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- 2 Aug 2010

Women in Luxury: An unfinished story

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Unravelling the more complicated truths behind the figures.

On the surface, the story of women in the luxury industry tends to be characterised by the ‘feel-good’ line that issues of gender parity are not a concern; that there is nothing to worry about.

And while it’s true that there is a high proportion of women in the luxury sector overall, when it comes to representation of women at senior levels, in many cases luxury companies are failing to promote women up the corporate ladder in the same numbers as they are generally. In some cases, they are lagging behind global benchmarks.

What’s more, far beyond simply ‘getting the numbers right’, a gender diverse employee profile may actually have important benefits for a luxury business’ performance.

Indeed, as Chantal Gaemperlé, group EVP of human resources and synergies at LVMH, points out: “By definition, women are the key to the success of our industry, representing 85% of our customer base. Because this is a markedly female environment, diversity is a crucial element of our DNA and it also corresponds to our culture of creativity and customer focus.”

So, we decided to look beyond the numbers and investigate further. Is the luxury industry doing enough to professionally empower our female employees? And if so, what are the best examples of initiatives that help to achieve this?

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Women represented well in the overall industry but not at senior executive and board levels

In order to develop a general picture backed up by hard data, we first examined publicly-available and bespoke information provided to Luxury Society by Gucci Group, Richemont, L’Oréal and LVMH. While the luxury sector is of course much broader than this set of companies and indeed some of these groups’ activities are outside the luxury sector, together these four companies employ almost 175,000 people, constituting a significant industry presence.

What we found was that, at the basic level, women are indeed very highly represented in luxury firms, with all companies having workforces comprised of more than 55% women.

However, as we moved up to more senior echelons of the organisations, the representation of women dropped dramatically. Luxury companies in our sample have not been able to maintain the same level of representation of women at senior management levels as in their general workforce. This pattern is consistent with what Saadia Zahidi of the World Economic Forum and Herminia Ibarra of INSEAD observed about women’s representation across all sectors in the ‘World Economic Forum Corporate Gender Gap Report 2010’: “female employees tend to be concentrated in entry or middle level positions – that is, the more senior the position, the lower the percentage of women.”

At senior management levels, LVMH, L’Oréal and Gucci Group respectively have women in 28%, 38% and 40% of positions, as defined by representation on brand or maison executive committees. Data for women’s representation in senior management at Richemont were not available.

At the group executive committee and board levels, the representation of women in luxury drops even lower. Global benchmarks we identified —including an in-depth survey of companies across 20 national economies by the World Economic Forum — have women in about 10-15% of board seats. Overall, luxury groups performed only marginally better than these global averages, and the representation of women is still very low considering the fact that over half of the general ranks of every luxury conglomerate in our sample is made up of women.

That said, there is some recent progress to report on this front. In April, LVMH elected Bernadette Chirac to their board just days after Gucci Group’s parent company, PPR nominated 3 women — Laurence Boone, Yseulys Costes and Caroline Puel — to its 14 strong board. Before the announcement, there was just one woman, Patricia Barbizet, on the PPR board.

The firm’s CEO, François-Henri Pinault affirmed his belief in “diversity [as] an element of progress” and said that the appointments “highlight[ed] PPR’s continuing goal to diversify its board and meet the objective of promoting men-women parity”.

Indeed, Gucci Group, with more that 25% women on both its group management committee and board (as represented by the board of PPR) outperformed the global benchmarks and its peers. Yet the fact that having a board which is made up of less than 30% women makes PPR the luxury industry’s top performer, just shows how far from achieving that objective the industry still is.

Upward mobility for women in the luxury industry, as elsewhere, remains one of the greatest barriers to overcome. Once they are recruited, women are still failing to be promoted up the corporate chain.

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Approaches for achieving gender balance range from organic to proactive

Attitudes vary enormously from company to company on how to tackle the issue of women dropping off the corporate ladder — or indeed how to move more women up the ranks. Some believe that it is the fundamental and organic philosophy of the company culture which is most important.

When Luxury Society spoke to Karen Lombardo, EVP of global human resources at Gucci Group, she was insistent that affirmative action was not the way forward: “The women in our organisation are very tough. We just look at really well-qualified people and we don’t exclude anybody,” she said. “We’re not overcoming discrimination. I think that’s because when we started out originally we had an Anglo-Saxon mind-set and were much further along in terms of overcoming discrimination than traditional European companies were… it’s just part of our DNA."

Another company that prescribes to the more organic approach is Richemont. Thomas Lindemann, the group’s human resources director, characterised the conglomerate as having “always lived with a natural diversity.”

For its part, LVMH has chosen to set specific targets on achieving a better gender balance. Says Gaemperlé of LVMH, “Bernard Arnault and I made a public commitment to gender diversity in November 2009. We expect the group to have 35% women on executive committees within 3 years, up from 28%.”

As the debate over how to redress the gender imbalance remains an open and contentious one throughout the wider business world, the divergence in opinions found here is not unique to luxury. And, no matter what the sector, a danger exists in seeing any one of these approaches as a cure-all solution.

Even the more proactive strategies like setting targets — or quotas, as some Scandinavian countries now require of their firms — don’t necessarily address underlying social issues that impact women’s ascent into corporate leadership roles. Parental leave is one such core issue surrounding work-life balance practices. And although progress has undoubtedly been made by the implementation of parental charters and advancements in related policies, combining a family with an ambitious career path is something that remains more difficult for women than for men.

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Internal reviews and surveys as holistic intelligence gathering tools

Luxury companies need to adapt to the notion that women who want to have careers and families will be more able to serve their employer and fulfil their personal professional goals if companies are able to think creatively and reward long term development and commitment as well as the rapid rise which characterises many successful male careers.

Headline-hitting appointments of women to executive boards are partly indicative of progress in the luxury industry and also help to establish role models for women earlier in their careers. However, companies themselves are aware that ongoing strategic investment in women and their potential is just as important as a handful of top-tier promotions. Getting to grips with the issue in detail is the first step for many companies and, with this in mind, some have been doing some self-reflection.

Internal strategic reviews of women and leadership are increasingly being undertaken in the belief that by building strategies and providing the right tools, women will build their confidence and hopefully translate this into increased ambition and improved career progress.

L’Oréal, for instance, have run PULSE surveys, which draw on suggestions from across the whole company. The 2006-2007 survey polled 28,000 employees in 28 countries on L’Oréal’s employer branding and commitment to addressing the issues facing female professionals. In December 2008 they signed a corporate agreement with all French trade unions, pledging to uphold gender equality and giving a contractual framework to the benefits and measures already in place. In the same year the group helped to develop the first MA in equal opportunity and diversity policies at the Institut d’Etudes Politiques in Lille.

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The tenuous link to corporate social responsibility

The ongoing belief that there is a correlation between women-centric CSR projects and the recruiting and retaining of women needs to be put into perspective. Individuals should value these initiatives as evidence of a corporation’s awareness of wider humanitarian issues, but the link to promoting women within the companies themselves should not be overstated.

There are, however, specific CSR initiatives that do seem more directly applicable to tackling some of the career obstacles facing women. L’Oréal has a particularly strong corporate philanthropy model. Its ‘For Women in Science’ program is relevant to HR because it is about bringing about a renaissance in attitudes towards women in science — an academic and professional sector directly relevant to their company. In 1998 they teamed up with UNESCO to launch the program and since then 52 women have received the L’Oréal-UNESCO Award in recognition of scientific excellence and 500 young female scientists have received funding for research in over 40 countries

In 2008, to celebrate the 10th anniversary, the partners inaugurated a Charter of Commitment for Women in Science to promote the cause of women and to change the unhelpful, male-centric image science has developed. Since 2007, each autumn the foundation also partners with the Women’s Forum for the Economy and Society. This project is about encouraging young women to pursue scientific and technical careers and giving them access to about 20 women who have excelled in these fields.

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Women’s initiatives need to seek to change prevailing attitudes and have long-term vision

The L’Oréal model is successful and relevant to the issue of gender parity because it is about creating educational channels for women; giving women female role models; addressing the stigma attached to science for women head on; forging relationships with individuals and institutions for women and, perhaps most crucially, making a strong statement that investing in women is important and valuable.

Within the LVMH portfolio of companies, the Veuve Cliquot Award also addresses the issue of female mentors and role models, which many experts and luxury professionals themselves see as a barrier to female professional development. In many ways Veuve Clicquot is an intrinsically feminine company. In 1805, aged just 27, Nicole Ponsardin (who became known as Veuve Clicquot) took over her deceased husband’s vineyards and created an internationally respected brand. Today the position of CEO and president is also held by a woman — Cécile Bonnefond.

The award was inaugurated in 1972 and now operates in 16 countries around the world. The professed aim is to “encourage and motivate younger, aspiring women” and also to “salute the women of achievement — many of whom work quietly and without acclaim.” Although in recent years the only winner from the high-end sector has been Linda Bennet, founder and MD of the premium brand LK Bennett, the award makes a broader statement about recognising women’s business achievements and encouraging the businesswomen of the future. The fact that Veuve Clicquot itself has a female leader undoubtedly adds to the weight of this statement.

As with the broader approach to women’s professional development, companies need to shun one-off initiatives in favour of a committed long-term strategy. As Bain & Company’s Gadiesh and Coffman assert in their recent report (‘The Great Disappearing Act: Gender Parity up the Corporate Ladder’, 2010), if companies genuinely care about gender parity they need to take as rigorous an approach as they would with any other goal they were serious about. That means gathering the right data; engaging the relevant stakeholders; identifying the action needed; monitoring the results; communicating progress regularly; linking incentives up with success and using active leadership to make things stay on track.

If luxury companies can keep the most talented women on board, and give them positions of authority where they can use their skills to best advantage, then the success will be for the company — and our industry — as a whole, and not just the cause for female empowerment.

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