Career advancement is one way to measure inclusion in an organization. In a five-year study of its employees, KPMG found that socioeconomic background was the strongest determinant of progression, stronger than gender, ethnicity, disability, and sexual orientation. The pdf report is available here. KPMG’s largest socioeconomic gap was in the average time to progress from Manager to Senior Manager. Employees raised in lower socioeconomic conditions took 19% longer to advance. I screen captured the associated info-graphic below. You can get 19% from 2.6 and 2.3 if you presume rounding: 2.649 / 2.225 - 1 = 19%. That comes to about a five month gap (27 vs 22). KPMG measured almost no gap at the lowest grade transition (4%, 1 month). The Asst. Mgr. to Manager gap was 10%; Sr Manager to Director was 5%; and Director to Partner was negative 8%.
You might wonder what constitutes low and high socioeconomic background. KPMG followed the guidance of the Bridge Group and Social Mobility Commission in 2021. If the occupation of the highest earner in your household when you were age 14 was in a professional or intermediate background, you have a higher socioeconomic background. If the occupation was manual or blue-collar, then you have a lower socioeconomic background.
I ran a simulation to estimate the effect of a persistent 19% promotion rate gap. Suppose you start a company and hire 100 people per month. Half of your hires have a lower socioeconomic background and half have a higher socioeconomic background. Each month employees have a probability of promoting equal to a normal distribution centered at either 2.225 years or 2.649 years, depending on socioeconomic background. I assumed a standard deviation of 6 months. In my simulation, employees leave the company after five years, so after five years headcount is steady at 100 hir/mo * 12 mos/yr * 5 yrs = 6,000 emps.
Here’s what representation looks like over time. It’s initially noisy, but converges toward a steady state of about 53% high socioeconomic background and 47% low socioeconomic background.
KPMG concludes this is evidence of bottlenecks into middle-management. This ideas is similar to the “broken rung” hypothesis posited by McKenzie & Company in 2019 (pdf).
A few other ideas from the report:
KPMG is addressing the challenge with programs designed to advance targeted groups into leadership roles.
The issue is related to ideas about living wage and net disposable income.
The issue is also related to ideas about marginalization of less-educated workers in the economy (see this).
KPMG started a Social Mobility employee resource group. Most resource groups target biases directed toward groups marginalized by their physical appearance. Socioeconomic background is an exception.