Lacking a Diverse Leadership Pipeline? Develop your FGPs
Diversity in leadership is a consistent topic in management science, as compelling data highlights its substantial benefits:
Research cited by Forbes indicates that diverse teams make better decisions 87 percent of the time. This heightened effectiveness stems from the variety of perspectives and experiences that diverse teams bring to problem-solving, fostering innovation, and enabling more creative solutions.1
Embracing diversity in leadership positively impacts employee morale and organizational culture. When employees observe that their organization values diversity and inclusion, they are more likely to feel respected and included. This sense of belonging correlates with higher levels of engagement and productivity. 2
Diversity in leadership correlates with enhanced profitability. Companies with diverse leadership teams tend to outperform their industry peers financially. This advantage arises because diverse leadership is better equipped to understand and cater to diverse customer bases, thereby driving increased sales and profitability. McKinsey's research underscores this, revealing that public companies in the top quartile for diversity in management enjoy a substantial 35 percent increase in financial returns above their industry averages.3
Despite the clear advantages, diversity is lacking in executive leadership:
Only 10.4 percent of Fortune 500 companies are led by women CEOs. 4
In 2021, women of color composed just 13 percent of C-suite roles.5
Asian Americans, despite having a higher representation in entry-level professional positions, are also underrepresented in executive roles in many sectors.6
In 2022, Hispanic and Latinx leaders held only 5 percent of executive-level jobs, while Black executives accounted for 3 percent of such posts. Asians occupied 6 percent of those positions. 7
Companies perennially state that cultivating a diverse leadership pipeline is challenging, citing a lack of qualified talent.
Our suggestion? Identify First-Generation Professionals (FGPs) early in their careers and develop them to fill your pipeline of executive talent.
Consider that BCG found that FGPs—among the first in their families to hold a white-collar position—are 48 percent likelier to pursue management positions in later stages of their career if they are intrinsically motivated, and FGPs are 40 percent more likely to be intrinsically motivated than their continuing-generation counterparts. Also explore the fact that 81 percent of first-generation college students cite financial stability as their reason for attending college. That pressure to achieve financial stability leads to FGPs accepting first offers more quickly, agreeing to lower starting salaries, and taking jobs for which they are overqualified.
Given that desire for stability, and based on our phase-one research on FGPs in which we interviewed more than a dozen, we posit that FGPs are not likely to jump from job to job, preferring to stay where they can grow safely and steadily. Finally, understand that FGPs are largely working-class folks who have demonstrated perseverance, courage, and creativity to graduate from college and make it into the white-collar world. The same tenacity that they demonstrated in their own path to the professional world, we believe, would be applied to their workplace responsibilities.
FGPs are hidden gems, preferring to stay quiet and unexposed, perhaps due to imposter syndrome or not feeling a sense of belonging, and largely due to not understanding the necessity of advocating for one’s self and building strong relationships in the workplace in order to advance. Further, as their the first in the families with professional roles, FGPs have no blueprint for comprehending their work environment and the opportunities it presents, as shared by one of our research participants:
“In my experience, I’ve wasted a lot of time because I didn’t know what was possible or what I could have, or what I could do. Not having someone to tell you…this is what’s happening, and this is how to navigate what’s happening. “
“You know your abilities, you know what you want to do, you know your dreams, but you don’t have a road map, you don't know how to go after it. You need support, you need some coaching, but you don’t know how to go for what you need.”
However, with guidance and confidence from trusted managers and mentors, FGPs—like the ones we spoke to in our phase-one research—were eager for stretch assignments and to expand their capabilities.
We are developing FGP-focused strategies to help companies identify and develop these high-potential employees from the recruiting and hiring phase through development and promotion to help the companies fill their leadership pipelines and expose the FGPs to opportunities that are beyond their expectations. Companies eager to identify their next set of leaders need to look no further than their organization’s First-Generation Professionals—and we would be happy to help them do so.
Resources
1
"New Research: Diversity + Inclusion = Better Decision Making At Work." Forbes, 10 December 2021. https://www.forbes.com/sites/eriklarson/2017/09/21/new-research-diversity-inclusion-better-decision-making-at-work/2
"Diversity Wins: How Inclusion Matters." McKinsey & Company, May 2020. https://www.mckinsey.com/~/media/mckinsey/featured%20insights/diversity%20and%20inclusion/diversity%20wins%20how%20inclusion%20matters/diversity-wins-how-inclusion-matters-vf.pdf3
"Diversity Matters." McKinsey & Company, 2 February 2015 https://www.mckinsey.com/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/why%20diversity%20matters/diversity%20matters.pdf4
"The Share of Fortune 500 Companies Run By Women CEOs Stays Flat at 10.4% as Pace of Change Stalls." Fortune, 4 June 2024. https://fortune.com/2024/06/04/fortune-500-companies-women-ceos-2024/5
"Leadership Roles Remain Out of Reach For Many Women of Color." McKinsey & Company, 7 October 2021. https://www.mckinsey.com/featured-insights/sustainable-inclusive-growth/chart-of-the-day/leadership-roles-remain-out-of-reach-for-many-women-of-color6
"Asian American Workers: Diverse Outcomes and Hidden Challenges." McKinsey & Company, 7 September 2022. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/asian-american-workers-diverse-outcomes-and-hidden-challengesr7
"Elevating Hispanic Representation in Top Executive Roles." SHRM, 11 February 2022. https://www.shrm.org/topics-tools/news/all-things-work/closing-gap#:~:text=One%20broad%20study%2C%20based%20on,while%20Asians%20hold%206%20percent.