You are on page 1of 14

S w

910C26

L'ORÉAL S.A.: ROLLING OUT THE GLOBAL DIVERSITY STRATEGY

Ken Mark wrote this case under the supervision of Professor Cara Maurer solely to provide material for class discussion. The
authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised
certain names and other identifying information to protect confidentiality.

Richard Ivey School of Business Foundation prohibits any form of reproduction, storage or transmission without its written
permission. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies
or request permission to reproduce materials, contact Ivey Publishing, Richard Ivey School of Business Foundation, The University
of Western Ontario, London, Ontario, Canada, N6A 3K7; phone (519) 661-3208; fax (519) 661-3882; e-mail cases@ivey.uwo.ca.

Copyright © 2010, Richard Ivey School of Business Foundation Version: (A) 2010-10-26

INTRODUCTION

It was the morning of January 15, 2007, as Sylviane Balustre-D’Erneville, Europe diversity director for
L’Oréal S.A. (L’Oréal), the largest cosmetics and beauty company in the world, looked out over rue
Martre from her Paris office. As she contemplated the next 12 months, Balustre-D’Erneville wondered
how to focus her communication effort and her actions to build support and momentum for the global
rollout of L’Oréal’s diversity strategy, which encompassed dimensions such as nationality, ethnic origin,
socio-economic background, gender, disability and age (see Exhibit 1).

Diversity had taken on strategic importance for L’Oréal, whose corporate goals were to eliminate all
forms of discrimination anywhere in its operations around the globe and to increase the overall diversity
of the entire multinational corporation. In 2004, L’Oréal France had signed a Charter of Diversity,
committing to a series of principles related to improving diversity in the workplace (see Exhibit 2). To
implement its diversity strategy globally, L’Oréal had put in place a diversity team headed by Jean-
Claude Le Grand, L’Oréal’s global diversity director.

George-Axelle Broussillon, L’Oréal’s corporate diversity manager, worked with Balustre-D’Erneville to


implement the firm’s diversity strategy. Broussillon discussed the importance of diversity to the
corporation:

Diversity for L’Oréal is a requirement that goes way beyond being “politically correct” . .
. . Diversity is a richness that has to be reflected in all that we do. Why? Because the
diversity of talents is the driving force behind creativity and innovation. And then, it
should also be remembered that product diversity ensures that there is something in it for
every single one of us . . . . Having said that, globalization teaches us every day that
common aspirations and values do indeed exist over and above the differences. They
have to be accessible to all — at L’Oréal, respecting them and sharing them day-in, day-
out.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 2 9B10C026

Balustre-D’Erneville’s work with the various country units (see Exhibit 3) informed her that some regions
were more advanced than others in their embrace of the need for a global diversity strategy that is adopted
locally. From her analysis thus far, the biggest issues facing L’Oréal seemed to be neither legal nor
regulatory in nature. Instead, Balustre-D’Erneville believed the main obstacles to be cultural differences
between countries and a low-level awareness of the benefits that a diversity strategy could bring.

L’ORÉAL S.A.

L’Oréal, headquartered in Clichy, France, sold a range of makeup, perfume, and hair and skin care
products in 130 countries, and employed a workforce of 52,000 in 2006. L’Oréal’s family of brands
included such well-known names as L’Oréal Paris, Biotherm, Cacharel, Garnier, Giorgio Armani, Diesel,
Innéov, Lancôme, SoftSheen Carson, Shu Uemura, Maybelline New York and La Roche-Posay.

In 2006, L’Oréal earned €1.8 billion on revenues of €15.8 billion.1 The foundation of the company had
been its strong sales in Europe and North America, growing 12 per cent per year for the past five years.
However, L’Oréal’s sales growth in emerging markets was much higher, at 37 per cent per year for the
same period. By 2006, emerging markets contributed 22 per cent of L’Oréal’s overall sales. Each of
L’Oréal’s country units operated independently, with full profit and loss responsibility at the country
level. Country results were then consolidated at the group level. Although each country manager was
responsible for running his or her country unit as if it were a stand-alone corporation (though with the
ability to seek best practices and procure product lines from other L’Oréal country units), frequent
meetings took place between each country manager and L’Oréal’s senior management team, which was
based in Paris.

L’Oréal’s products were targeted at the general market and, increasingly, at multicultural consumers. The
company’s first foray into the multicultural product space was the acquisition of SoftSheen-Carson, a
manufacturer of products for people of African origin. Lindsay Owen-Jones, L’Oréal’s chairman, stated:

In our business, it is absolutely vital to be in tune with your consumers. And it’s by
listening very carefully to our consumers all around the world that we’ve come to
understand the extreme diversity of their needs. You have to understand that we at
L’Oréal, we do not try to export or impose a single view of beauty on the world. On the
contrary, all our brands must reach out to people — very different types — all around the
world. But additionally — and this is quite original for a company like ours — 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.

To promote products to its multicultural consumers, L’Oréal used a variety of approaches: employing
ethnically diverse spokespeople, advertising in ethnic magazines and partnering with agencies focused on
marketing to specific ethnic groups. As the company made inroads into non-European markets, L’Oréal
saw diversity in its markets and its employees as a competitive advantage it could cultivate. Jean-Paul
Agon, L’Oréal’s chief executive officer (CEO), explained the firm’s approach to implementing its
diversity strategy:

Firstly the very nature of our business makes diversity absolutely vital for us. Being a
global company that serves customers with different sensitivities all over the world, our
1
At the end of 2006, the euro to U.S. dollar exchange rate was €1=US$1.32. Source: http://www.x-rates.com/cgi-
bin/hlookup.cgi.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 3 9B10C026

desire to innovate is based on understanding and respecting difference. As you all know,
a major part of our success is due to the diversity of the brands in our portfolio. Building
further on this, we now have research centres not only in Europe, but also in North
America, in Asia and soon in Latin America to better understand the diversity of hair
and skin types across five continents. It is our belief that beauty has many faces.

Secondly, diversity is key to L’Oréal being a “Great Place to Work in.” As Sir Lindsay
Owen-Jones said, “In order to be global, we must be global from within.” Being truly
global from within, however, has more to it than simply attracting diverse profiles. We
must go beyond representation and strive for equitable management in order to ensure
that everyone has an equal opportunity of realizing their potential. It is my conviction
that happy and fulfilled employees are more productive and creative. This is why it’s so
important for managers to lead with human sensitivity.

Thirdly, our experience shows that variety breeds more creativity and innovation, both
of which are paramount to our success. Teams made up of diverse profiles cover any
issue from multiple angles and thus come up with more holistic approaches.

Lastly, diversity is a mirror of the ever changing world in which we live and, as such,
prepares us to meet the challenges of the 21st century. A diverse workforce is better
equipped to deal with change. It’s all about being in tune with the environment.

L’Oréal’s Diversity Strategy

Diversity at L’Oréal was not narrowly focused on ethnic origins or gender differences, and was not
merely about compliance with legal standards. L’Oréal defined diversity as follows:

Diversity is a mosaic of visible2 and invisible3 differences . . . of similarities and


interactions which influence attitudes, behavior, values and ways of working of both men
and women within their professional environment.

The concept of diversity was not entirely new to the company; back in 2000, it had put in place an Ethics
Charter (see Exhibit 4), which touched on issues of diversity. In addition, L’Oréal had already made
significant progress since its adoption of the Ethics Charter (see Exhibit 5). Le Grand stated:

There had been several important milestones for L’Oréal’s diversity program in the six
years since it adopted its Ethics Charter in 2000. There had been policies put into place,
executives appointed to posts specifically overseeing diversity initiatives, employees had
received diversity training, and the company had participated in career fairs promoting
diversity.

L’Oréal took an active approach to diversity, seeing it as an investment in its future success. L’Oréal
aimed to be a responsible “corporate citizen of the world,” to attract and retain top talent and to position
itself as a “brand of choice” for consumers. The diversity strategy was part of L’Oréal’s ongoing efforts to
deliver on its commitment to diversity. Broussillon commented:

2
According to L’Oreal, visible differences included ethnic origin, gender, disabilities, physical appearance and age.
3
According to L’Oreal, invisible differences included cultural origin, socio-economic status, education, experience, religious
beliefs, political or philosophical convictions, sexual orientation and values.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 4 9B10C026

As you can see, our diversity initiatives have come in waves. First, there was a movement
to implement the Ethics Charter in 2000. Then in 2002, we created the first position for
diversity in the U.S. — a vice-president was assigned to the task. Owen-Jones, who was
our CEO at the time, started to diversify the portfolio of brands we owned, purchasing
brands with different cultural origins. Then the challenge was to recruit people to manage
these brands with different cultural origins — that’s why intercultural management
became so important for us.

In 2004, L’Oréal France signed the Diversity Charter with 35 large French corporations. As a further
signal of the importance of diversity to the firm, L’Oréal promoted its head of recruitment, Jean-Claude
Le Grand, to global diversity director. Le Grand was committed to diversity at L’Oréal. He explained the
rationale behind L’Oréal’s people policy:

Since its inception, L’Oréal has made diversity one of its guiding principles. Whether in
terms of the people it employs or the products it develops, L’Oréal has always viewed
diversity as a key concern. The diversity of our human resources, our balance of male and
female employees and our mix of talents, is one of the keys to L’Oréal's success. At all
levels and in all arenas, teams made up of a wide variety of people lead to greater
creativity and a better understanding of every type of consumer. The Group therefore
intends to continue hiring a diverse range of people and completely rejects any form of
discrimination, be it on the grounds of sex, age, disability, ethnic or social origin,
religious, national or cultural beliefs, etc.

A team was assembled at L’Oréal to continue the rollout of the firm’s diversity strategy. The company
was also careful to note that the strategy was not about lowering standards for its workforce. Diversity
was about “recognizing, accepting and valuing differences and capitalizing on differences to increase
performance.” Ultimately, diversity at L’Oréal was at the core of the organization with strong support
from top leadership.

Putting L’Oréal’s Diversity Strategy into Action

Agon described how the firm communicated the need for diversity to its thousands of managers across the
world:

In order for diversity to work, and thus to enable us to meet current and future challenges,
it is necessary to go beyond words. At L’Oréal, we’ve initiated several actions over the
years to promote diversity. Today, we have a 5-line diversity strategy that takes into
consideration: Recruitment & Integration; Management; Career Management;
Communication; and, last but not least, Training.

Accordingly, we have set up a 2-day training program for over 8,000 managers in 32
countries across Europe. This program is a cornerstone of our overall diversity policy. As
our collective commitment must be reflected in each and everyone’s day-to-day actions,
your personal action plan at the end of the training program is indispensable: “What will
you do to promote and manage diversity within L’Oréal?”

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 5 9B10C026

Balustre-D’Erneville’s team aimed to deliver diversity training to 8,000 managers in 32 countries before
the end of 2010. The intent of the training was to “prepare managers to approach their role and
responsibility as a team leader in a new way, based on who they are and want to be as a manager.”

These managers would participate in a one-and-a-half day diversity seminar that would clarify the
meaning and importance of diversity for L’Oréal; help them to understand the concept of diversity; help
them to identify personal, team and organizational barriers to diversity; and enable them to establish an
individual action plan. An overview of the seminar can be found in Exhibit 6. Once the training was
completed, managers were expected to return to their day-to-day operations with a better understanding of
diversity.

After the seminar, managers were expected to lead diversity initiatives in their offices. These appointees
were expected to assess the state of diversity in their workplace and to develop a diversity strategy
tailored to their particular situation. This diversity strategy would then be approved by the local director
prior to implementation. By the end of 2006, approximately 1,000 managers had attended this training
seminar.

While the number of attendees met Balustre-D’Erneville’s expectation, she learned that the content of the
training seminar and the new expectations afterward had generated both positive reactions and significant
pushback from managers. The following are a selection of the comments Balustre-D’Erneville’s team
received:

I think that the seminar was useful and we will make an effort to be more understanding
in our workplace.

The objective is to be tolerant of different ideas and I learned that this might require a
change in the way I perceive others.

I don’t understand why we need to attend these sessions because we’re not discriminating
against any employees to begin with.

Diversity is ingrained in our beliefs as it is. A diversity seminar would be great for senior
managers but may be of less value to younger employees.

We have too many things to do in a day as it is and there is no time for yet another
“flavour of the month” program. Is this really necessary?

We understand the need for diversity and there is little value to be gained in spending two
days on the topic.

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.

Is this another way of saying we now have an “Affirmative Action” program?

This is more of a French concept and some of the directives may not be relevant in some
regions.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 6 9B10C026

I don’t understand why the definition of diversity is so broad — it practically


encompasses everything.

I did not know before the seminar that I was discriminating but it seems that I was. I will
change the way I manage my people.

Balustre-D’Erneville wondered how to react to the feedback her team had received from managers about
the relevance of a diversity strategy and the diversity training program.

Clear geographical differences affected how L’Oréal’s global units viewed the idea of implementing a
diversity strategy. In comparison with other country units, the United States was the farthest along in its
acceptance of the need for diversity. The U.S. management team was diverse — the percentage of ethnic
minorities in L’Oréal’s U.S. workforce was 32 per cent of the total and included a vice-president in
charge of diversity.

On the other end of the scale, some Asian country units, characterized by very homogenous workforces
from an ethnic and cultural perspective, had not prioritized the issue of diversity in their workforce. In
some cases, local management had given very little attention the matter even after having attended the
diversity seminars.

The Diversity Team Takes Action to Motivate the Attendees

Balustre-D’Erneville looked at the range of issues facing her team. She was committed to implementing
L’Oréal’s diversity strategy as efficiently and effectively as possible. But local management in each of
these country units had to understand and buy into L’Oréal’s overall diversity strategy before they would
even think of developing and implementing a diversity strategy of their own. Broussillon, who was
present for the seminars, described how her team was facing as they worked to encourage managers to
change their behaviors:

Our task is to explain to employees that diversity is not only an external subject, that it’s
not just “affirmative action.” What we are saying at the moment is that diversity is key to
our success and we can show the link that exists between diversity and performance. Our
communication is backed up by commitments from our CEO and Chairman.

Balustre-D’Erneville wondered whether she could enlist some of the 4,000 managers who had attended
the program to become advocates for diversity in their own country units.

Taking one last long look at rue Martre underneath her Balustre-D’Erneville stepped back from her Paris
office window. She knew that the stakes of this issue were high and that she had to take action to prevent
the roll-out of L’Oreal’s diversity strategy from getting stuck in its tracks. She wondered what her
diversity team’s strategy should look like in the next year and beyond.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 7 9B10C026

Exhibit 1

L’ORÉAL DIVERSITY STRATEGY

Source: Company files.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 8 9B10C026

Exhibit 2

FRENCH DIVERSITY CHARTER

Promoting pluralism and seeking diversity through recruitment and career development is an opportunity
for companies to progress. Such strategies improve efficiency and contribute to a better social climate.
They can also have a positive impact on the way a company is viewed by customers, suppliers and
consumers, in France and overseas.

The Charter of diversity, adopted by our company, is intended to demonstrate our commitment, in France,
to cultural, ethnic and social diversity within our organisation.

In accordance to this Charter, we undertake to:

1. Raise awareness of non discrimination and diversity issues among top management and staff
involved in recruitment, training and career development and to educate them in these matters.

2. Respect and promote the application of all aspects of the principle of non-discrimination at every
stage of the human resources management, in particular in the recruitment, training, promotion
and career development of employees.

3. Endeavour to reflect, the diversity of the French society particularly in its cultural and ethnic
dimension at every level of our workforce.

4. Make all our employees aware of our commitment to non-discrimination and diversity, and keep
them informed of the practical results of this commitment.

5. Make the development and implementation of the diversity policy a subject of a dialogue with the
employees representatives

6. Insert a chapter in the annual report describing our commitment to non-discrimination and diversity
including details of the measures implemented, our internal procedures and the results achieved.

Source: Company files.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 9 9B10C026

Exhibit 3

L’ORÉAL COUNTRY UNITS

Europe North America Africa, Orient, Pacific


Belgium Canada Australia
Bosnia USA Bahrain
Bulgaria Egypt
Croatia Latin America India
Czech Republic Argentina Israel
Denmark Brazil Jordan
Finland Chile Kazakhstan
France Colombia Kuwait
Germany Guatemala Lebanon
Greece Mexico Morocco
Hungary Panama New Zealand
Iceland Peru Oman
Ireland Puerto Rico Pakistan
Italy Uruguay Qatar
Latvia Venezuela Saudi Arabia
Netherlands South Africa
Norway Asia United Arab Emirates
Poland China Yemen
Portugal Cambodia
Romania Hong Kong
Serbia-Montenegro Indonesia
Slovakia Japan
Slovenia Malaysia
Spain Philippines
Sweden Singapore
Switzerland South Korea
Turkey Taiwan
Ukraine Thailand
United Kingdom Vietnam

Source: Company files.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 10 9B10C026

Exhibit 4

L’ORÉAL CODE OF BUSINESS ETHICS, VALUES AND GUIDING PRINCIPLES

L’Oréal enjoys a world-wide reputation for the performance and safety of its products, as well as for the
frequency and originality of its innovations and for the quality of its staff.

L’Oréal stands out through continual progress in its economic performance, its international expansion
and the ever-increasing reputation of its brands.

L’Oréal is highly regarded for its business ethics: respect for the consumer, partnership with suppliers,
clients and distributors, sincerity and openness in the information provided on its business operations and
for its range of environmentally friendly products.

L’Oréal is appreciated for the quality of its human and social policy which is built upon mutual trust, high
standards of performance and respect for the individual.

The men and women who have built L’Oréal’s success and reputation have applied themselves to the
Company’s development with rigour, commitment, the will to succeed and the firm conviction that the
aspiration to beauty and well-being is universal.

It is the professionalism and loyalty of these men and women that ensure the continued prosperity of the
Group.

The lasting nature of the trust between L’Oréal and its partners stems from its respect for simple rules of
conduct based on shared principles.

The aim of this document is to draw to the attention of each and every one of us the importance of these
rules and principles; it is a guide to every individual within the Group in determining appropriate
behaviour when confronted with situations that are sometimes complex.

Respect for the Law

It is incumbent upon all the Group’s subsidiaries and individual employees, in the performance of their
duties, to respect the laws of the countries in which L’Oréal operates.

L’Oréal attaches particular importance to respect for the spirit and the letter of the laws governing:
• Social legislation: prohibition of child labour and forced labour; observance of hygiene and safety
standards, and of anti-discrimination laws; provisions governing working time and remuneration;
employees’ collective representation;
• Taxation, notably concerning accurate communication of financial information;
• Competition, in line with international legislation and the World Trade Organisation’s
recommendationsl;
• The environment.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 11 9B10C026

Exhibit 4 (continued)

Each individual, at whatever level of responsibility, should ensure that these principles are respected by
all person and should, in this matter, monitor the respect for these principles in all legally established
bodies with which L’Oréal has dealings.

Respect for the Individual

Respect for the individual is a fundamental principle. It is applied daily at L’Oréal and is the focus of
human relations within the company.

L’Oréal believes in the value of difference and diversity for the development of its human assets. L’Oréal
categorically rejects all forms of discrimination, both in thought and deed, notably concerning sex, age,
physical disability, political and philosophical opinion, union activity, religious conviction, as well as race
and social, cultural and national origins.

Each individual has the right to respect and human dignity; all behaviour or acts likely to create a hostile
working environment and, in particular, any form of sexual harassment, will not be tolerated.

Respect for the individual is also demonstrated by L’Oréal’s commitment to its employees and to those
management values upon which the Company sets great store. Respect for the individual is maintained
through an ongoing dialogue between individuals and management. Thus, recruitment and career
development are based on competence and quality, appraised objectively in relation to the Company’s
needs.

The Group’s Training and Development programmes play a vital part in the development of each
employee’s skills and potential.

L’Oréal is committed to facilitating the professional integration of those who require special attention:
young adults, persons from disadvantaged backgrounds and those with special physical needs.

Principles of Loyalty and Integrity

“Two-way loyalty” is an expression of fundamental importance to L’Oréal.

It articulates a deeply-held set of values that includes, for example, support for employees who might find
themselves in difficulty.

L’Oréal’s practical commitment to “two-way loyalty” is a policy of long-term personal development for
each employee, based on the Company’s growth and economic performance.

L’Oréal’s respects each employee’s right to privacy. Each individual has a duty to ensure that he or she
speaks in his or her own name in private life, refraining from making any remarks that might be
interpreted as reflecting L’Oréal’s official position.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 12 9B10C026

Exhibit 4 (continued

Similarly, no employee must use L’Oréal’s name for personal reasons or to obtain any personal gain
whatsoever through his or her position in the Company or through information acquired, by whatever
means.

It is forbidden to accept or to offer invitations or gifts for which the value exceeds those customary in the
particular country.

Everyone is under an obligation to act in the best interests of the Group, with the constant aim of
protecting its assets, maintaining its image and good name and keeping all information or know-how
confidential, whatever its nature.

As a general rule, employees must avoid situations where personal interests might come into conflict with
the interests of L’Oréal or which might be prejudicial to the Company.

L’Oréal encourages the exchange of ideas and respects freedom of speech. It is naturally incumbent,
however, upon each employee to refrain from any form of denigration of his or her colleagues, of the
Group, its customers, its suppliers or its competitors.

Integrity both in day-to-day business activities and in overall behaviour is a requirement that is enshrined
in the values of L’Oréal.

Note: The full document shows several sections, but only three sections (i.e., “Respect for the Law,” “Respect for the
Individual” and “Principles of Loyalty and Integrity”) are included here.

Source: Company files.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
9B10C026

L’ORÉAL DIVERSITY MILESTONES


Exhibit 5

Source: Company files.


Page 13

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.
Page 14 9B10C026

Exhibit 6

L’ORÉAL DIVERSITY SEMINAR

Source: L’Oréal – Celica Thellier document, ec.europa.eu/social/BlobServlet?docId-1825&langID=en, accessed September


21, 2010.

This document is authorized for use only in Liang Chen's Issues in Managing the Multinational - sm1 2019 at University of Melbourne from Feb 2019 to Aug 2019.