L'Oreal Case study

L'Oréal is the world's largest beauty products company. It creates cosmetics, perfume,

and hair and skin care items in more than 130 countries under 23 brands, including

L'Oréal Paris, Maybelline, Lancôme, Soft-SheenCarson, and Redken. L'Oréal also

owns the UK-based natural cosmetics retailer The Body Shop International, which

operates about 2,550 stores worldwide. In 2006, L'Oréal had revenues of €15.8 billion

and expected future growth to come more from its emerging markets rather than its

traditionally large U.S. and European markets. The organization was highly

decentralized with countries having full profit-and-loss responsibility. Local results

were then rolled up to the group level to provide a picture of overall effectiveness.

L'Oréal's strategy was conducive to a diversity perspective; the very nature of its

business makes diversity vital for success. With diverse customer from around the

world, innovation must be based on understanding and respecting differences. In order

to be global, the organization must be global from within, and their experience

showed that variety breeds more creativity and innovation. As a mirror of the ever-

changing world, a diverse workforce is better equipped to deal with change, be in tune

with the environment, and a represent a key to L'Oréal being a “great place to work.”

The organization's current efforts are built on a long history of diversity which

began in 1974 with the “Schueller” leave, a maternity policy named after the

company's founder that gives women an additional four weeks leave in addition to the

statutory requirements and which can be taken, in full or in part, until the child is two

years old. In 2000, L'Oréal adopted an Ethics Charter describing its values and

practices as a global company and it implemented several other initiatives, such as the

adoption of policies concerning diversity practices, the appointment of specific roles

(a U.S. vice president of diversity was appointed in 2002), the inception of diversity

training, and participation in career fairs.

Momentum for diversity efforts at L'Oréal increased in 2004 with the signing of the

Diversity Charter, along with 35 other large French organizations, and the

appointment of a global diversity director. The charter represented a national effort to

promote pluralism and diversity as strategies for success. It visibly committed the

organization to pursue a variety of initiatives, including raising awareness,

incorporating diversity progress metrics in annual reports, and implementing policies

that promoted diversity throughout the corporation. Diversity within L'Oréal came to

be defined as “a mosaic of visible and invisible differences … which influence

attitudes, behaviors, values, and ways of working within the professional

environment.”

The new global diversity director assembled a team that developed an explicit

diversity strategy. The strategy involved five action levers, including recruitment and

integration, training, career management interventions, management and inclusion,

and communication. These five levers were expected to drive results along six visible

and invisible dimensions, including nationality, ethnic and cultural background, social

promotion, gender, disability, and age. The team believed the biggest obstacle to

implementation was the cultural differences between the countries and a low-level of

awareness of the benefits that a diversity strategy could bring. For example, many of

the workforces in the emerging market countries were quite homogenous relative to

the United States and France, their economies were growing fast, and their leadership

teams had little experience or understanding of diversity related practices. On the

other hand, the diversity efforts in the United States were quite advanced. L'Oréal's

U.S. diversity program was recognized with the 2004 Diversity Best Practices' Global

Leadership Award for creating an environment of diversity and inclusion for

employees, customers, and suppliers. The U.S. experience thus provided some

important internal benchmarks for the global team. 505506

For example, with respect to the recruiting strategy, the U.S. vice president of

diversity had introduced the concept of “fishing in different ponds” to suggest that

where the organization looked for diverse talent was as important as whom they were

looking for. The organization identified seven different ponds and as a result, more

than 60% of the general managers were women compared to a L'Oréal international

average of about 33%. In addition, minority representation had increased from 13.9%

in 2001 to 16% in 2004. Eventually, this led to the principle of sourcing

diversification to be able to access a broader range of profiles.

In addition, the international organization began computerizing the application

process in 2004. Through its website, they deleted request for certain kinds of

information that might contribute to recruiting biases. Since its inception, the

organization has deleted home addresses, a type of information that French studies

believed was among the most discriminatory, as well as information related to gender,

age, and nationality.

In terms of the training strategy, the U.S. vice president collaborated with the global

training organization to make diversity and inclusion part of the core curriculum for

all major leadership development training programs. One of the global diversity

team's initial activities was a two-day diversity seminar that involved over 8,000

managers in 32 countries in Europe. The seminar explained the diversity strategy and

created opportunities for managers to establish goals and action plans to make

diversity practices a reality in their countries. In line with the global team's concerns,

the managers' reactions were mixed, depending on their organizational role and the

country they represented. Many wondered if this was a “flavor of the month” issue,

believed they were already managing with diversity in mind, or had more important

business issues to address. However, many of the managers also realized the potential

of diversity and became aware of some personal biases. These managers were used to

leverage the diversity effort as it rolled out globally.

The U.S. program also led with way in terms of implementing the strategy of

management and inclusion. Diversity objectives were included as part of a manager's

responsibilities in annual performance reviews. That practice was eventually

expanded, and today diversity objectives are included on a worldwide basis.

To measure the progress of the programs, L'Oréal benchmarks the company against

leading Fortune 500 companies that are recognized as “Best in Class” for women and

people of color. A quarterly “State of Diversity Report” measures results and monitors

progress in key areas; it is shared with senior leaders and human resources teams. In

2006, L'Oréal was recognized with the World Diversity Leadership Council's

Diversity Innovation Award, and in 2007 Ethisphere magazine ranked the organization

as one of the “world's most ethical companies.”