A Case Analysis based off the IVEY School of Business Case – “L’Oreal S.A.: Rolling out the Global Diversity Strategy”
Introduction
Although launched with the best of intentions, the L’Oréal diversity campaign is unlikely to be implemented uniformly across all geographic regions. The concept of diversity was vague and often out of sync with regional concerns, possibly due to an ethnocentric bias favouring countries whose politics and policies already coincided with the desired approach. The knowledge was disseminated from the top down, causing confusion and the questioning of intentions and credibility. Furthermore, Country Managers were told to incorporate diversity into their operations, but were not given an official action plan, let alone longitudinal guidance. To address these issues while taking advantage of the opportunity that diversity offers, clear, consistent and detailed messaging regarding the vision; and a flexible and tailored approach to action is recommended.
The Diversity Campaign shall be supported by the creation of the Openness Campaign. The purpose of the Openness Campaign will be to implement diversity in a creative way into L’Oréal’s fundamental culture, values and across all subsidiaries. The Openness Campaign, by no means, will take away any core and vital driving forces behind the diversity strategy. Initially, the term “diversity” seemed to have connotations of defensiveness and division and people assumed it only applied to visible minorities. Over the next year the Openness Campaign will clarify the initiative and be a driving force behind the adaption of both visible and invisible diversity in the workplace.
Problem Identification
Problem 1: Presentation Design
To train employees successfully, L’Oreal’s diversity managers must first recognize the individual differences in origin, understanding and experience with the topic. First, the two day training program invited “over 8000 managers from 32 countries across Europe.” Considering the program was developed and pioneered within one continent is likely to give rise to exactly the kind of ethnocentric bias the management team hopes to avoid. The European Diversity Director Balustre-D’Erneville praises the United States for its progressive attitude, but does not comment on the fact that the training approach is Western-centric in its philosophy and delivery. For example, if Asian markets are “homogenous” in their “ethnic and cultural perspective”, then they are understandably confused by the emphasis on the topic. Moreover, the style of communication is one-way and dogmatic. The assumption that all listeners will be able to process this information in this way has ultimately divided the group into the confused and the indignant. It would be wise for the conference organizers to anticipate this controversy, and help the audience listen with an open mind before forming a conclusion. Moralized and politicized issues that listeners may take personally can cause listeners to regress into reliance on familiar counter-arguments. Left untreated, this problem can complicate “the intellectual exploration of rich topics”. Accordingly, a lack of diversity (and awareness of it) within a teaching environment can exacerbate this issue (Burkstrand-Reid, 2011). It is evident that the conference organizers did not appreciate the stratification of experiences with this sensitive topic; prioritize combining visible and invisible diversity in the room when they shared it; or teach individuals to overcome their biases and experiences with the topic. It is possible that the training simply moved too fast: an entire aspirational lifestyle was packed into a day and a half. This was likely overwhelming. As well, feedback was only generated at the end of the conference, leaving no room to adapt to concerns and differences in real time. In addition to the polarizing effect of the conference, one comment stated “I don’t understand why the definition of diversity is so broad — it practically encompasses everything.” Clearly, the team must spend more time defining the problem before moving on to solutions. Country managers who may have been enthusiastic about the change are instead left on the fence.
Problem 2: Communication Clarity
This problem stems from the failure to communicate the precise concept of diversity and its applicability within the organization. Comments made following the seminar indicate many employees do not know the difference between affirmative action and diversity, leading to their misinformed judgements on the proposed strategy. Affirmative action focuses on ensuring a company’s workforce is representative of a diverse pool of individuals by placing an emphasis on employing women and members of minority groups (Roosevelt Thomas, Jr, 1990). This is applied in the form of a regulation that has been set and made effective during the hiring process. Rather than simply enacting the legal requirement of representation, the diversity strategy aims to create a corporate culture in which equity is inherent. As a result, diversity emerges as a key component of the company’s productivity and innovation. Unfortunately, L’Oreal’s vertical communication in the explanation of the strategy has been inadequately passed down from the Diversity Director to lower level managers of the organization. With the component of miscommunication in effect, there will be difficulties in the implementation at the individual level. Theory suggests that miscommunication is one of the key driving forces in determining the ultimate success or failure of the company, as the long-term direction is accomplished by the changes in individual actions to perform daily strategy execution (Tarique et al., 2015).
Furthermore, the diversity initiative is seen as a French concept. Consequently, some global units do not understand its necessity and relevance. While they may act according to superficial guidelines within their respective offices, the enforcement may be accomplished incorrectly. Instead of focusing on diversity change, the strategy may be treated solely as a CSR stunt in order to make the company appear diverse. This does not modify the business’ internal practices in a manner that improves its function where the issue is not just hiring a diverse team, rather, it is making use of this group’s higher potential (Roosevelt Thomas, Jr, 1990). The improper implementation hinders the progress of L’Oreal’s overarching goal of valuing cultural, ethnic and social diversity.
The issue with differentiating between diversity and affirmative action affects all levels of management, as the communication process begins with top-management’s directives with the message flowing down to managers that develop the initiative, and lastly to staff that implement it. The lack of clarity in communication has left fraction of country managers prone to misunderstanding and misjudging the significance of L’Oreal’s diversity strategy. Until clarity has been brought to all members of L’Oreal’s team, the implementation of the diversity strategy will be unable to proceed.
Problem 3: Lack of Managerial Guidance
Country managers who attended the diversity workshop were not given a clear picture of what “success” should look like, examples of model organizations who are considered to be in tune with the company’s goals, or even general criteria. Instead, the seminar only offered vague suggestions, and allowed country managers a short period of unguided reflection on how to make changes. Taking an abstract concept and making it applicable to an entire region’s complexities apparently left these managers confused and unmotivated. The open-endedness of this project also increases the likelihood of personal views being intermingled with company policy. This could give rise to multiplicity in the kinds of judgements and guidance each senior manager passes on to the operational managers in their purview. Additionally, even if the country managers, left to their own devices, were able to figure out how to carry out the strategy as intended, the Diversity Director did not delineate an evaluation metric and timeline. They may begin with a uniform idea of the company’s goals, but become distracted by local concerns and eventually lose sight of how even their smallest decisions impact the entire brand. In addition to providing initial guidance, the Diversity Director has not given country managers more time and guidance within which to reflect, research and design a holistic country-wide program.
All of these flaws can be attributed to unrealistic top level management’s expectations. They are disregarding the circumstances that each organizational function, level and region. It was assumed that execution of these diversity programs would become each region’s top priority. As well, they believed positive results for human resources and branding would be realized immediately. Instead, this focus on speed only heightened country managers’ uncertainty as to where they fit into this strategy shift. An implied time constraint without intermediary deadlines or criteria will inevitably result in an unimaginative and oversimplified approach to diversity processes. Ultimately, the embodiment of the program will not reflect the diversity values that senior executives set out to achieve. According to Six Principles of Effective Global Talent Management a topic that is tied to overall organizational success should be standardized; but when local decision making is necessary for implementation, manager autonomy is of increased importance. (Stahl et al, 2012) Diversity is a core value for L’Oreal, but evidently generic content and lack of overall guidance did not produce the desired effect. Within the organization, managers should ensure their compliance with strategic goals; but top level executives must consider local employee and customer needs. The article also pushes for employer branding through differentiation. Appreciating diversity is a core part of the company’s vision, and will affect the type of people who will choose to work there and enact its values in their daily activities.
Problem 4: Miscommunication
Geopolitical and cultural distinctions had an impact on key global L’Oreal managers’ first impressions of a diversity strategy. Language used to introduce and explain the diversity strategy were assumed to carry the same literal meaning and associations across all countries and levels of management without consideration of the differences between situational backgrounds. The process of sharing meaning by transmitting messages can be undermined by “noise” derived from fundamental differences. (Deresky, 2014). Top level management disregarded the potential disruptions in listening that result from visible and invisible cultural, religious, socio-economic, and political differences within the message they tried to get across. This resulted in miscommunication within the different levels of management. Some of the country managers who attended the seminar never truly grasped what L’Oreal’s corporate diversity strategy was striving to achieve because of different interpretations of, and experiences with, of the term diversity. L’Oreal failed to consider the implications of communication style before creating a strategy that ironically disregards diversity. The people responsible for the diversity strategy and training program made biased decisions. They believed that there was a strong universal need for diversity, that all subsidiaries were focused on the same distinct set of priorities, and local managers would undoubtedly embrace diversity to better their daily operations. The assumptions made were unrealistic, as the cultural and geopolitical barriers had lead subsidiaries to view and value diversity differently. There is a need for variation as diversity does not hold a shared, universal similarity and meaning for every individual.
For example, the United States accepted the strategy as they understood the need for diversity. Their management team was diverse, yet, on the other side of the world, in Asia, corporate culture was characterized by homogenous workforce. In this case, both global units have different priorities for the diversity of their workforces (Vranceanu and Leca, 2015). They place different values on the need for diversity in their operations. In countries with little cultural diversity, the directives may be seen as irrelevant. The cultural differences that needed to be crossed to reach all members of the united global operations was too great. Cultural differences are difficult to observe and quantify, but failure to appreciate and acknowledge them can have negative repercussions. The strategy implemented could be defined as invasive, the concept of incorporating diversity was not wanted or accepted by certain subsidiaries. Some did not see the value in incorporating the goal of diversity, since it was not something they understood or believed they encountered on a daily basis.
Problem 5: Credibility
The legitimacy of L’Oreal’s strategy may come into question as they have not proven their claims on the advantages of diversity in the workplace. Agon, claims that the benefits of the strategy include increased creativity and innovation, as well as an improved response to changing markets and preferences. This statement was released without any empirical evidence to support it. Management may question the credibility of the claims, and hesitate to implement it. Additionally, questions of validity may arise throughout the training seminar which does not address the advantages of the strategy in the form of a measured performance change if implemented. Without an in depth analysis of the specific benefits of the strategy with prior studies conducted to back the claims, managers will have little motivation to change their current business practices to one which may not be as effective. Following the diversity training program, feedback was collected from managers on the relevance of the strategy. Clear issues concerning management’s lack of understanding and outright skepticism on the strategy itself were evident. This may lead to their non-cooperation with diversity initiatives, and as a result, the stalled progression of the strategy as a whole.
Recommendation
New Strategy Defined
To address the root cause of issues pertaining to L’Oréal’s Diversity Strategy, we propose the “Openness” Strategy. It encompasses each function and area of their business model, and will tie all positive aspects of the current Diversity campaign together with several new initiatives and expansions. This new strategy will bring clarity by redefining the existing diversity strategy to one of openness and acceptance of all individuals. The scope of “openness” must acknowledge visible diversity traits, considering the work environment is composed of employees from different ethnic backgrounds, sexual orientations, ages and more. However, more time will be spent reflecting on the invisible diversity traits L’Oréal has already outlined, such as socio-economic status, disabilities, sexual orientation, and religion. Consistent with the “open” message of the campaign, there will be an emphasis on acceptance of the various backgrounds and experiences, thus allowing for different interpretations of the strategy. Thus, Country Managers will have some freedom to assess the local situation focus more on the most pressing concerns and valuable opportunities to maximize the strategy’s effectiveness. This sense of participation and co-creation will give the campaign a greater chance of being integrated directly into the workplace culture so that in turn, it is reflected positively in all aspects of the business. The observant, educated and empathetic corporate culture will contribute to a more efficient workforce and better leadership style, which will result in better product development, and ultimately higher profitability (Seppala & Cameron, 2015).
In the previous Diversity Strategy, miscommunication and failure to guide Country Managers contributed to the problem. They were not given a clear understanding of how diversity connected with L’Oréal’s overall vision, or general criteria to model their initiatives after. To counter this, processes and implementation strategies should be standardized to a degree which will bring clarity and efficiency to the process, while still allowing flexibility to tailor the project to their respective regions. They will be given an action plan with clear instructions on how to implement the changes. Hiring processes will also be standardized to ensure the right candidates are aware that L’Oréal is looking for an open-minded workforce. This also solves the issues of inflexible communication with Country Managers. By modifying each initiative to understand and fit the diversity needs of its region, the interpretation issues and noise will be minimized. It will be necessary to frame the strategy so that despite various settings, it will be recognized as valuable.
Overcoming Barriers in the Workplace
L’Oréal can frame the issue by first acknowledging that every individual faces a number of barriers in their everyday work life. External barriers such as discriminatory occupational practices lead to internalized oppression. This decreases self-efficacy, impedes on individual aspirations, and in turn, leads to a demotivated employee. (Ruth Fassinger, p. 257) These barriers stem from a variety of factors, for example, disabilities, mental health, and familial responsibilities. In a hostile work environment, employees may feel the need to hide the issues that they face in order to avoid discrimination and save appearances. This perpetuates the cycle of depressing motivation. With the Openness Campaign, we’d like to eliminate the stigmas and discrimination to allow for a harmonious work environment where employees can feel free to express their identity without judgement. Employees will be given the chance to be open about their personal issues and the support they need to colleagues, human resources department, and supervisors. A revolutionary level of transparency at all levels and functions of the company will be an important central value in which the campaign is based around, as it is vital when building trust within an organization. The ideas of transparency and openness are highly intertwined in that they create a relational environment of trust. Instilling this value will promote collaboration and commitment to the organization. (Julia Jahansoozi, p. 943) In terms of the comparison of the two strategies, rather than simply gathering feedback after training sessions, the Openness Campaign will ensure each concern throughout the training and implementation process is recognized and attended to. With this, the issues brought to light from the initial project can be remedied.
Internal and External Factors
The campaign should exist as a point of guidance for understanding the direction of L’Oréal as a whole, whether it be from an internal stakeholder point of view, such as employees or management, or from external stakeholder point of view, such as customers and shareholders. From an internal standpoint, employees will begin to empathize with their fellow coworkers after realizing the scope of diversity-based issues which affect everyone in their workplace. As employees play a vital role in actively incorporating new mentalities and attitude shifts into the corporate culture, the implementation of the strategy must be focused on the workforce. A strengthened workplace culture has been found to have a strong positive correlation with employee satisfaction. (Yafang Tsai, p. 2) Leadership behavior adjusts accordingly, therefore creating a cycle of job satisfaction (see figure 2 in appendix). In L’Oréal’s case, the Openness Campaign will be pervasive from the very beginning of the hiring process, where a diverse group of candidates will be encouraged to apply for positions within the company. Each change in the method of operation will contribute to the overall strategy implementation. As managers realize the validity of the campaign, they will be incentivized to apply the changes to their region. Contrary to the Diversity Strategy where the inflexible decentralized decision-making organizational architecture conflicted with the centralized implementation approach, the Openness Campaign will allow for a localized strategy, to the extent that it complements the overall structural goals.
Externally, a generic diversity campaign may be criticized as a CSR stunt to gain public approval and thus increase profits. Although benefits from public relations and brand image will result in optimistic financial expectations for the organization, it will not be seen as the primary motivation. Rather, spreading the importance of an open and accepting community should be transparent such that the corporate culture can be seen by all stakeholders. The front-end product development processes must encompass the same company-wide vision. This would include promoting innovative thinking into product design to cater to a wider audience. By leading the beauty products industry in developing a diversified product line, the higher revenues due to an entrance into new markets will translate into benefits towards stockholders.
Action Plan
For the Diversity Campaign to be successful, L’Oréal’s vision must be made tangible and applicable to the daily lives of the workforce. The action plan will use specific international human resource management strategies to ensure L’Oréal meets its objectives of international diversity. Short term goals begin to involve current employees, and long-term plans build on the value of this mentality. Issues with the initial strategy, including presentation design, failure to guide Country Managers and lack of credibility will be resolved throughout the action plan.
Short-Term
Introduction Training Program
The new training program will build on the initial Diversity Campaign, by developing a curriculum targeted towards geographical subsidiaries. The training will be conducted by Strategic Specialists who work closely with Directors from Human Resource Department at headquarters and draws inferences to articles and studies that help discern elements of successful diversity training. The following three points are an outline of specific ways in which the training style will be improved:
- Smaller Group Sizes for Training
The Openness training will be region specific. Rather than inviting all the Country Managers from around the world to a single training session, specific cultural regions will be invited to partake in the training. This will allow for smaller sized groups to ensure that each manager will be a valued participant and will be able to discuss any misunderstandings and concerns they may have. Using L’Oreal’s understanding of the various cultural norms within which they operate, they will be able to use Managers’ discussions of mutual concerns to adapt their training program to relevant concerns (Wrolstad, 2016). - Culture/Region Specific Training
An important feature of the Openness Campaign is that it takes regional concerns into account. An overarching abstract strategy and general action items, complemented with a curriculum tailored to specific regions will allow for programs to suit each unique culture within the organizational architecture. This modification will encourage acceptance through involvement, considering Managers will feel their concerns are heard and understood. The outcome will be an accepting workplace and workforce, but this will be achieved in different ways depending on region. The criteria for success which will be included but is only an outline, managers will be encouraged to enter into a dialogue with their superiors regarding how to make the program their own dependent on their consumers and employees.
For example, a training program would be held for East Asian Country Managers. Country Managers from Japan, South Korea and China would be trained together. The small group size would also allow the Country Managers to express their thoughts and concerns about the strategy while they are still learning it. For example, they did not see the urgent need to advocate for diversity in a relatively culturally homogenous area. Through an inductive and dialogic approach, they could focus on educating themselves on invisible differences. Or, they could find ways to promote visible diversity, for example, creating an internship that recruits internationally. Because these Country Managers run their operations in similar cultural settings, the discussions will applicable to each of them. This advice from peers, guided by a corporate leader, will be valuable as they return to their own countries (Managing When Cultural Differences are Invisible). - Time Frame
In order to fully immerse the managers in this critical and multifaceted concept, the training session will be extend from 3 to 5 days. It must be clear that this movement towards a more diverse environment is a crucial component of how L’Oréal operates.
Organizational Structure
After the training program is finished and the Country Managers bring back the new strategies to their respective operations, a two-way communication channel with the training specialists will keep all lines of communication open. Local employees will be able to reach out to their manager; and the manager will have a direct line of communication with the trainers, so they may request clarification as needed. By encouraging openness in the channel of communication, and allowing for continuous support from upper management, regional resistance against the diversity strategies can be minimized. Correspondingly, enthusiasm and commitment will enable L’Oreal to transition up the learning curve.
The Openness Campaign will also decrease emphasis on the vertical architecture to the extent that this structure inhibits the campaign’s organic success. This allows for employees to make the campaign personal and are given the freedom to incorporate the program into their lives as they see fit, which will produce the greatest magnitude of effect in the workplace (Wrolstad, 2016). This change begins with the opening of discussion between the ranks of employees and management.
Incentives
After the first regions chronologically experience dynamic training programs and find positive experiences within the office, other subsidiaries will observe and be excited for the opportunity to be trained in diversity. It is important that employees of all rankings are aware of the benefits and aligned with the purpose. For this reason, informal incentives for compliance to the program are crucial to success. The existence of diversity management and a diverse workforce are positively correlated with tangible incentives in the workplace (Yong Jin Sa, 2015), such as:
1. Improvement in group performance
2. Employee satisfaction
3. Reduced turnover rates
4. More motivated workforce
Most importantly, an intrinsic incentive would be feeling at one with a group that understands you, and actively contributing to a positive atmosphere.
Continuous Training and Learning
After the Country Manager has experienced the training program, they will bring the Openness Campaign to their office by following a 12-month plan for continuous everyday implementation. Each month can be used to spotlight a different visible or invisible diversity issue and it allows employees to play part in the integration of the openness mentality into the workplace, which will further boost the magnitude and effectiveness of the campaign (Goffee & Jones, 2013).
For example, January will be Mental Health Awareness Month. At the beginning of the month, the Country Managers alongside the Human Resources Department will host a meeting where a presentation will take place and relevant information will be given to all employees. Other ideas include:
- Bringing in expert speakers to facilitate a related topic
- Recommending external resources and providing internal support systems to all employees.
- Allocating time to allow motivated employees to help with the planning of these monthly initiatives, and eventually they may lead their own initiatives.
- Gamification: Each month, there can be challenges encouraging employees to educate themselves on the topic, and care for themselves and others. (See appendix for an example)
With ample opportunity to engage with the Openness Campaign and new initiatives every month, the short-term integration will capture the attention of all employees and be a part of their daily activities with minimal effort.
Long-Term
After the first year of the Openness Campaign, L’Oréal will continue to reinforce the values of openness and diversity in company culture by prioritizing continuous feedback and adjustment based on the overall success of the campaign after the first year. They should pay special attention to whether the ideas and values behind being a diverse and open company have successfully integrated through all levels of the organization. If so, the Openness Campaign can discover new levels of depth and complexity
The short-term action plan will allow for an improved workplace environment, which has been proven to increase productivity, encourage innovative product design and lead to more profitable operations. The next step is to re-examine management styles. After taking care of all internal concerns, begin to prioritize reaching the attention of stakeholders. The shareholders will benefit from the Openness Campaign as well. Through the productive and innovative workforce, there will be continued investment in research and development. L’Oréal products will become known for personalization, a decrease in stigma, and the focus on exemplifying the strength, courage and beauty which comes from facing visible and invisible adversity.
Conclusion
The campaign for “openness” can be interpreted based on various definitions. It encompasses the idea that each individual employee and managers realize they do not need to hide the various “differences” that make them who they are. This mindset fosters acceptance of the self and others, and reminds people that diversity is not someone else’s problem, or an issue that is “out there” and can be ignored. Rather, diversity is about acknowledging the differences that reside within each of us. This level of vulnerability may be uncomfortable for some at first, but due to the reciprocal relationships within each branch and function of L’Oréal, it will ultimately strengthen morale, capability and retention. Regarding coordination, “openness” also refers to communication style, especially across hierarchical divides. Due to the interactive nature of the program, high participation and involvement are anticipated. Individuals are likely to appreciate the personalization of the problem and will be committed to finding a solution. Then, after establishing their corporate culture, they can position themselves externally as a brand that considers those who are typically under-served by the mainstream beauty industry. While other companies are slow to embrace this global opportunity, L’Oréal can emerge as a leader in inclusivity and positivity; thus attracting investors, media attention, and the kind of talent they desire. Perhaps the greatest strength of the campaign is that managers and employees are not necessarily being taught anything new. Instead, they are being given a medium to reflect on reality and unprecedented freedom to express themselves.
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