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Greater Diversity Needed at Accounting Firms

August 6, 2012

Recent studies by the American Society of Women Accountants and Howard University’s Center for Accounting Education found that even when accounting firms hire women and minorities, many of them drop out due to a lack of support that hinders further advancement.

Even with diversity initiatives in place in many companies, a staggering percentage of women and minorities still feel that their needs are not being met.

Nobscot Corporation CEO Beth N. Carvin believes that accounting firms can be doing much more to improve their diversity efforts and increase retention rates among female and minority employees. Her company develops software for doing employee surveys and exit interviews that some firms are using to help with their staff retention efforts.

Beth Carvin

“People are realizing it is something they need to work on, that it won’t just sort itself out,” she said of diversity efforts. “There was a period about 10 years ago where accounting firms were doing a fairly good job of recruiting women and minorities, so everybody thought we’re good, we’re making sure educationally there are both genders and all sorts of races and bringing them into the firms and casting a wider net and doing all the things that you’re supposed to do, and less attention on the retention aspect of it. So bringing people but having them walk out the door, so we never really got to where we needed to be. With the economy and all of that, when people do cuts, they tend to cut out some of those things related to diversity. It seems unfortunately those are often the first things to go when actually it can cause greater problems for the firms.”

While her company works with employers who may find themselves the targets of discrimination lawsuits and wrongful termination suits, she said the companies usually try to identify such issues before they get to that stage. “We work with companies on their exit interview strategy,” said Carvin. “With exit interviews, you can actually see where there might be some potential issues, where maybe somebody is not going to sue right now, but down the road maybe there is someone who is a little bit more litigious.”

With one financial services company that Nobscot worked with, a female employee in the trust department completed an online exit interview where she rated everything very highly except for sexual harassment, but without leaving a comment to explain the rating. “It was kind of scary, so we looked back to see,” said Carvin. “It was a case where the manager was just a little bit too touchy feely. He’d pat you on the shoulder. He was kind of old school. He really didn’t mean anything by it at all, but they were able to say, ‘Knock it off, you can’t do that anymore.’ That woman was not going to sue, but you never know. There could have been someone else who might have.”

Carvin noted that with accounting firms, there may be good policies in place to help women, like work/life balance and flexibility. “All these programs came up in the late 1980s or early 1990s, but what happened is there’s an unspoken culture,” she said. “Let’s say an accounting firm put in a policy that allows people to leave early X number of days and work from home. That all sounds great. If someone needs to pick up the kid, whatever they need to do, but then the corporate culture might be such that if you take advantage of that wonderful policy, you are ostracized or you are looked at as not being a team player, or that you are viewed as not being ambitious without ever knowing that those people who are taking advantage of it, usually women, are working twice as hard from home. The policies might be really good, but how they’re playing out in the workplace might be very difficult. It’s really about diagnosing your issues by looking at your exit interviews or new hire surveys.” The information may reveal that firms have a great workplace flexibility policy, but female employees are afraid to take advantage of it because they worry they will be looked upon poorly by their colleagues and managers.

Minority employees appear to benefit from mentoring programs at companies and firms to improve diversity. Carvin cited a study by sociology professor Frank Dobbin of Harvard University and his colleagues in which they studied the effects of different diversity initiatives. “CPA firms and other companies will put together diversity initiatives,” said Carvin. “They might hire a diversity manager, do diversity training and have a task force. There might be several different things that they do as part of their initiative, but nobody ever knew and studied if they actually had an effect or not. It was always sort of intuitive that if we do this, it’s going to work. So Dobbin and his team looked at the composition in the partners and the senior-level positions of minorities and women and did all this correlation back to the diversity programs to see which had an effect. Some of the programs actually had negative effects on certain populations, and others had a little bit of a positive effect. He broke it down by white women, black men, black women, Asian women, Asian men, Hispanic women and Hispanic men. The one that had the highest beneficial effects on the most populations was mentoring programs.”

The research also looked at whether the mentoring programs were more effective with women mentoring other women or men, or with women being mentored by men. “Women mentoring women can really help as a support when you’re feeling frustrated and you just need to talk to someone who has been there before, who has dealt with some of the roadblocks, but there is also very strong academic research on getting ahead,” said Carvin. “Unfortunately it seems that in getting ahead, for both women and minorities, having a white male mentor created the best increase in getting into senior-level positions. Let’s say in a CPA firm the majority of partners are men. People like to hire people that are like themselves and promote people like themselves. It’s very ingrained on a subconscious level. Having a white male mentor is someone who can vouch for a particular employee, as if saying, ‘They’re OK, this person is good, they can come into the circle.’ For both women and minorities to have that, studies have shown that having a white male mentor gives something like a $25,000 compensation bounce.”

Comments (5)
Amen and Amen to the commenters following me. I don't see a CPA designation behind the author's name or Ms. Carvin's indicating that they're diagnosing something they know nothing about, but are more than willing to offer a solution such as "mentoring programs". Mentoring when I was in those trenches was "do what they did last year" on the audits and "do it quickly". If the money is there and the working conditions are conducive to family life, there will be no "diversity" issues.
Posted by v-rodcpa | Wednesday, August 08 2012 at 12:38PM ET
Diversity -- what about age?

There are a lot of people who either have been out of public accounting for a number of years, or who have spent their careers in industry. Yet they may possess an impressive body of knowledge, along with business experience and a mature work ethic.

But regardless of what level at which they expect to start, what salary they expect, or how long they expect to work, CPA firms continually insist on "recent public accounting experience". That usually translates into someone with 3-7 years of experience -- that is, a young professional. If you're close to 40 or over, forget it -- even if you can still contribute, now and in the future.
Posted by JEGarn | Tuesday, August 07 2012 at 3:26PM ET
There are two issues. First, many of the women I knew in public accounting did not get their CPA license to be an auditor, they got it because it results in more money at a private accounting position. In fact many of those women sole intention of getting their CPA license was so that they could make more money working in a government position.

The second issue is that as mentioned, Working your way up in a firm requires MANY MANY long hours. One firm I worked at required me to work 12 hours days, 7 days a week during tax/audit season. Then to make it even worse, the year I left, they took away any overtime pay for exempt employees. And classified all CPA's as exempt employees. If a woman does not want kids, then it is easy to spend this much time at a job. If she wants children, then public accounting is not family friendly.

This is going to have to change. People of the upcoming generation do not want to live at their job. Employers of all kinds will not be able to get one person to work 12 hours 7 days a week. Those times are gone. People are starting to find out that it is better to have a life, than to live at your job.
Posted by Klawrence | Tuesday, August 07 2012 at 3:25PM ET
Oh come on! Mentoring programs? Hindering further advancement? Really?
For the minorities, I'm not sure what's going on, if anything at all. By minority are you saying Afro-American? I rarely see any in this line of work. The last I heard, Afro-Americans make up only 13% of the U.S. population. Other minorities are lower.
Regarding women, all of you who spent time in large/regional CPA firms know that the job requires lots of overnight travel for audits and long hours. Tax season requires very long hours as well.
The women I knew in the business dropped out to be able to have and raise families. Large firm public accounting and family life do not mix. Over half of the partners of the firm I worked at were divorced and I have no doubt that the job played a major role in that issue.
To become a partner, you almost have to sell your soul to the firm.
Posted by v-rodcpa | Tuesday, August 07 2012 at 9:27AM ET
I was cautioned back in 1989 from going public because "firms hardly ever make women/minorities partners and that is where the money is".
Well three years ago I wrote my master's thesis on this very topic. It's really sad that this is still an issue 23 years later.
Posted by Kirsten J | Tuesday, August 07 2012 at 8:36AM ET
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