The accounting profession has a long way to go in attracting, retaining and including both minorities and women.
Executives at the top accounting firms all agree that diversity in the profession is far from reaching an acceptable balance -- a reality reflected in the numbers.
According to the American Institute of CPAs' 2011 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits, minority hiring in the profession has seen slight improvements, but overall stagnation.
From 2008 to 2010, total minority hiring rose from 22 percent to 25 percent. Broken down by ethnicity, Hispanic hiring increased from 4 percent to 7 percent of total hires over the two-year span; Black/African-American hires stayed steady at 4 percent; Asian/Pacific Islander hires also remained fixed, at 12 percent; and American Indian/Alaskan Native hires fell from 2 percent to zero. Meanwhile, females, who in 2008 had a slight edge on the male hires, found an even gender split in 2010.
The Big Four credit these minimal recruiting gains to a profession-wide trend of introducing under-represented minorities to accounting at a younger age.
Thirty-six percent of Ernst & Young's campus hires are minorities - an increase from a mid-1990s number of about 10 percent -- according to the Big Four firm's Americas director of inclusiveness recruiting, Ken Bouyer, who attributes the improvement to a holistic strategy.
Initiatives like the Rutgers Future Scholar Program, where Bouyer spoke to nearly 200 low-income, academically talented seventh-graders last summer, are targeting younger students, but Bouyer also stresses the personal touch. "We're real people, in a great profession, incredibly successful, and we have the ability to make a lot of significant change," he explained. "I myself grew up in Queens, the inner city, and I personalize the story for those coming from a similar background. I say, a talented pool like yourselves should consider the profession. The message resonates well with students."
Marcus Harden, executive director of the nonprofit Accounting Career Awareness Program in Seattle, which offers a college preparatory pilot program to minority students, finds that the students' discovery of accounting firms' "cool clients" -- like Microsoft, Nike, Starbucks and Amazon - resonates.
In one instance, a shared passion did the trick for one of the students Harden mentored. When the young African-American soccer fanatic visited Deloitte, he discovered that employees participated in company games. "There was this look on his face," Harden recalled. "'I can do this and still play soccer for fun?' It inspired him to apply to the accounting program at Howard University," which he now attends. "He wants to work at Deloitte; before, he didn't know what he wanted to do or why he was there. That's what an awareness program can do."
This interpersonal outreach is important, said Bouyer, but to really move the needle, a much bigger message is essential. Heidi Brundage, the AICPA's senior manager of the A&A product line and professional development team, agreed. "From a minority perspective, we're not doing a good job getting them into the profession -- forget keeping them and developing them into leaders," she said. "We don't make the profession look attractive enough, or as successful as the law and the medical profession. Accounting doesn't hold the same cache, if you will, as some other professions. If I'm a minority, and I'm going for the top, oftentimes it's ingrained in me -- medicine and law are the place to be. We need to change that perception."
According to Calvin Harris, national president and chief executive officer of the National Association of Black Accountants' National Board of Directors, this issue of marketing the profession to under-represented minorities is an ongoing problem to be solved. He remembers a past AICPA campaign, depicting the accountants of sports figures on posters, as having the right idea.
For now, Harris said, NABA, which was established in 1969 and today has 6,500 student and professional members, has shifted gears to helping firms foster an environment of inclusion.
This holy grail of an inclusive environment is critical to retention, an area where many of the firms recording positive under-represented minority and female hiring progress are struggling.
Deloitte's pipeline has been successful, at least at the very top. Chief executive Joe Echevarria is of Hispanic/Latino origin and chairman Punit Renjen is of Indian origin. The firm's former chairman, Sharon Allen, was also the first woman elected to that office in the Big Four.
"[Diversity] is more than just the numbers - it's about the culture and how individuals are treated, accepted, and their ability to thrive as key contributors, professionals and leaders," said Deb DeHaas, chief inclusion officer for the Deloitte U.S. firms, via e-mail. "For us, one of the most important indicators is what our people are saying. Our annual talent survey includes multiple questions that help us gauge our inclusive culture."
Those numbers, nonetheless, are dire. The Howard University School of Business Center for Accounting Education's February 2010 study, Retaining African-Americans in the Accounting Profession: A Success Model, reported that only 1 percent of public accounting partners are African-American, and only 3 percent of chief financial officers at Fortune 500 companies are minorities.
While women comprise half of the profession's workforce, they hold 21 percent of its partner positions, according to the AICPA's 2011 Trends report.
An exclusionary environment is partly to blame, according to the AICPA's 2011 PCPS Top Talent Study: Attracting and Keeping the Best CPAs. Among the study's findings:
• Non-whites are significantly less likely to recommend their firm as a great place to work.
• Non-whites are less likely to believe that feedback from non-management personnel leads to changes.
• Non-whites feel far less comfortable approaching management with questions or concerns.
• Non-whites said that they were much less likely to make the same career choice again, given the opportunity.
In an effort to combat these trends, Big Four firm PwC brought a Harvard professor into a few of the firm's offices in March of last year to discuss implicit bias.
Recognizing this bias, borne of different knowledge bases and backgrounds, is a key step toward a more harmonious workplace, according to Brundage. "When we are unaware of our own cultural biases, we will end up excluding people along the way," she said, explaining that the learning curve is continual. "Training doesn't have to be formal. If you're a small CPA firm, with 10 to 20 people, every couple months, every person could do a little research on an under-represented country or minority, and bring that to the attention of team members at a staff meeting."
This research makes business sense beyond the cost savings of retention. The accounting firm client demographic is changing, with minorities expected to become the U.S. majority in 2042, according to the U.S. Census Bureau's Occupational Outlook Handbook.
"There is the changing client; we're more global and we're not going to go backwards in that respect, in terms of clients with subsidiaries in [other] countries," Brundage continued. "The face of the globe doesn't look just like us."
PwC believes that the mentor of an under-represented minority or female employee need not necessarily match the face of their protÃ©gÃ©, according to Maria Moats, the firm's chief diversity officer. As a whole, the firm employs 27 percent minority employees and 45 percent women, and at the entry level, its associate class is 46 percent female and 31 percent minority.
Through one recent program, the firm's leadership was urged to choose three to five people with a background different from their own to be an advocate for, explained Moats, who experienced this disparity in her own mentorships. "I like to tell people, think about my sponsors: mostly white males," she elaborated. "I've been a partner eight years at the firm, and been with the firm since 1994. What I like to tell the partners is that all my sponsors were white males. That tells me we know how to do this, and do it well, and there are more stories like mine."
Moats' story also features a supportive firm chairman and senior partner in Bob Moritz. When she was offered her current position, she had just adopted her second child and needed to have flexible time on certain days of the week while taking on this new role and still keeping her client responsibilities. Bob told her she had his support, but she had to make this arrangement visible to the rest of the firm, reminding people of her balanced schedule.
A different sort of story was recently alleged at KPMG, however, where a class-action gender discrimination lawsuit brought last June claims the firm denied women promotions, discriminated against them on pay, allowed a hostile work environment, and was indifferent to complaints of discrimination.
One of the four female plaintiffs in the suit, Donna Kassman, alleges that, after more than a decade serving as a senior manager, she was put up for a promotion to managing director, only to be derailed by three men -- one supervisor, a fellow senior manager and an associate below her - conspiring to block her career advancement. Her supervisor abruptly removed Kassman from the promotion track, the complaint continues, "based on unfounded, stereotypical complaints by the other two men about Ms. Kassman's 'tone' and 'direct' approach -- a complaint never before lodged against her during her 17-year tenure at KPMG."
"Once you get to a certain point [at KPMG], you see stagnation, in terms of career development," said Katherine Kimpel, partner at national law firm Sanford Wittels & Heisler, who represents Kassman. "People that are considered top performers, there are vague allegations of issues with their tone, soft metrics you can't really quantify - they're not schmoozing the right way. These are things KPMG has used to justify not promoting them or paying them properly."
Kassman's base salary was cut by $20,000 while she was on maternity leave in 2003 because, she was told, she was paid "too much," according to the complaint. When she returned to work, she was placed on a Performance Improvement Plan that would require her to "improve her metrics" within 60 days. "Nothing was ever discussed with me," Kassman said. "[The Performance Improvement Plan] was slipped between papers on my desk and I found it; nothing was ever said. I was completely blind-sided by that ... . It was then I decided I had to go on a flexibility plan. I had no choice; I couldn't compete with the men."
After Kassman attempted to report this internally, "Everybody looked the other way," she said. "I couldn't really believe nobody was there to help me... . I had specifically told HR my situation had gotten so dire for me, I was willing to give up my position as a senior person on my team to try a new function at KPMG, because I like KPMG, and I have a family at home, a mortgage at home."
Kassman claims she was met with responses of "Yeah, we've heard this before," and that her performance manager, human resources, the office of ethics and compliance and the office of general counsel were more interested in making her complaints go away than in addressing them. It was this inaction that motivated her to file suit, she said.
At press time, the class was waiting for the judge to rule on the initial motion after KPMG had filed a motion to dismiss and strike. KPMG declined to comment for this story.
Career ladder impediments only increase for women of color, according to Catalyst's 2008 report, Women of Color in Accounting -- Women of Color in Professional Services Series by Katherine Giscombe.
"Women of color appeared to have the greatest challenge in dealing with stereotypes in the work environment, perhaps because of their low representation in the leadership of accounting firms," the report states. "They were most likely of all groups in the study to believe that managing preconceptions of their race and gender is a challenge to their advancement."
The study also revealed that out of the four groups (white women, men of color, white men, women of color), white women recorded the highest organizational commitment -- or attachment to and identification with their organizations. They also had the lowest intent to leave their organizations of the four demographics, while women of color had the highest.
Here, Brundage advocates mentorships that pair people of similar backgrounds. Commonalties, she stressed, can sometimes cross gender and ethnic lines. "Everybody needs help, needs mentoring and visible role models," she said. Oftentimes, it's "necessary for minorities to have minority role models."
With the limited representation at the top, however, some flexibility is required. In the case of female employees, she continued, there might be one female firm partner out of five.
"From the outside, it's awesome. She's a female and great role model for a staffer who wants to make it to the partner level. But if you break down who the partner is: no kids, averages 75 hours a week, not even married, and you won't even go into her attitude or demeanor. A lot of people will look at her and say, 'That's not the life I want, I can't relate to her, she can't be my role model.'"
In that case, the staffer might better bond with a male partner "who spends time with his family and has young kids."
The right fit can only be found through open communication. This transparency, from all levels and demographics, is vital to creating a more inclusive firm environment overall, Brundage stressed. "We need a diversity of thought."
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