Case Study – “L’Oreal S.A.: Rolling Out The Global Diversity Strategy”
Petito Mike, Riskind Michael, Polk Alex, Reis Karina, Rizack Gabriella
February 26th 2015
Roadblocks for Diversity Support
L’Oreal has encountered numerous roadblocks in attempt to show its global managers that a commitment to diversity is highly important. Although L’Oreal recognizes that diversity is necessary, they do not put enough emphasis on it, as they should. In its corporate goals, L’Oreal states that it works to eliminate all forms of discrimination and boost its diversity around the globe. Considering that L’Oreal is a global company and operates in many different countries, it must tailor its diversity strategies specifically to each country.
L’Oreal Implements a Global Diversity Strategy
L’Oreal uses ethically diverse people as their company spokespeople, advertises in magazine that are considered ethnic, and partners themselves with agencies that target certain ethnic groups. These are all methods used to promote diversity on a global scale. Holding mandatory diversity seminars was another popular strategy used by L’Oreal to help promote diversity, but these were highly criticized. In addition to educating employees on why not having diversity is bad, they must show employees that a high amount of diversity is actually beneficial to the company. Using the strategies listed above to create change is often more difficult in developing countries compared to developed countries.
The Demographics of the United Kingdom
Religious beliefs within the United Kingdom carry over into its labor force. It is important for L’Oreal to determine what similarities exist between the company’s native French culture and the United Kingdom’s Culture and try to work around the differences. The United Kingdom, especially its upper class, tends to treat equality with much respect, which creates a good atmosphere for increased diversity. L’Oreal must highlight to managers of its United Kingdom branch how diversity creates a variety of input and fosters innovation. Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) allows managers to group certain countries together based on cultural similarities, and groups the United Kingdom with the “Anglo Cluster.”
L’Oreal Faces Various Diversity Problems in the United Kingdom
Within the United Kingdom, male dominance, racial discrimination, and language differences are the three main factors hindering the progress of diversifying L’Oreal. The percentage of men within the labor force is consistently greater than that of women in the United Kingdom. L’Oreal’s top executives should implement a monitoring system to avoid gender bias and discrimination. Additionally, blacks and Asians are discriminated against in the UK workforce, which could be corrected to some extent by a change in the marketing departments’ campaigns. Lastly, human resources must pay special attention to complaints about discrimination based on language differences.
L’Oreal is a French Retailer that is the world’s largest cosmetics and beauty company, headquartered in Clichy, France. L’Oreal’s beauty products and services concentrate on hair color, skin care, sun protection, make-up, perfumes and hair care. L’Oréal is an international company with several brands across the world. For this company, a strong international strategy is a crucial part of success. L’Oréal must create diversity strategies that are specific to the culture of each of its operating countries. The company’s strategy must have numerous diversity dimensions throughout strategy development. These dimensions include gender, age, race, and education. An effective diversity strategy yields numerous advantages to a company, as L’Oréal illustrates.
General Strategy: Handling Roadblocks
L’Oréal currently possesses 27 international brands in over 130 countries. These countries vastly differ from each other in their global diversity. The implementation of L’Oréal’s global diversity strategy was restricted due to the substantial differences between the countries. Employees’ lack of awareness about diversity benefits hindered L’Oréal’s creation of a successful diversity strategy. L’Oréal’s diversity seminars aimed to teach managers to promote diversity in their workforce. At first, numerous managers from Western countries were reluctant to attend these seminars. The seminars unfortunately were less effective than planned. Managers claimed the diversity seminars were unnecessary, especially because they were busy with other responsibilities. L’Oréal was determined to have its employees value globalization and diversity. The company wanted employees to expand their worldviews. Consequently, L’Oréal challenges its managers to create a diverse, inclusive work environment for all employees. This work environment is plausible when managers emphasize the importance of diversity to every employee.
L’Oréal took action in attaining diversity within the company. The company had been dealing with issues of diversity since 2000. The issue with L’Oréal’s diversity strategy was that “Diversity at L’Oréal was not narrowly focused on ethnic origins or gender differences and was not merely about compliance with legal standards” (Mark, 2010, p. 4). L’Oréal views diversity as “visible and invisible differences” which influence the way individuals behave and what they value. The company fails to specify in their definition ethnic, racial, or gender elements. Managers struggle to create concise diversity goals since L’Oréal’s definition of diversity is too broad. Managers internationally attended global diversity seminars to try and educate employees on diversity in the labor force. L’Oréal assumed each regional branch would select the strategies they learned that were appropriate for that specific region. However, this identical method is not effective for the assortment of geographical and cultural backgrounds that L’Oréal employees work in. Numerous managers viewed the diversity seminars as pointless. These managers criticized the seminars. Sylvanie Balustre-D’Erneville, European Diversity Director, drew conclusions from the feedback she was given from managers who attended the seminars. According to Sylvanie Balustre-D’Erneville, most managers understood the significance of diversity but did not stress it in their workforce. Managerial doubt was often rooted in misconceptions about an affirmative action seminar. Affirmative action is a policy that favors individuals who often suffer from discrimination, especially related to employment. These policies relate to positive discrimination and aim to minimize inequalities related to factors such as employees’ age, race, and gender. Additional factors are also included in diversity such as religion and sexual orientation. Even though L’Oréal’s first seminars were not narrow enough, these seminars eventually proved to be successful in showing the global diversity strategy of L’Oréal.
Every country has specific cultural beliefs, values, and behaviors. These differences pose problems for L’Oréal’s global diversity strategy. Developed countries typically have a greater immigration rate than developing countries. Therefore, managers in developed countries such as the United States are aware of the importance of diversity. This is because developed countries’ populations are more diverse than developing countries. Since developing countries have a smaller immigration rate, their populations tends to be more homogenous. L’Oréal branches in developing countries, such as China, typically have employees that are all the same race. This leads to minimal knowledge about diversity. In most developing countries, corporations are less likely to embrace diversity management. Asian managers insisted the seminars were inapplicable to their homogenous workforces. Previously, L’Oréal’s general seminar workshops have focused on promoting diversity hypothetically instead of inside specific branches. The amount of individualized cultures could result in diversity seminars not being successful in accomplishing L’Oréal’s diversity goals.
Diversity management is an essential part of the workforce. Successful diversity management strategies result in a more unified and effective workforce. Diverse companies entice a larger customer base. L’Oréal improves its global diversity strategy to increase the company’s revenue. Managers capable of advocating diversity in the workforce of their region will experience an increase in revenue.
Promoting Diversity in the Workforce
Diversity plays an integral role in L’Oreal succeeding as a profitable company. Although links exist between diversity and performance, there are managers within L’Oreal that understand and support the need for diversity as a strategy but do not prioritize it. These managers do not prioritize this effort over other objectives and goals.
In 2004, L’Oreal France signed a Charter of Diversity. This charter was designed to improve diversity in the workplace. L’Oreal’s corporate goals with regards to diversity include eliminating all forms of discrimination in its operations internationally and increasing the overall diversity of the entire multinational corporation. L’Oreal’s corporate diversity manager, George-Axelle Broussillon, stated, “the diversity of talents is the driving force behind creativity and innovation” (Mark, 2010, p. 1).” To promote products to its multicultural consumers, L’Oreal uses a variety of approaches, consisting of employing ethnically diverse spokespeople, advertising in ethnic magazines, and partnering with agencies focused on marketing to specific ethnic groups.
Another way L’Oreal tried to improve diversity within the workplace was by holding mandatory diversity seminars for all employees. Although the intentions of these seminars were positive, L’Oreal received mixed reviews from its managers. After having attended one of the seminars, one of the managers said, “I don’t understand why we need to attend these sessions because we’re not discriminating against any employees to begin with” (Mark, 2010, p. 5). This reaction illustrates how L’Oreal can improve its methods of communicating the importance of diversity. Instead of instilling the idea that managers are currently doing a poor job in this regard, the seminars should highlight that this is not criticism of past performance. Seminars should highlight that diversity is the most effective tool to breed innovation and creativity. Additionally, they should emphasize that L’Oreal is working to reach the next level of global dominance. L’Oreal’s chairman, Lindsay Owen-Jones, said, “… we have developed a unique portfolio of brands, each one with a different cultural origin to better satisfy the differences in sensitivities of people around the world” (Mark, 2010, p. 2). Since L’Oreal is a global company, it needs to have an exceptionally diverse workforce because the company must appeal to different types of people internationally. After attending one of the diversity seminars, another managers said, “I understand and support the need for diversity as a strategy, but implementing it when there are day-to-day pressures is going to be tough even if I support it wholeheartedly.” This reaction portrays how certain managers recognize the importance of diversity but fail to prioritize it. These managers may view other daily tasks as more important.
L’Oréal has to go beyond basic “diversity training” and educate its employees about the goals and results that can be reached by the company on a global level. When this occurs, seminars will impress the significance of diversity programs. Additionally, L’Oreal needs to educate its employees about the potential impairment of a workforce not being diverse. The company can highlight how the United States is the furthest along in accepting the need of diversity, while Asia is the least far along. Management in Asia has not given priority to the diversity of their workforce. This led to profits being higher in the United States than in Asia. Diversity is not solely an external subject or “affirmative action”. Diversity is the key to success. As demonstrated by the difference in profits of the United States and Asia, there is a link between diversity and performance.
Encouraging and Implementing Diversity in the United Kingdom
In preface to the discussion of key factors below is an important demographic figure of the United Kingdom: religious affiliation. Religious affiliation can provide important insight into work-related values. The United Kingdom is approximately 59.5% Christian, including the denominations Anglican, Roman Catholic, Presbyterian, and Methodist (CIA World Factbook). Based on this religious breakdown, it can be concluded that the majority of the UK workforce will value, as Catholics do, consideration or “concern that employees be taken seriously, be kept informed, and that their judgments be used” and, as Protestants do, employer effectiveness, or “desire to work for a company that is efficient, successful, and a technological leader” (Kreitner & Kinicki, Tenth Edition). These values held by the majority starkly differ from the values of UK minority religious groups, such as the next largest group, Muslims, which make up only 4.4% of the population. Muslim people tend to value continuity or “desire for stable environment, job longevity, [and] reduction of uncertainty.” This may affect what kind of work each group seeks and how each addresses problems in the work environment.
In building a cultural profile for the United Kingdom, L’Oreal will benefit most from an analysis of six dimensions of the British culture relative to the company’s own French culture. As determined by the Hofstede Study, the UK is an individualistic culture, beaten only by the US and Australia in the extent to which it prioritizes personal responsibility, freedom and choice. The country is predominantly masculine, meaning companies tend to value success and performance more than caring for others and quality of life. “People in the UK live in order to work and have a clear performance ambition” (The Hofstede Center). The UK tendency towards modest behavior seems to contradict the significant importance placed on achievement. This could result from foreign misinterpretation of the United Kingdom’s low-context culture, which demands an understanding of verbal cues beyond what is actually spoken and which indicates a tendency to get down to business quickly, agree by specific contract, and negotiate efficiently (Kreitner & Kinicki, Tenth Edition).
To involve people from high context cultures into the proposed L’Oreal branch in the UK, managers must train and be trained to make adjustments to lower the context barrier. To do this, managers should greet new employees with groups of colleagues that can be assets to newcomers, give explicit instructions and assignment expectations, provide background information-including history and personalities-when explaining anything, encourage questions about matters outside newcomers’ department and function, and foster self-reliance (Kreitner & Kinicki, Tenth Edition).
Returning to the Hofstede analytical tool, L’Oreal will find the most useful information concerns power distance and uncertainty avoidance, dimensions where the UK and France differ most. Power distance refers to “the extent to which the less powerful members of institutions…expect and accept that power is distributed unequally” (The Hofstede Center). Compared to France, Britain—especially the British upper class—believes that people should be treated as equals. Representing a low power distance, this will benefit L’Oreal because it indicates that British managers have a predisposition in favor of diversity. Britain also falls low in uncertainty avoidance, indicating that most British companies and employees feel comfortable approaching problems without instructions or rules. This is consistent with Britain’s strength in creativity and innovation. When opening a branch in the United Kingdom, L’Oreal should emphasize to managers that diversity of employees will offer a greater variety of input, facilitating the success in creativity and innovation that the masculine, individualist society demands.
Project GLOBE (Global Leadership and Organizational Behavior Effectiveness) allows managers to profile countries based on similar cultural dimensions. It groups England and Ireland with the “Anglo cluster” of former British colonies that are now some of the most developed nations in the world (Ashkanasy, Trevor-Roberts, & Louise, 2001). The Globe Project asserts that charismatic/value-based, team-oriented, and participative styles of management make for the best leadership in Anglo countries. Since the UK is individualistic, diversity cannot be integrated through an uncompromising decision from the top. Relevant parties must be regularly involved in discussion about and promotion of the topic. Charismatic/value-based and team-oriented management can help affect this goal; these forms of management emphasize, respectively, leading by creating a vision and through diplomacy. “In a country such as Ireland, […] a team-oriented leadership style can be more family-orientated in that the team is viewed as a surrogate family unit with team building and diplomacy behaviors coming to the fore.” Thus, if L’Oreal’s management can successfully create a similar environment, it will do well instilling diversity within its United Kingdom branch.
Key Factors in Promoting Diversity in the United Kingdom
Within L’Oreal’s United Kingdom branch, three key individual factors must be taken into account when formulating diversity initiatives: male dominance, racial discrimination, and language differences. The first of these factors, male dominance, reflects a longstanding reality in the workforce: men hold more available jobs than women. In 1971, 92% of men were in the workforce, while only 52% of women participated in the workforce (Dugan, 2014). Nearly forty years later, in 2010, the gap between male and female employment lessened by 20 percentage-points with. Although these numbers reflect a trend toward gender equality in the workplace, a major gap continues to exist. Interestingly, because the L’Oreal brand worldwide primarily targets female consumers for many of its “bread-and-butter” products, the company is in a unique position to expand its UK employee group in the direction of its customer base. To avoid gender bias within L’Oreal’s United Kingdom branch, top executives must implement a monitoring system to ensure that there is no discrimination against women at the hiring stage and subsequent employment.
A critical step toward correcting any gender imbalance is for supervisors to oversee the hiring rates of both men and women within the UK branch. To the extent that discrepancies exist, a strategy must be implemented to attract more women to the workforce (e.g., flexible hours, work opportunities from home, on-site childcare centers, etc.). Once hired, the human resources department should pay careful attention to any complaints related to gender bias within the company. One method of ensuring that gender equality is properly executed is to design and implement a training program for human resource executives and supervisors to help promote identification and management of situations involving gender bias. The HR team should have at its disposal specific actions for remediation, including a “no tolerance” policy, warning/probation systems, and eventual dismissal for failure to comply. Diversity workshops that address a wide range of issues (gender, race, cultural differences) also should be rolled out to all employees.
Another individual key factor to consider when promoting diversity in L’Oreal’s branch office is the undeniable discrimination against black and Asian ethnic minorities present in the UK workplace. Studies have shown that work opportunities for members of these groups stem from, and are diminished by, an extremely low rate of University acceptance. In effect, the lack of higher education excludes blacks and Asians from a substantial applicant pool where educational achievement is a key factor in hiring. Furthermore, this ongoing circumstance has generated in potential employers and minority group members alike the unfortunate conclusion that higher earning career paths are unattainable. In order to promote diversity in the UK branch, top executives must implement a program designed to recruit more black and Asian minorities. The marketing department must create an advertising campaign to attract qualified candidates who show aptitude, desire and potential. Once hired, promising employees who lack University credentials should be given access to courses and other educational opportunities that enable job advancement. L’Oreal is in a unique position to break the cycle of discrimination and become a leader among UK companies by attracting and nurturing strong candidates.
A third factor that should be taken into account in branch diversity initiatives is the presence of language differences among English speakers from the United Kingdom and English speakers from the United States or other countries. Not all English speakers use the same words or pronunciations for certain items, and in a company as large as L’Oreal, diversity among English language users exists. Underlying cultural prejudices may also generate a lack of tolerance among certain “native” speakers for other groups. L’Oreal must address this issue by reminding employees that they are part of a global company whose products reach a broad range of consumers from many walks of life. The success of L’Oreal depends on its global strategy and the ability of its employees to embrace different cultures. The human resources department must look for and pay special attention to complaints that demonstrate intolerance through language differences. Supervisors of the branch must spread the idea that diversity in the workplace is part of a strategic initiative that benefits the company as a whole. Members of the L’Oreal community who encourage diversity in the workplace will be helping the company remain vibrant, vital and open to change – and, in an era of business globalization, such openness is important to job security.
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