IPG Photonics Corp– Diversity Goals (2023)
Outcome: Successfully withdrawn following the company committing to set “meaningful” minority and gender diversity targets for managers and above, and process commitments, including a guarantee of interviewing a minimum of two diverse candidates for open U.S. management positions and meeting with The Boston Club to discuss available resources.
We believe that diversity, inclusive of gender and race, are critical attributes of a well-functioning executive team and necessary to meaningfully drive diversity throughout an organization.
The business case for workforce diversity is compelling. McKinsey & Company found in 2015, 2017, and 2019 that companies with highly diverse executive teams had higher returns on equity and earnings performance than those with low diversity.[1] Further, McKinsey reports an increased likelihood of financial outperformance in each successive study. ISS Analytics examined companies where the CEO had a tenure of at least three years and found companies that combined gender diversity in the boardroom and the C-Suite showed, overall, the best results in terms of risk-adjusted quality of performance. (ISS Analytics /Governance Insights/October, 2018)
IPG Photonics (“IPG”) states that it “recognizes the importance of a balanced workforce and strives to employ and promote women into leadership positions across all IPG locations.” IPG also states that it “requires our search firms to seek female and diverse candidates.” Yet, the lack of progress on its efforts to, attract, retain, and promote women is concerning. For example, women in senior leader and manager roles remained unchanged at 21 percent for two years ending December 2021. In the same time period women in its workforce declined from 34 percent to 32 percent. There are no women on IPG Photonics executive leadership team. This comes more than two years after a shareholder proposal addressing diversity in the executive leadership ranks earned 45 percent support from its shareholders.[2]
Research continues to point to the lack of diversity in corporate pipelines as a primary reason why too few women are being promote to senior leadership roles. For the past eight years women have not been promoted at the same rate as men. In 2021, for every 100 men promoted from entry-level roles to manager positions, only 87 women were promoted and only 82 women of color were promoted. At the same time, women leaders are leaving companies at high rates, and are citing factors such as lack of opportunity to advance, company commitments to well-being, and flexibility.[3]
Companies can address this issue through recruitment, retention and promotion practices, and work to provide equity, inclusion, and justice at each step in the career progression. Companies are setting diversity targets which provide an important accountability mechanism. Salesforce, Intel, Microsoft, Alphabet, Intuit are examples of companies that have set quantitative, time-bound diverse representation targets.
Many shareholders[4] are increasingly concerned about material human capital management risk and seek clearly established targets and goals that promote a diverse and inclusive workforce.
Resolved: Shareholders request that IPG Photonics set public company-wide, quantitative, and time-bound targets to increase the representation of women and minorities, particularly at the managerial and senior levels of the company.
[1] McKinsey Company, Diversity wins: How inclusion matters; S. Dixon-Fyle, K. Dolan, V. Hunt, S. Prince; May, 2020
[2] https://www.ipgphotonics.com/en/company#[social-responsibility]
[3] https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace
[4] https://www.linkedin.com/company/thirty-percent-coalition/
