Diversity & InclusionThe New Business Imperative
Tonie LeatherberryPrincipal, Deloitte Consulting LLP
November 16, 2012
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Diversity is a Fact. Inclusion is a Choice
INCLUSIONmeans behaviors, policies, and practices that allow all stakeholders to achieve their full potential
DIVERSITY is a
collective mixture of
individuals, cultures,
and organizational
expertise
Diversity includes everyone.
Source: The Changing Consumer and the Workforce Imperative, Network of Executive and Deloitte, 2011
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“The business case has been demonstrated quite thoroughly. When you’ve got over one-third of this country as people of color, a diverse workforce benefits in terms of connection and creativity. Whether Latino, African American, Asian – regardless of the group – it is hard to form a brand relationship unless you have people that come from those cultures and ethnicities that can connect.”
— Don Knauss, Chairman and CEO, The Clorox Company
Source: Knauss, Don. Chairman and CEO, The Clorox Company. Interviewed by Deloitte employee via telephone, 19 March 2010.
Diversity is More Than Just a Buzzword
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Diversity Has Many Layers
Identity
Function
Role
Credentials
Level
Tenure
RegionWorkExperience
IndustrySpecialization
ServiceLine
ImmigrationStatus
Socio-Economic
Status
Education
ThinkingStyle
GeographicLocation
FamilyStatus
WorkingStyle
Class
Language
Appearance
ValuesAge Race/
Ethnicity
Religion
Mental/PhysicalAbility
GenderSexual/
Orientation
Personal Cultural Organizational
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The Marketplace & Workplace Are Changing
Beginning in 2011, > 50% of children younger than the age of one were minorities1
By 2025 > 50% of the US population may be multicultural1
By 2042, minority groups may be the new majority1
Going forward, 85% of the US’ population growth may come from ethnic groups of color2
Only 3% of the world’s future population growth may come from the developed world1
By 2014, the global earning power of women is expected to overshadow the growth in the gross domestic product of China and India — combined3
93% of Fortune 500 companies say that diversity is an important business drive4
1. Source: Burgos, David and Ola Mobolade. Marketing to the New Majority: Strategies for a Diverse World. New York: Palgrave Macmillan, 2011.2. Source: U.S. Census Bureau, ‘‘Annual Estimates of the Population by Race, Hispanic Origin, Sex and Age for the United States: April 1, 2000 to July 1, 2008 (NC-
EST2008-04)’’ (released May 14, 2009).3. Source: Jeffrey Matthew Humphreys. The Multicultural Economy 2008 (Athens, Ga.: Selig Center for Economic Growth, Terry College of Business, University of Georgia, 2008).4. Source: Tudor, P. “Adding Value with Diversity: What Business Leaders Need to Know.” American Institute for Managing Diversity. 2007.
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1990 Buying Power
2014 Buying Power
(Projected)% Increase (1990-2014)
African American
$318 billion
$1.1 trillion1 246%
Hispanic $212 billion
$1.3 trillion1 513%
Asian American
$117 billion
$696.5 billion1 495%
Native American
$19.7 billion
$82.7 billion1 320%
White $3.8 trillion
$13.1 trillion1 245%
LGBT Not avail. $835 billion2
Understanding the cultural diversity of
your consumer base is important to capturing
market share
Minority Groups Have Unprecedented Buying Power
1. Source: The Multicultural Economy 2009, Selig Center for Economic for Economic Growth2. Source: The Buying Power of Gay Men and Lesbians 2008, Witek Combs Communications
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1. Source: http://www.huffingtonpost.co.uk/2012/11/14/eu-mandatory-quotas-proposals-scrapped-in-favour-of-softer-approach_n_2128296.html:2. Source: http://ddp-ext.worldbank.org/ext/DDPQQ/member.do?method=getMembers&userid=1&queryId=189 3. Source: Catalyst, The Bottom Line: Corporate Performance and Women's Representation on Boards (2007)
Diversity & Global Markets
Women are increasingly crucial European governments mandates for board
positions are currently being debated1
In a majority of countries, women represent > 50% of college degrees2
Companies with more women directors, significantly outperform companies with the lowest percentages of women directors3
Growth strategies for emerging markets (BRIC and MIST): Invest in localized R&D
Utilize local ingredient and rituals
Understand local distribution/consumption patterns
Build local affinity communities
Work with local businesses & political forces
France
40%
Italy 33%
Belgium 33%
The Netherlands 30%
Norway 40%
Spain
40%
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Age is Yet Another Component of Diversity
Growth in U.S. Age Groups1
Businesses should meet the needs of an aging
US population while also targeting younger
generations who are the consumers and
employees of tomorrow
1. Source: US Census Bureau2. Source: U.S. Bureau of Labor Statistics
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So What Can Inclusion Do For Your Business?Deloitte’s Enterprise Value Map™ helps to frame the business case for Diversity and Inclusion
Attract and retain top talent Provide leadership
development opportunities
Provide mentoring relationships
Reinforce culture of meritocracy
Increase productivity through improved morale
Address costs associated with recruitment, training, and retention
Reduce workforce costs resulting from employee relations/litigation/settlements/turnover
Increase efficacy of the existing initiative, programs, and communications
Leverage diverse ideas to develop innovative market-relevant product and service ideas
Identify new market segments and opportunities
Sell more effectively to growing diverse markets
Mirror the changing complexion of customers and customer organizations to more effectively compete
Leverage marketplace recognition and eminence to attract new business
Improve public, shareholder and investor perceptions
Strengthen corporate social responsibility reputation
Enhance brand image through strength of culture and eminence of people
Shareholder Value
OperatingMargin
SG&A COGS
AssetEfficiency
PP&E Inventory AR/AP
RevenueGrowth
Volume Price Realization
Expectations
Co. Strengths
Ext. Factors
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The Corporate Pyramid Model inhibits the flexibility to attract future workers and consumers
The Bridge Model connects consumers to a business’ leadership via a more engaged workforce and more transparent flow of information
The Anchors: Consumers and Leadership, which depend on each other & hold the structure together
The Deck: Workforce, supporting the bridge with a sense of purpose
The Beams: Communication and information networks, fostering a multi-dimensional dialogue
FIT Has Proposed Three New Models for Inclusion
Cultural fusion is already apparent in food, fashion and music
Fusion can be incorporated into beauty using three elements
Combined, these allow brands to:
- Connect with diverse customers
- Spur inspiring product concepts
- Build an emotional connection
The Bridge1 The Bonding Helix2 Beauty Fusion3
Indigenous Ingredients
Sensorial Experience
BeautyRituals
The growing diversity of the world’s consumers means brands must engage in 1-on-1 conversations
Today’s consumers are unique and have power to influence others
Brands must build relationships that include loyalty and influence
Six Bonds of the Helix:
- Consider
- Evaluate
- Buy
- Re-Evaluate
- Loyalty
- Influence
This is only possible using digital fingerprints and technology to create customized digital content
1. Source: Diversity and Global Leadership: The Bridge 2012, Fashion Institute of Technology2. Source: Diversity and Global Marketing: The Bonding Helix 2012, Fashion Institute of Technology3. Source: Diversity and Global Product Development: Beauty Fusion2012, Fashion Institute of Technology
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Leading Companies Leverage Diversity for Innovation
“Diversity brings innovation and relevance. I think the greatest benefit we have found is that diversity drives innovation. People from different backgrounds engaged in thoughtful debate leads to groundbreaking
solutions. When you have a team that is engaged and reflective of your consumer base, you can better understand, anticipate,
and meet the needs of your guests.”
— Tracey Burton, former director of diversity, Target Corporation
Source: Burton, Tracey. Former director of diversity at Target Corporation. Interview by Deloitte employee via telephone, 5 May 2010
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Beauty is a Profitable Industry
Beauty Manufacturing(2011 at-a-glance)1
Beauty Fragrance and Cosmetics Stores
(2011 at-a-glance)2
While industry revenue dipped in 2009 (by only .1%) for the first time in five years due to weakened worldwide economy, things turned around in 2010 and 2011
Revenue in 2012 is estimated to grow by 2.2% to $54.9B (making the annual growth rate over five years 1.3%)1
1. Source: IBISWorld Industry Report; Cosmetic & Beauty Products Manufacturing in the US, March 20122. Source: IBISWorld Industry Report: Cosmetic & Fragrance Stores in the US, March 2012
Statistics Snapshot
Statistics Snapshot
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“The popularity of the ‘white, blonde and blue-eyed’ look has been declining for some time.” — Geoffrey Jones, HBS professor & author of Beauty Imagined
Cosmetics companies are adapting to growing markets such as China and Latin America, expected to overtake North America within four years1
But Beauty Companies Should Adjust To Remain Profitable
1. Source: The Observer: Faces of Change, Zoe Wood, July 2011
Iman –
Credited as the world's first ethnic supermodel
Liya Kebede – The first black model in Estee Lauder's history
Du Juan – Hailed as the first Chinese supermodel
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Brand X Idealist line1
Brand Y “My Black is Beautiful”2
Brand Z , leverages different strategies to sell to all ethnicities3
Leading Brands Already Use Diversity Driven Marketing
1. Source: NYFashionCrit: http://nyfashioncrit.wordpress.com/2011/03/23/estee-lauder-shows-some-diversity-in-its-new-ad-campaign2. Source: Proctor & Gamble:http://www.myblackisbeautiful.com/about/3. Source: Beauty Packaging: Lining Up for the Latino Market: http://www.beautypackaging.com/articles/2009/03/lining-up-for-the-latino-market
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Brand A
Along with Deloitte, sponsor the “Diversity and Performance” Chair at ESSEC1
Solidarity Sourcing Program has helped 14,000 economically vulnerable people find work2
Brand B
Foundation For Woman has raised $175M for breast cancer research, providing detection programs to 17M women in 58 countries3
Signed the CEO Statement of Support for UN’s Women's Empowerment Principles Report4
Leading Brands Embed Inclusion Within Organizations
1. Source: http://leadership-diversity-chair.essec.edu/2. Source: L’Oreal: http://www.loreal-finance.com/eng/news/solidarity-sourcing-825.htm 3. Source: Avon: http://www.avonfoundation.org/causes/our-impact/4. Source: http://www.unglobalcompact.org/Issues/human_rights/equality_means_business.html
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The Business Case For Diversity According to Deloitte
https://deloittenet.deloitte.com/About/Bus/Talent/Pages/Diversity.aspx
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Lessons From Our Experience: There Is No Silver Bullet
Inclusion driven as a business case
Leadership commitment from the top
Accountability – what gets measured, gets done
Benefits accrue to the organization
Continue to innovate
Engage non-minorities, men from the beginning
Share leading practices
Continue to innovate by challenging the status quo
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Creating the Preferred Workplace Requires Change
Catalyst Research1 suggests that a well-designed strategy, not separate programs, makes all the difference. The strategy should be:
Business-based
Focused on Top Priorities
Integrated into Business Strategy
And Driven By:
Solid Business Case
Senior Leadership Support
Effective Communication
Accountability and Metrics
1. Source: http://www.catalyst.org/
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Leaders Must Be Accountable and Engaged
External Advisory Board(s)
Initiatives that are integrated into marketplace
Multiple benefits to attract/retain people
Education and communication
Surveys to measure results and impact
Incentives based on targets and retention plans
Alliances with higher education
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Deloitte is committed to growing leadership skills at various levels in the organization
Deloitte University (DU) is an embodiment of this commitment to developing its people
Including Managing Principal, Diana O’Brien, Deloitte Consulting LLP and Chief Customer Officer, Pete Sackleh, Deloitte LLP, DU is led by a diverse array of leaders
DU’s commitment to diversity shows, as:
- Younger employees work hand in hand with senior practitioners
- People from all Deloitte’s offices and practices nationwide work together to solve problems
Deloitte University Fosters Values In a Diverse Workplace
3M+Learning hours in FY12 (~1M at DU)
22KProfessionals attended learning and networking
3,500Partner, principal, director visits
~50Client visits; 50 more in the planning stages
Note: Deloitte University statistics provided are aggregate for FY12 and not specific to Deloitte's Retail & Distribution practice only.
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Inclusion Is No Longer About Doing The Right Thing…
Right Thing to Do
Increased Diversity Representation
EEOC Compliance
Diversity Programs
Value
Innovation and Creativity
New Market Penetration
Customer Loyalty
Effective Global and
Cross-Cultural Teaming
Global Leadership
DevelopmentBrand
Reputation
Knowledge Transfer
Employee Satisfaction, Engagement
and Productivity
Acquisition and Retention of Top Talent
Business Enabler
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Disclaimer
This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
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