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L A T I N A M E R I C A - 2022
Socioeconomic diversity in the workplace matters
How companies can take action towards equity and inclusion
Socioeconomic diversity in the workplace matters
How companies can take action towards equity and inclusion
L A T I N A M E R I C A - 2022
01
Why socioeconomic diversity in the workplace matters
Evidence of the business value of diversity is significant. McKinsey research conducted over the past decade and a half has found
strong correlation between companies’ commitment to DE&I and their results.
Gender diversity¹ versus EBIT
% of companies with EBIT above industry average
1. Diverse companies based on the following answers – Non-diverse: Includes answers “Low”, “Very low” and “None” / Diverse: includes answers “High” and “balanced/medium”
Latin American companies have become more inclusive and equal over the past years. However, the diversity, equity, and inclusion (DE&I) efforts of many companies have not been consistent across historically underrepresented groups.
One critical element has largely been overlooked:
socioeconomic diversity.
For which of the following underrepresented groups does your company have strategies… ?
% of DE&I and HR leaders who said “Yes”
Only 32%
of companies state they have actions for socioeconomic diversity
The report builds on and expands previous McKinsey’s research on DE&I, adding socioeconomic diversity in the workplace to the discussion.
+5000
PEOPLE
24+ years old, formally employed or entrepreneurs
Diverse in gender, ethnicity, sexual orientation and socioeconomic background
6
Latin American countries
ARG
BRA
CHI
COL
PER
PAN
+40
LEADERS
HR and DE&I and senior executives from leading companies in the region
Groups analyzed
Lower socioe-conomic background
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- People whose parents completed up to high school; and/or
- Who had no or limited access to food or health services when growing; and
- Nowadays face similar constraints, and have studied up to high school
Experiencing social mobility
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- People whose parents completed up to high school; and/or
- Who had no or limited access to food or health services when growing; and
- Nowadays do not face similar constraints, and have completed at least a technical degree
Higher socioeconomic background
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- People whose parents completed at least a technical school; and
- Who did not have issues with access to food or health services when growing; and
- Have completed at least a technical degree
02
Obstacles to socioeconomic diversity in the workplace
The study examines specific challenges people from lower socioeconomic backgrounds face throughout
3 key moments of their work-life journey
Access to corporate jobs
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Professional growth
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Entrepreneurship path
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Access to corporate jobs
~90%
of people who had not experienced social mobility said they faced obstacles in studying further, particularly lack of money and time.
1/2
of people from lower socioeconomic background don't know which companies could provide them good opportunities
Do you speak English, and at what level?
Intermediate level of English or above - % of respondents per group
Lower socioeconomic background
Higher socioeconomic background
X
Difference between people from lower socioeconomic background1 and those from higher socioeconomic background1 per country
English knowledge is 1.9 times higher among employees from higher socioeconomic background.
Professional growth
While 45 percent of people who have experienced social mobility hold management and executive positions, the number is of 59 percent for people from a higher socioeconomic background
Also, people from lower socioeconomic backgrounds are exposed to fewer hours of in-company training, consistently across all countries surveyed. The gap in hours is wider for soft-skills training
People from lower socioeconomic backgrounds are less likely to share hobbies and common references with their colleagues from higher socioeconomic backgrounds, which can reduce the likeliness to establish strong rapport with their peers based on common interests and experiences.
“At my company, I felt that there was no one to talk about things I like to do, I didn’t share interests with most of my colleagues—I was not feeling that I could be myself at work.”
What is your current position?
% per group
In the last 6 months, how many hours have you dedicated to training offered by your company?
Average hours of training per type and per group
Entrepreneurship path
Despite similar ambitions to become entrepreneurs across all groups, people from lower socioeconomic backgrounds do not have the same opportunities to do so.
Entrepreneurs from a higher socioeconomic background are better able to access initial capital and loans, while people from a lower socioeconomic background see this as the most prevalent challenge to overcome
Delta between the number of people employed and demographic representation (p.p.)
Delta between the number of people employed and demographic representation3 (p.p.)
% of respondents per group that picked the obstacle as #1
03
Benefits associated with investments in socioeconomic diversity
Companies committed to socioeconomic diversity are likely to enjoy
better organizational health and greater talent management
Companies correlate benefits in 5 dimension
with investment in DE&I and socioeconomic diversity
Organizational health
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Employee commitment
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Unique talent pool
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Employee retention and recognition
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Employee satisfaction
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Employees are up to twice as likely to say that their leaders foster trust and open dialog and promote a teamwork culture
Employees are 4x more likely to be happy in the workplace
Employees are expected to remain 12% longer in the companies and there are 40% more employee promotions
Employees value their work and work performance more (+13p.p and +11p.p, respectively)
People from different socioeconomic backgrounds bring new visions to the workplace, which can translate into improvements in the way of working
04
Key actions companies can take to promote socioeconomic diversity
To effectively promote socioeconomic diversity and inclusion, companies can take
5 key actions
comprising both the expansion of actions already focused on increasing DE&I in the companies, and new initiatives tailored specifically to the circumstances of people from lower socioeconomic backgrounds
01
Purposefully track workforce composition based on employee’s socioeconomic background, and monitor well-being
Only 26% of companies mentioned they already track employees’ background – those who do are able to set data-driven goals, implement a bold plan and assess their well being
Company example
01
A company in the technology sector created a well-being index to measure the levels of psychological safety of each of the underrepresented groups, including those with a less privileged socioeconomic background
The idea behind the initiative was to have real-time monitoring that goes beyond traditional DE&I KPIs - ensuring diversity with well-being
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02
Restructure the recruitment process and expand the talent pool
Only ~40% of people from lower socioeconomic background have intermediate level of English or above; reviewing entry requirements can allow companies access these talents – investing in interviewers’ skills is also key
Company example
02
A services company organized an event to introduce the company’s digital capabilities center to public high-school students, who traditionally are not usually targeted by recruitment events.
This provided an opportunity for non-traditional candidates to expand their horizons. One of the participants reported, “I had already given up on my future, but after today I started dreaming again.”
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03
Offer additional company training to allow employees to bridge gaps on hard, soft, and language skills
People from lower socioeconomic background receive less training than those from higher one, despite of 31% of them mentioning support for higher education degree and upskilling/reskilling trainings, especially on soft skills as one of the most impactful actions a company can implement
Company example
03
A retail company decided to sponsor software development courses for well-performing employees at its logistics center as a career change option.
The company not only benefits from having a scarce professional on its staff but also offers its employees the opportunity to qualify for a career with high demand and higher salaries.
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04
Enhance employees’ sense of belonging by strengthening networking, role modeling, and leadership representation
People from lower socioeconomic background had fewer role models and mentors over their lives (14% lower), promoting networking opportunities and ensuring leadership teams have diverse backgrounds, are some of the ways to promote their inclusion
Company example
04
A telecommunications company promotes events where people from lower socioeconomic background can share their journeys with colleagues.
More visibility has been given to the topic, stimulating a more inclusive workplace, and also it has fostered the development of role models and the creation of connections between people with similar trajectories.
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05
Include a socioeconomic lens in anti-biased processes to ensure fair progression
Less than 30% of companies have included bias-checkers in the decision-making process, the ones that did effectively integrate, develop and retain those from lower socioeconomic background through implementing antibias trainings/discussions before evaluation cycles or any relevant internal process
Company example
05
A technology company implementing an anti-bias algorithm to improve performance assessments. The company defines the normal performance curve for all employee subgroups, and assessments from peer reviewers are compared against the forecast. The algorithm automatically corrects deviations from the mean and presents the assessor with a new proposal that removes the bias. Assessors are then able to accept or reject the proposed revision.
“In over 80 percent of cases, the evaluator accepts the algorithm recommendation,” said the company’s chief people officer.
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Authors
Heloisa Callegaro
Senior Partner
São Paulo
McKinsey & Company
Maria
Helo
Partner
Colombia
McKinsey & Company
Paula
Castilho
Partner
São Paulo
McKinsey & Company
Beatriz Federico
Associated Partner
São Paulo
McKinsey & Company
Flor
Moreno
Associated Partner
Colombia
McKinsey & Company
Alex
Rosário
São Paulo
McKinsey & Company
Ana
Tavassi
São Paulo
McKinsey & Company
Camilla Bragança
Rio de Janeiro
McKinsey & Company
Caroline Candido
São Paulo
McKinsey & Company
Glauber Ferreira
São Paulo
McKinsey & Company
Isadora
Rial
Rio de Janeiro
McKinsey & Company
Art and design
Conrado Sertorio, Evee Avila, Fabio Yoshida, and Thiago Limón (illustrations)
Communications
Anabel Suero, Barbara Roncada, Cristiane Matos, Giovana Fazio, Laura Valente, Marcelo Batistella, Mariana Almeida, Paula Duran, Priscila Bianchini, Vinicius Camargo, and Jackie Fermo and Jocelyn Newmarch, from Douglas Knowledge Partners
Contributors
Ankit Jain, Celso Moraes, Cláudia Zaroni, Pedro Antonacio, Resil Das, and Utkarsh Rathi for survey and data analysis Carolina Manrique, Camila Muratore (alum), Fernanda Wurmli, Florencia Muther, Gabriel Bezerra, Geraldine Coronel, Igor Vieira, Iolanda Correali, Magdalena Badal, Pedro Sarasqueta, and Zoroastro Souza, for contributions to the report
Acknowledgements
The authors would like to thank the following senior colleagues for their commitment to the study: Fernando Ferrari, Francisco Ortega, Reinaldo Fiorini, Alonso Razetto, Angela Samper, Federico Ruiz Guiñazu, Julio Giraut, Mauricio Janauskas, Jaime Szigethi, Filipe Freire, Sara Prince and Monne Williams. They would also like to specially acknowledge Henrique Fagundes, Margaret Swink, Robin Lore, Florencia Dellacqua, Gian Romano and Laura San Miguel for their great contributions.
The authors would also like to thank all companies and respondents that participated in the survey for their central contribution to the report.
