When money no longer buys happiness, companies must rethink their approach to DEI.
US companies have serious work to do to heal the US female workforce that has been so badly fractured by the COVID-19 pandemic. And although it may be tempting to turn to traditional diversity, equity, and inclusion (DEI) programs, those programs were not designed to address the current challenges.
DEI programs have long been the corporate “home” for strategically driving better outcomes for women. They tend to focus on eliminating discriminatory behaviors, achieving workplace equity, and increasing the representation of women in leadership positions. Complementary human-resources policies and benefits have also aimed to level the playing field and nurture high-potential talent on the path to the executive suite.
These programs and policies are insufficient to solve the wide-scale attrition and hiring difficulties of the so-called great resignation. As the pandemic unfolded, the soaring demands of work and home strained women’s roles as primary caregivers in most families. Even as of November 2021, women’s participation in the workforce remained at a 33-year low. The great resignation forced a reckoning among all employees, not just mothers, and not just women. In November 2021, 4.5 million workers quit or changed jobs—the fourth time in 2021 that the number of workers quitting set a record.
As we look forward to a post-pandemic workplace, strong signals suggest that workforce challenges will persist longer term. Recent surveys have found that only 35% of working mothers say that they are planning to work as they did before the pandemic. More than half of female knowledge workers have said that they are open to looking for a new job in the next year. Armed with new-found clarity about priorities and values, many women have fundamentally altered their expectations of their work, employers, and lives.
Companies need to find new ways to address the breadth and magnitude of today’s challenges. They need to understand women’s motivations and how they make decisions about jobs and careers. Companies must also reach far more women across the organization and broaden their objectives and actions. (See Exhibit 1.) As the chief diversity officer of a financial services organization said, “We’ve been working diligently to put all of the best practices in place, but they aren’t going to be enough to deal with what we’re seeing now.”
DEI programs have made progress in reaching their original goals, but they need to be far bolder and more ambitious to address the new mandate of the post-COVID-19 environment. In seeking to understand how to advance these programs, we surveyed 3,345 US female employees and 4,019 US male workers, and we started with five hypotheses:
In testing these hypotheses, we drew inspiration from BCG’s state-of-the-art consumer research methodology: demand-centric growth. The DCG methodology breaks away from the simple, insufficient consumer-segmentation approach that uses broad demographic groups (such as millennials, women, and Asians). Instead, DCG uses a comprehensive segmentation approach that factors in additional drivers (such as attitudes) that emerge from quantitative research and are examined using advanced analytics. By understanding individuals’ needs, DCG uncovers what truly drives decision making in different circumstances.
We adapted the survey-based DCG methodology to understand the workplace needs of our representative sample.1 Notes: 1 The survey consisted of 8,805 full-time female and male workers in nongovernment, for-profit companies with 500 or more employees. The sample was balanced at the population level for representation, with key demographics balanced to within 3% of US labor statistics. A subset of 1,433 respondents were oversampled to ensure sufficient representation for Black and LGBTQ+ workers, and 8 participants identified as other, rather than women or men. Applied to an organizational context, the DCG approach allowed us to assess the importance and interplay of a comprehensive menu of potential demographic, attitudinal, and contextual drivers in creating discrete patterns of functional and emotional needs. (See Exhibit 2.) And because the methodology recognizes human complexity, we were able to determine that not all dimensions that shape an employee’s identity, beliefs, and life situation are equally important in driving the person’s functional and emotional needs at work.
We then delved further into human motivation and behavior by establishing the relative importance of more than 20 potential functional and emotional needs in decision making. (See Exhibit 3.) We conducted a series of statistical tournaments in which participants were asked to make a series of tradeoffs. For example, would they rather connect with coworkers or have better benefits, and would they rather have better benefits or feel valued and appreciated. This technique uncovered the real drivers of choice that can be impossible for employees to determine and articulate directly.
The analysis has three implications for women in the workforce. First, the new segmentation enables companies to de-average their female population into segments that are grounded in what women revealed as the real reasons for the differences among them. Second, by surfacing both the functional and emotional needs that affect decision making, companies can tap into the broader set of issues that underlie the great resignation of women—issues that are much harder to articulate than a desire for more money or other functional benefits. And third, as organizations wage the indefinite battle between aspirations and resources, they can balance nuance with executional pragmatism, target the needs that matter most, and build programs that will be more successful at attracting, retaining, and advancing women. (For a summary of the insights that we derived from this analysis, see “Six Quick Takeaways.”)
Our research suggests that a needs-based DEI strategy has the potential to significantly improve outcomes for women. Across our survey population, we found a strong statistical correlation between the satisfaction of needs and the key indicators of positive employee outcomes: happiness (R-squared of 80%), motivation (R-squared of 50%), and long-term retention (R-squared of 50%). (See Exhibit 4.) In other words, the more likely female employees were to say that their most important needs, especially emotional ones, were being met, the more likely they were to be happy and motivated at work and to stay in their jobs. Among women who expressed the strongest satisfaction of needs, they were 15 percentage points (pp) more likely to say they were very happy than the average respondent, 33 pp more likely to say they were highly motivated, and 9 pp more likely to say that they would definitely be at their company in three years. Stated simply, by focusing on satisfying women’s needs, companies have significant potential to influence their decision making and drive positive employee outcomes.
A great deal of DEI work is unsurprisingly focused on addressing women’s functional needs—including compensation, benefits, and work-life balance. In a world in which pay and caretaking responsibilities remain unequal, this is to be expected. Satisfying functional needs is also easier to do and measure, and women often rank these needs as most important. But our analysis shows that the fulfillment of emotional needs—such as feeling valued, supported, and respected—correlates more strongly with women’s happiness at work and in shaping positive employee outcomes. In other words, money can’t buy happiness. (See Exhibit 5.)
The systemic challenges of pay equity, leadership representation, and day-to-day discriminatory experiences demand ongoing focus. But companies must do more. They must ask whether today’s approaches and interventions are tapping into the diverse sets of needs that influence outcomes across the women in their workforce. (See “Looking Beyond the Woman Label.”)
Therefore, reshaping DEI programs so that they drive different outcomes depends on de-averaging female workers into segments. A one-size-fits-all approach will be insufficient. This is especially true because needs are dynamic, changing over the course of a woman’s life and career.
So, what factors lead to the most significant differences in needs among women?
Age and Seniority. Our research found that age and relative seniority drive the most significant differences in needs among women. Put simply, 25-year-old women are likely to have different needs from 50-year-old women, just as junior staff are likely to have different needs from senior executives. In other words, the trajectory of a woman’s life and career is central in shaping a woman’s workplace needs.
While these findings may seem intuitive, few DEI programs recognize and support this evolution of needs as women move through the stages of life. As the chief human-resources officer of a consumer packaged goods company said, “We focus a great deal on young high-potential employees, but rarely do we think about how we should be supporting the older employee in a nonmanagement role, or even our most senior executive women once they’ve made it to the top.”
The Importance of Work in a Woman’s Life. Is work a day job or a mission? Is a profession a central part of a woman’s identity, or is receiving a paycheck most critical? Answers to these questions can influence the tradeoffs that a woman is willing to make for a job, for public signals of success (such as a company’s reputation), and for the content of the work. As with age and seniority, these answers can change over time.
Motherhood. Motherhood naturally surfaces important differences in needs between women with and without children at home. Many DEI programs address motherhood but often stop short of recognizing the changing needs of older women. With more free time, senior empty nesters are often eager to find new purpose and experiences at work, yet traditional DEI programs emphasize the needs of younger women and generally do not provide ongoing support.
Salaried Versus Hourly. How women are paid and, often by extension, their economic position within the company are the fifth variable. Current DEI efforts rarely address the needs of women who are hourly and frontline workers—needs that are very different from those of women who are emerging leaders. The desire for safety and security has been especially acute among hourly female employees during the pandemic, as it ravaged key sectors of the US economy—such as retail, service, and travel—that are heavily represented by women. Some women were forced to work when the virus was widespread and unchecked, while others found that their economic security was suddenly at risk.
Race. The one intrinsic variable that drove significant differences in needs among younger women is race, reflecting the broader challenges of achieving gender and racial equity in the US. In general, all women place outsized emphasis on fair treatment. Additionally, younger women of color disproportionately seek the opportunity to get ahead but are skeptical that they have an equal chance to succeed. This intersectional cohort clearly has discrete needs and deserves focus. (See “The Role of Intersectionality.”)
Collectively, the most significant factors generate 11 key segments of women. (See Exhibit 6.) Each segment is based on a hierarchy of needs unique to the individuals who populate it. Since we determined this needs-based segmentation by conducting a broad survey of women in the US workforce, it describes patterns and archetypes in the general working population and yields valuable universal insights. Contrasting the needs of women in two demographic groups helps to demonstrate why companies need this new segmentation.
Younger, Junior Women. This broad grouping of women occupying nonleadership roles breaks down into four distinct segments based on the women’s needs. It’s instructive to look at two segments in particular. (See Exhibit 7.)
The first segment (striving racial minorities) comprises women of color who see work as important, but it does not define their lives. Their differentiating needs are more functional than emotional. Relative to their go-getter counterparts, they care disproportionately about compensation, benefits, and fair treatment. Work may not be central to their identity—it’s not what they lead with at a party of strangers—yet they want to advance in their careers, often articulated as a desire to go beyond the world in which they grew up. They give poor scores to their company’s DEI efforts and are skeptical that they have an equal chance to succeed. These women also reported among the lowest levels of happiness and motivation at work as well as likelihood of staying at their company.
These findings suggest that racial equity initiatives established in the wake of George Floyd’s murder are not working as intended. “We were under a lot of pressure from our board to make public statements, but as a black woman, I can tell you that all the statements and book clubs in the world don’t change the fact that our younger employees look up and see that there aren’t many people that look like me at my level,” said the chief diversity officer of a major retailer. “We have a lot of work to do to fix some fundamental problems in how we recognize and support people of color moving up through the organization.”
By contrast, younger go-getters are more likely to value feeling important, successful, competent, and confident and having the opportunity to do work that they care about. This group, which includes both white women and women of color, unsurprisingly reports higher overall sentiment than most other segments. Most current DEI programs, which have been designed to drive greater representation of women in leadership, often address the needs of the go-getters through access to executive leaders and mentors, coaching and development programs, and the opportunity to take on high-profile assignments. These programs work specifically because they are directly targeting the most important needs of these women.
Older Women. This broad grouping of women, covering frontline workers to CEOs, breaks into five segments using the new approach. Two segments vividly show the contrast in needs of women of similar ages: senior women in leadership who no longer have children at home (senior empty nesters) and junior older women in salaried positions (salaried and stable employees) working in nonmanagerial roles such as analysts and administrative assistants. (See Exhibit 8.)
Senior women in leadership demonstrate a significant shift in needs as their children leave home. These women want to focus their time and energy on work that delivers impact. For many, the chance to write a third act of their careers energizes them as they seek new knowledge and challenges at work.
A great many of today’s DEI initiatives targeting senior women in leadership focus on networking opportunities or leveraging them as mentors for younger go-getters. This role does not go over well. Only 21% indicate that they personally benefit from their company’s gender programs, and only 31% believe that leadership is held accountable for their company’s DEI outcomes. Older women do not want to carry the load of solving their company’s challenges.
Although the needs of less-senior older women are different, they also often go unrecognized and unresolved. The cohort grades their company’s DEI efforts poorly—just 8% indicate that they benefit from their company’s gender programs, and they have the lowest participation in these programs across all women, potentially in part due to a lack of relevance or even eligibility.
Not surprisingly, these women care more about the functional basics—pay, benefits, work-life balance, flexibility, and control—than do executive women at a similar life stage. They also want to feel secure and fairly treated, and they want to feel valued. An administrative assistant from a professional services firm said, “Over the last month, I’ve worked around the clock to support my manager and his team on a major deal. I went well beyond what’s expected of me in my job, spending my evenings and weekends with my computer in my lap. But then when the team had a big dinner to celebrate the deal closing, I wasn’t invited. I felt completely invisible.”
Applying This Methodology in the Real World. In order to be actionable for individual organizations, more targeted research must be done to determine where and how best to subdivide segments. Furthermore, there is a pragmatic tradeoff in terms of how deeply to subdivide segments; while each additional segmentation may bring further granularity, DCG methodology is designed such that those nuances are increasingly less significant in shaping outcomes and thus less likely to be worth the added implementation complexity. Each company will have its own unique answers to these questions.
The great resignation provides companies with a crisis too valuable to waste. The systemic talent risk across industries is large and lingering. We need to find ways to motivate women and encourage them to stay. Companies cannot continue doing what they are doing because their DEI programs were not designed to serve this purpose. Instead, companies need to take steps toward a new DEI approach that tackles the bigger talent challenge—giving women what they are currently missing at work.
This powerful approach can solve underlying emotional needs, unlock happiness and motivation, and improve retention—and not just for women. It also has the potential to be applied to the male workforce as well. (See “What About Men?”)
Though our findings may seemingly complicate efforts to improve gender diversity, they chart a powerful path for companies seeking to support women in a way that stretches beyond the boundaries of traditional DEI functions. By de-averaging women into segments that are grounded in the real drivers of needs, organizations can begin to reinvent their DEI efforts to improve happiness, motivation, and retention for far more women than is done today.
By recognizing the limits of money, flexibility, and other functional benefits as organizational glue that retains women, companies can start to develop more meaningful interventions, programs, and employee value propositions and make a difference in the work lives of many more women. And in doing so, they will start to humanize the work experience and work itself.