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.

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 desire to innovate is based on understanding and respecting difference. As you
all know,
1
At the end of 2006, the Euro to U.S. dollar exchange rate was €1=US$1.32, http://www.x-rates.com/cgi-bin/hlookup.cgi.