Rene Dubos in his Celebrations of Life may have said it best: "Human diversity makes tolerance more than a virtue; it makes it a requirement for survival."And that's precisely what's happening in accounting firms throughout the U.S. Diversity has often become the key to profitability, or, in some cases, whether a practice will survive.
By the end of this year, the U.S. Census Bureau projects that one in three Americans will be African-American, Hispanic-American or Asian-Pacific American. Together, these three groups are increasing seven times faster than the population as a whole. This shifting population mix, along with the demands of growing international markets, has chief executives across many industries wrestling with diversity as never before.
Sadly, for years, CEOs have paid only lip service to diversity.
In the 1980s, when the term began popping up in the boardrooms of more progressive companies, multicultural programs were viewed primarily as feel-good initiatives - important, but hardly imperative. Yet profound demographic changes in the U.S. and an increasingly global marketplace are driving recognition that diversity is more than simply the right thing to do. Diversity programs represent a way for companies to fuel growth by tapping into fast-growing multicultural markets.
James Turley, chairman and global chief executive of Ernst & Young, recently summarized the importance of fielding a diverse work staff: "What's the connection between fostering diversity and market leadership? Very simply, we provide better service and solutions to our clients around the world when our teams include people with diverse backgrounds, diverse experiences and diverse perspectives."
Deloitte Touche Tohmatsu chief executive William Parrett recently participated in an executive roundtable discussion on diversity. The view that multiculturalism offers a strategic advantage also led the way for diversity among the company's executive and management teams and its board of directors, he reported.
Further evidence of the company's commitment is a decision-making process that gives one vote to each of the company's global operations, regardless of their relative size. "The U.S., for example, represents 35 percent of our revenue, but does not have 35 percent of the vote," Parrett explained. "The purpose of that is to build a multicultural organization over the long term."
Like many large companies, Deloitte also requires minority and gender representation on teams, and insists that a diverse slate of candidates be considered for top spots.
"Unless you influence the leadership appointment process, we find that white males will, generally speaking, pick a white male, or a U.S. partner looking for an appointment in the U.S. will generally pick another U.S. partner," Parrett said. "Every time we create a team, we step back and evaluate that team based on its diversity. It could be diversity from color, from sex, from background, but it's rare that we form a team that is not diverse."
New wave of accountants
"These are clearly issues that we are grappling with here," said Kenneth Cerini, a partner in Cerini & Associates, in Islandia, N.Y. He referenced a recent symposium that was attended by roughly 20 female accountants to focus on developing a mentoring program for women to help them address issues inherent in the profession. One of the topics was the fact that about 60 percent of the people entering the profession are female, yet the number of women in upper-level management is probably less than 20 percent. "We will be exploring the same issue with respect to minorities in the profession later this year."
According to Cerini, more and more of the people entering the profession are minorities. "There are firms out there that are known as minority firms, with large portions of their staff comprised of African-Americans or individuals of Asian or Latin American descent."
Cerini emphasized that his is a small firm of 16. "But it has always been our policy to hire the best candidates for the job, regardless of any factors such as race, religion or disability. Unfortunately, while we have had minority staff in the past, our staff currently is principally Caucasian, with the only ethnicity being eastern European or Hispanic lineage. We are not averse to offering individuals opportunities here with the firm; we unfortunately have not had a significant number of qualified applicants. I do believe, however, that over the next few years this will change, as more minority students choose accounting as a career path."
In urban areas such as New York City, there is more penetration of minorities. As a market, Long Island is five to 10 years behind, mainly due to some of the economic conditions that exist there, namely the high cost of housing. According to Cerini, however, the landscape of Long Island is changing, with statistics showing that, by the year 2020, more than one-half of the population of the area will be of either Asian or Hispanic descent. "This will certainly translate to a larger number of qualified minority accounting students for all Long Island-based firms."
What's driving diversity?
Kenneth Guidry, president of PKF Texas, noted that his firm has more than 100 employees, and that more than 20 different languages are spoken.
Why? "Because we live in an international city [Houston] and our staff reflects this," he explained. "In effect, we have a sincerity of purpose. There is nothing artificial about what we do. We've built a service team to do business internationally. It's as simple as that."
Houston is second only to New York in its number of foreign consulates. One in seven workers in Houston itself works for a foreign-owned company. According to Guidry, as a result, PKF Texas was presented with meeting the growing demands and needs of foreign companies. He said that the firm quickly recognized that these companies needed international tax capabilities, as well as a full suite of international consulting services that include human resources/expatriate services, software selection and integration, state and local tax guidance, and connection to other service providers.
He pointed out that the firm made a commitment in the area of specialization, and worked on expanding its international tax capabilities, particularly in the energy industry; added technology-related resources for international companies; offered specialists for expatriate and foreign national issues; and spotlighted Houston itself as an international business leader.
"As a result of this way of thinking and acting, we mirrored Houston's international marketplace," Guidry said. "The firm's diverse makeup allowed us to speak the clients' languages. In fact, PKF Texas professionals speak languages from Mandarin Chinese to Farsi."
The bottom line is that the firm utilized internal resources for the majority of the niche-building activities. In four years, its international service group has grown an astounding 760 percent.
PKF Texas also recruits and retains managers from Texas A&M and the University of Houston, local schools that have attracted a number of international students. "Our structure is to understand our population growth. We have a firm and culture and attitude to reflect where we work and live," said Guidry.
Richard Berkowitz, managing partner of the Florida-based firm of Berkowitz, Dick, Pollack & Brant, said that over half of his staff represents minorities, and this is primarily because Miami has become a melting pot second only to New York City. "I believe we may have the most diverse staff of any accounting firm in the country," said Berkowitz. "Although there is clearly a Latin focus, Miami itself has become a very strong international city, and as a result, we have people coming from all over the world."
He said that his firm has led the way in the "people shortage" in accounting firms, because Florida has become such a desirable place to live and work that there is really no problem in attracting and hiring top-drawer professionals. "That's the future, as I see it."
How firms reach out
Carolyn D'Anna, the partner-in-charge of human resources at the New Jersey-based super-regional firm J.H. Cohn, said that the firm is working to build a strong, diverse staff.
"As our mission statement reminds us, the firm is committed to creating a culture that ensures the success and professional growth of all our employees. We know that the statistics say that there is a direct correlation between satisfied and loyal employees and satisfied and loyal clients. With that in mind, it is our desire and our obligation to nurture a knowledgeable, skilled and culturally diverse staff."
In addition to general recruiting efforts that continuously expose it to a wide variety of college students, as well as to experienced professionals, some of the initiatives that J.H. Cohn has executed are:
* The J.H. Cohn Women's Initiative. Currently, the firm is working with an outside consultant on a Women's Initiative Program. Although it doesn't currently have a standard flexible work program, it supports employees' requests to allow for their individual situations. JHC maintains a high level of awareness regarding work-life balance issues, especially during tax season, and it works together with employees to create that balance based on their own unique needs and circumstances.
D'Anna says that the program, using the talents and training of an outside consultant, was created in July 2004.
"The presence of an outside consultant provides us with additional credibility, because our staff can see that we are serious about this program. In addition, she offers us an independent view of issues that need to be addressed. She has met with all the female partners, the executive management team, and approximately 30 professional females throughout our offices, and has provided us with a report of findings and recommendations. These findings, based in part on a survey of the women, as well as our executive management team and every office partner-in-charge, were made public at our semi-annual partner and manager meeting last September."
* The Foreign Exchange Program. This year, J.H. Cohn is hoping to develop an exchange program with its German affiliates, as well as utilizing some staff from its Mexican affiliate during the tax season. This additional staff will also be used more frequently for Sarbanes-Oxley engagements and audit work.
* Creating diversity. D'Anna pointed out that the firm's current recruiting efforts include candidates who are not U.S. citizens. "As a result, we work with these employees to obtain visas. We have also interviewed candidates in the Philippines that are interested in moving to the U.S."
Developing the mix
Habif, Arogeti & Wynne, a firm based in Atlanta, said that a significant component of its commitment to being the firm of choice is developing a diverse staff that can provide its clients with a wide range of skills and experiences.
Over the past couple of years, HA&W has revamped its campus recruiting program. One of the goals was to find students of various backgrounds and actively recruit them to join the staff. The firm's increasing focus on international business has made this effort even more important. It has added staff with Hispanic, Chinese, Russian and European backgrounds and language skills in the past year. Their experience and skills have been invaluable in serving clients from these areas of the world. In addition, it has sponsored several foreign nationals to work in the U.S., where their experience and skill were needed to serve identified market segments.
HA&W has also been successful in the development and advancement of women. Four of its 24 partners are women: One heads the international practice for the firm; another heads the financial advisory and tax practice and sits on the firm's executive committee.
"Our commitment to work-life balance has been critical in this area," said director of marketing Brian Falony. "The firm's conversion to paperless operations has made it easy for our staff to work from home when necessary. The young mothers on the staff, among others, appreciate this benefit. Where before a woman may have decided to stay home with the children and leave the firm, now more are working part-time from home to meet their family obligation while maintaining their career. This career continuity also comes into play when advancement decisions are made. The result is more women in senior and management roles at the firm."
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