The key to business survival during the COVID-19 crisis

This is Working Together, a weekly series on the changing face of U.S. business. These are challenging times and we are all trying to work out what the coronavirus means for our lives and our careers. If there are topics related to the virus that you’d like us to discuss as a community, let me know by commenting below or sending me an email to [email protected]. 

Companies with diverse teams are more likely than ever to outperform their peers, and the penalty for being a laggard on this front is growing steeper. 

That’s the finding of a new report from McKinsey that examines how over 1,000 companies in 15 countries have prioritized — or not — inclusive teams. But while the academic case for building diverse teams continues to mount, putting this into practice has become even more challenging amid a global pandemic. 

After speaking with dozens of executives since the onset of the pandemic, McKinsey partner and report co-author Sara Prince said that sentiment around diversity and inclusion efforts has fallen into two stark camps. Some senior leaders see diversity efforts as a key lever that will help their companies weather this crisis. Others believe that day-to-day business operations must be the priority, relegating diversity and inclusion efforts to the back burner. Prince sees this divide as a deciding factor in which companies will survive the pandemic. 

“The very thing that effective diversity and inclusion allows you to do to get more value are the critical things businesses need right now,” Prince said. “The organizations that harness it and leverage it will ultimately find it as one of the biggest lifts for their future performance.”

Companies with diverse leadership in terms of gender are 25% more likely to financially outperform their peers, and those with ethnically diverse leaders are 36% more likely to outperform, according to McKinsey. Meanwhile, companies without equal gender representation in leadership are 19% more likely to underperform. 

Based on the experience of past recessions, corporate leaders would need to act deliberately to ensure their companies have diverse representation coming out of this crisis. Women and other underrepresented groups are more likely to be in staff roles that are at a greater risk to be eliminated during a downturn, said Prince. And as companies across industries are forced to lay off and furlough large portions of their staff, it’s critical that they track how different groups are being affected by these moves.

McKinsey also found that diverse representation isn’t enough. Employees need to feel and perceive equality and fairness of opportunity in their workplace. But amid a global pandemic that has forced most major companies to shift entirely to remote work, fostering a culture of equality has become even more challenging. Workplace microaggressions that were common before the crisis — like men talking over women in meetings — can be exacerbated as teams switch to all-digital communication. Nationwide school closures and unequal sharing of childcare and homeschooling responsibilities could also put women and minorities at a disadvantage.

But these circumstances also present an opportunity: Forcing teams to work remotely has allowed many corporate leaders to see the benefits of flexible work arrangements for the first time, said Prince. As remote work — and hiring — gains wider acceptance, businesses could begin to rethink not only what the ideal employee might look like, but where and how that ideal employee works as well. 

“Companies and their leaders can seize this moment — both to protect the gains they have already made, as well as to leverage inclusion and diversity to position themselves to prosper in the future,” researchers write in the report.

What’s Working

The brunt of the crisis. LinkedIn data reveals that millennial women are getting hired a slower rate and applying to fewer jobs during the COVID-19 crisis. I sat down with LeanIn.org’s Rachel Thomas and WIE Network’s Dee Poku to discuss these findings and more. Check it out above. 

All-time record. 36 companies in the Fortune 500 are now led by women, the most ever. Twenty years ago, there were only two women CEOs in this cohort, and it wasn’t until the last four years that female CEOs in the Fortune 500 passed the 30-person mark. [Fortune] 

New normal, forever normal? A silver lining of this crisis may be that more companies will become accepting of working mothers as corporate leaders, says ServiceMax CMO Stacey Epstein for Fast Company. “No one, regardless of gender, should ever be made to feel they have to choose between pursuing a big career and being a good and present parent. As we are doing in this time of COVID-19, let’s collectivity work to create a mindset that allows for both — forever,” she writes. [Fast Company] 

Prioritizing caregiving. Patagonia CEO Rose Marcario has been a long-time advocate for gender parity. She brought on-site childcare to Patagonia to help achieve that. In an interview on Tuesday with LinkedIn Editor In Chief Dan Roth, Marcario shares why she thinks this pandemic could help deliver a working world that prioritizes caregiving responsibilities. That is, if we make the right decisions now. Check out the conversation above. 

Leading through anxiety. Anxiety is one of the most common illnesses in the U.S., affecting 40 million Americans each year. Amid the pandemic, Harvard Business Review spoke with dozens of experts on how to confront, fight through and let go of anxiety. [HBR]

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