Shops Corporation

Client goal

Our client is Shops Corporation. Shops Corporation approached McKinsey for help to improve diversity, equity and inclusion within their company.

Description of situation

Shops Corporation, is a US-based retail company that is committed to ensuring that its own employees—especially those at their corporate headquarters—represent its customers. The majority of Shops Corporation’s customers are women, while only about a quarter of their executive team is women. The CEO has shared the following with your team

• Companies in the top-quartile for gender diversity on executive teams are more likely to outperform on profitability.
• Companies in the top-quartile for ethnic/cultural diversity on executive teams are more likely to have industry-leading profitability.

For these and other reasons, Shops Corporation would like to improve diversity, equity, and inclusion throughout their organization. In particular, they are dedicated to enhancing the representation of women and other minority employees within senior leadership.

McKinsey study

Shops Corporation has recently created full-time, director-level roles to lead a number of inclusive affinity groups and has engaged McKinsey to help Shops Corporation with their diversity and inclusion goals.

Helpful hints

• Write down important information.
• Feel free to ask the interviewer for an explanation of any point that is not clear to you.

What types of factors would you want to explore to understand how Shops Corporation might improve its diversity within senior leadership?

Helpful hints

• Take time to organize your thoughts before answering. This will help show your interviewer that you have a logical approach and can think in an organized way, regardless of the “accuracy” of the outcome.
• Develop an overall approach before diving into details.

One of the things the joint team of Shops Corporation and Mckinsey has been working on is what they are calling a Talent Pipeline. The pipeline displays the career progression for women and their representation across the following 4 levels. From most junior to most senior, they are:

• Professional: this includes entry level hires and support staff (e.g., executive assistants).
• Manager: slightly more senior professionals (e.g., hires after business school) and select support managers.
• Director: vast majority are aligned to revenue generating functions; at this level, individuals typically manage teams.
• Executive: business unit leaders, executive team, etc. managing tens to hundreds of people.

The pipeline shows the proportions for hiring, attrition (proportion of people in that group that left Shops Corporation), and promotion.

Exhibit

What can be possible explanations for the challenges that Shop Corporation faces in achieving and maintaining higher rates of women executives according to this data?

Helpful hints

• Take some time to look at the information and note down any observations you have.
• Challenge yourself to identify trends that are not immediately obvious in the data.

Shops Corporation is considering hiring more women as managers from external sources to increase its proportion of women executives. They have a goal of reaching 40% women executives in the next 10 years. To understand the impact, the team has gathered the following information:

• The total number of executives today is 300, and is expected to stay the same over the next ten years
• Over the next five years, the team projects that two-thirds of these hired Managers will become Directors; Over the subsequent five years, one-third of those Directors will become Executives
• Over the next ten years, assume a total of 50 percent of these hired Managers will leave
• Everything else stays the same (i.e., existing women employees move through the pipeline at the same rates as they do today)
• As a reminder, 25 percent of Executives are women today

How many additional female managers would need to be hired next year to reach Shops Corporation’s goal of 40% executives in the following 10 years?

Helpful hints

• Don’t feel rushed into performing calculations. Take your time.
• Remember that calculators are not allowed, you may wish to write out your calculations on paper during the interviews.
• Talk your interviewer through your steps so that you can demonstrate an organized approach; the more you talk the easier it will be for your interviewer to help you.