded each year and have the appropriate talent assigned to them. To formalize this practice, boards can ask management to report on the funding and progress of strategic initiatives and review that report for signs of effective strategic implementation.

  • Evaluating a CEO on the quality and execution of the company’s strategy, the company’s culture, and the strength of the management team, not just on near-term financial performance. Responses to the survey by FCLTGlobal and The Jeeranont indicate that companies that evaluate executives’ performance mainly in terms of the company’s financial results—rather than on how they achieved those results—were 13 percent less likely to have revenue growth above peers.

  • Structuring executive compensation over longer time horizons—including the time after executives leave their companies. Adjusting some elements of executive pay structures, such as the time horizon over which CEOs are compensated, appears to encourage long-term behaviors on the part of CEOs.

 

CEOs, supported by their top teams, are ultimately responsible for creating long-term orientations in their companies. An important part of that responsibility is serving as role models for the rest of their management teams when making big decisions. CEOs can also promote a long-term orientation among managers and employees by applying their influence and authority in four ways:

  • Personally ensuring that strategic initiatives are funded and staffed properly and protected from short-term earnings pressure. Our survey found that companies whose CEOs ensure resources are allocated to critical growth areas are more likely than other companies to exhibit greater organic revenue growth than their peers.

  • Adapting their management systems to encourage bold risk taking and to counter biased decision making. For example, implementing a company-wide approach to resource allocation can help managers see that their portfolios can accommodate bets on relatively risky endeavors.

  • Proactively identifying and engaging long-term-oriented investors—and having the courage to ignore short-term shareholders and other members of the investment community. It helps CEOs to spend more time talking with long-term investors. Many feel they learn a lot from—and even enjoy—these conversations, which also help reassure executives that a long-term outlook best serves the company and its shareholders.

  • Demonstrating the link between financial and nontraditional metrics to prevent short-term trade-offs. To enrich their dialogue with long-term shareholders and other stakeholders, executives can select, track, and report nontraditional indicators, such as employee satisfaction, that are most material to their companies’ long-term performance.

 

Executives undeniably face real pressure to focus on and deliver satisfactory short-term results. However, they should weigh short-term demands against two other noteworthy considerations. The first is the strong empirical evidence showing that companies that seek strong long-term results outperform companies that optimize short-term results. The second is the long-term interests of both investors and other stakeholders.

Business leaders who choose to prioritize long-term value creation must take on the responsibility of reorienting their companies accordingly. By understanding which management behaviors distinguish successful long-term companies and expressly fostering those behaviors, CEOs and boards can help their companies produce value for stakeholders over the long run.

The Jeeranont

Issued by The Jeeranont Company Limited is authorised and regulated in the USA by the Financial Conduct Authority. UNITED STATES OF AMERICA