Achieving diversity in the accounting profession is a topic many talk about, some actively address, but fewer truly excel at.
The need to change perceptions of diversity and provide equal opportunities, all while meeting growing marketplace demands, feeds a competitive cycle that's left the accounting profession struggling to shed a seemingly unbreakable stereotype—public accounting is still dominated by white males.
While this isn’t entirely true, for minority students and young professionals still deciding on a degree and career path, this perception is one that arguably dissuades them from ever pursuing accounting and the CPA credential.
“Quick stereotypes still exist and easily last with students. Not only that, but there’s another perception issue surrounding the accounting profession—there’s a lack of sexiness to it,” says Melina Barona, diversity recruiter and campus development manager with KPMG LLP. “This perception compounds the pipeline challenge; we simply don’t have enough students pursuing accounting to meet demand.”
It's not simply a matter of more candidates, but rather of more diverse candidates. Minority populations of African, Asian, Latin and Middle-Eastern descent are driving U.S. population growth, and Census data tells us that combined minority group populations are on track to surpass more than half of the total U.S. population within the next 30 years.
Geographic origin simply skims the surface, however. Today’s definition of diversity is far more broadminded. It’s no longer just about race, ethnicity and gender, it’s about recognizing and respecting individuals for their differences in thought, culture, religion, sexual orientation, Veteran status, physical abilities and disabilities, what generation they’re part of, and much more.
“The business case for diversity is simple. Our clients are changing, so our profession needs to change,” says Erica O'Malley, Grant Thornton LLP’s national managing partner, Employee Benefit Plans and Diversity & Inclusion.
“Frankly, both the clients and employers of public accountants are becoming increasingly diverse and equally demanding of the teams they hire,” adds Bill Graf, CPA, immediate past chair of the ICPAS Board of Directors and a partner in Deloitte’s Chicago headquarters. “One of the largest clients I work with rates its vendors on the extent of their diversity, not only on the team servicing it, but throughout the entire organization. This rising trend is being driven by rapidly changing demographics across our nation, and it’s driving the accounting profession to reconsider its diversity and inclusion and recruiting and employment standards and goals.”
Even though the marketplace recognizes that diversity and inclusion are good for business, the accounting profession still has a long way to go to actually achieve it.
By The Numbers
“It’s a competitive profession; whoever gets here faster is going to be the most successful. Supply and demand will change the demographics over time, but look at gender as an example,” says O’Malley. “For more than a decade, nearly 50 percent of hires have been females, but the percentage of female partners still lingers under 20 percent. Right now, ethnic minorities make up far smaller percentages of new hires and partners than even women do. So you have to ask, how long is it going to take for everyone to grow their numbers in the upper ranks?”
The AICPA’s 2013 Trends Report points out that despite record demand and accounting graduate hiring in 2012, only 30 percent were non-whites. The shocking part is that that’s a record.
Even more troubling is the fact that very few women and people of color ever make it to the partner level. Forty-four percent of all firm employees are women, but only 19 percent are in partner- level positions, for example. And when you see that a staggering 90 percent of CPA firm partners are Caucasian, it’s clear that the profession is very slow to change. The next largest partner group, at a mere 5 percent, is Asian/ Pacific Islander, while Black/African- American and Hispanic/Latino partners account for only 2 percent each.
The numbers aren’t any better for corporate finance leaders; a mere 4 percent of S&P 500 and Fortune 500 company CFOs are of African-American, Hispanic or Asian descent, according to a recent measure by Crist|Kolder and The Wall Street Journal.
“The numbers have only marginally improved; we’re just not getting there. Diversity in this profession doesn’t happen by chance,” stresses Elizabeth A. Murphy, PhD, MBA, CPA, associate professor in DePaul University’s School of Accountancy & MIS and chair of the Illinois CPA Society’s Diversity Initiatives Task Force. “Just because there’s a more diverse population on campus doesn’t mean we’ll end up with more diverse accounting graduates or CPAs in the partner pipeline. The accounting profession must deliberately increase its efforts to attract and retain not only the best and brightest talent, but also the most diverse and inclusive talent.”
It can be argued that this is a pipeline issue first and foremost. Young people simply aren’t being exposed to, or excited by, accounting early enough in their academic careers. As it stands, many of the students who realize it’s a career worth pursuing only learn this by seeing the successes of a parent or close friend or relative firsthand.
“Melina hit on it…we need to bring some attractiveness to the profession. Like Chicago Fire and Chicago PD, we need a Chicago CPA to show accounting can be exciting, fun and lucrative,” quips Kari Natale, assistant director of development with the Illinois CPA Society and CPA Endowment Fund of Illinois. “But in all seriousness, early outreach is important regardless of how hard the ROI is to measure. We need young people to realize that if they like sports, food or fashion, whatever, there’s something appealing for them to do as a CPA in every industry.”
Think career day presentations, collaborating with community schools to provide financial literacy and introductory accounting courses, and volunteer efforts with organizations like Junior Achievement and the National Academy Foundation, which stimulate interest in business, accounting and higher education.
“Whatever it may be, we need our graduate students, interns and professionals going back to their alma maters, their children’s schools, and those surrounding their communities to mentor students and share their stories,” says Natale. “If nothing else piques their interest, most kids will probably fall out of their chairs when they hear what the average starting salaries are in this profession.”
“I’d also argue that high schools can do a better job of teaching accounting,” adds Murphy. “If bookkeeping is the only thing they’re being exposed to they’re being sent all the wrong signals.”
Murphy suggests that the accounting profession should work harder to collaborate with universities and professional associations to provide high school students and educators with access to accounting camps led by accountants and accounting professors. The result could be multifold. Ideally, efforts would expose students to true accounting work and spark their interest in the profession. In the meantime, supporting universities and firms would gain meaningful access to potential future students and interns. And the insights gained by high school faculty would leave them better prepared to recommend accounting as a career path, helping to bolster the pipeline of future talent.
“It will be a challenge, but schools are most appreciative of you coming to them,” adds Murphy, “especially in areas challenged by low income and crime, but those are the folks that need it the most.”
The reality is, many ethnically diverse students still come from less affluent backgrounds or grow up in cultures where higher education remains largely out of reach. Many CPA firms, universities and professional associations like the Illinois CPA Society (ICPAS), the National Association of Black Accountants (NABA), the Association of Latino Professionals in Finance and Accounting (ALPFA) and the National Council of Philippine American Canadian Accountants (NCPACA), amongst others, have taken great strides to provide grants and scholarships to low-income and underrepresented ethnic groups in the profession. But giving these students the opportunity to attend an accounting program at an accredited university addresses only one part of the challenge.
“A 3.0 GPA is the minimum most firms consider, and recruiters also want to see success and leadership in extracurricular activities. Many ethnically diverse students simply don’t meet the requirements,” explains Murphy. “The fact is that many of these students are working full-time to afford their education. So the extracurricular activities—clubs, competitions, committees— that help students grow and develop and polish their technical knowledge, soft skills and business prowess aren’t even an option for them because they literally can’t afford to dedicate the time to them.”
“Preparedness for the profession is always a sticking point,” adds Natale. “Greater financial support that frees up time for academics and extracurriculars may help some students, but we also need to look deeper into the programs and offerings of our colleges and universities.”
The question is, what can we do to bring greater equality to the academic landscape?
“There’s a reason why most recruitment resources are spent on the schools with toptier accounting programs. We need more schools investing in career development offices and programs that help students prepare to interact with us,” says Barona. “As a recruiter, it breaks my heart when I meet students who do really well in their coursework but have no coaching on creating a good resume or how to interact professionally with people from the business world.”
Entering its third year, the donor-driven Mary T. Washington Wylie Internship Preparation Program administered by ICPAS and the CPA Endowment Fund of Illinois is working to address this exact issue.
“What we’re doing is preparing the college sophomores and juniors whom we’ve identified through our relationships with NABA, ALPFA and accounting faculty across Illinois as deserving African-American and other underrepresented minority students to be placed into an internship or job,” explains Natale. “In addition to financial assistance, we’re delivering three days of intensive training and direct exposure to people in the profession to get them the resume, interviewing and career resources that they so desperately need. The message we’re trying to send to firms is that if they really want to do something about diversity, we’ll help to prepare the students that we can, but they have to hire and retain them. The profession needs these students to succeed and be advocates of it.”
Firms may recognize the business case for diversity. They may want a more diverse workforce. Some may be exploring or supporting programs to increase diversity. But the truth is, firms can’t talk the talk if they don’t walk the walk. In other words, they're going to have to be flexible with their recruiting directives now if they want diversity later.
“During recruiting, academics, activities and interpersonal skills are scrutinized. Everyone is always trying to get the best candidates, but what sometimes happens in the process is that unconscious bias can come into play,” says O’Malley. “It’s not easy, but no one can look at any one group and say that because they are a particular culture, or because they went to a particular school, that they’re going to be a better accountant.”
GPA numbers are a good example. “We need to stop looking at the GPA from one school as being more meaningful than the same GPA from another,” says Natale, who knows firsthand through her Endowment work that dozens of smaller universities and colleges across the state produce excellent students but rarely or never garner the attention of firm recruiters.
“It’s also going to be an issue for us to find the diverse students that we’re looking for if we continue to focus our efforts on the same schools over and over,” adds Barona, who suggests that it’s time for recruiters to “cast a wider net” and reach out to those schools being overlooked.
Take community colleges. Many financially savvy and lower-income students of all walks of life are starting their college careers at these institutions before transferring to more prominent universities to finish their degrees. It saves cents, but costs them early exposure to recruiters, who tend to focus on freshmen and sophomores at top tier universities to fill internships and other opportunities.
“This has to change. There’s a huge amount of talented young people at community colleges that we have got to tap into as a pipeline for our future,” says O’Malley. “Partnering with these colleges and their faculty is key to putting these students on our radar and us on theirs.”
Getting more students into accounting programs and recruiting more diverse candidates for internships is all well and good, but if the accounting profession is really going to adopt a culture of diversity and inclusion, there’s going to have to be a change at the top as well.
“There’s an imbalance in representation between leadership and staff, between the firms and their customers, and between their overall demographics compared to today’s population,” says Natale. “Having diversity, whether it’s gender, race, ethnicity, lifestyle choices, whatever, it strengthens your organization, opens it up to new opportunities, and serves as a catalyst for improved decision-making, increased productivity and competitive advantage.”
“Unfortunately, when the next generations of diverse interns and employees see fewer like faces to mentor them and that are willing to invest in them, it creates an ‘up-and- out’ environment,” Murphy stresses. “Is it really surprising that they aren’t filtering up to partner?”
What’s driving the falloff is twofold, O’Malley explains. On the leadership side, there’s a lack of diverse role models, and on the culture side, the profession has some traditional norms—like golf and happy hours and heavy workloads—that don’t mesh well with how many cultures build relationships, interact with clients and colleagues and manage time with their families.
“I’m a woman and a partner, but there were no female partners early in my career. Then, eventually, there was one. Then there were two. Then, finally, one came along that I related to and wanted to be like,” O’Malley explains. “We really have to invest in creating more diverse role models that are passionate about advancing young professionals and continuing the evolution of a truly diverse and inclusive firm culture. We also need to stop holding employees to a standard that’s not consistent with their own culture. We need more leaders to take action.”
As more firms realize that a lack of diversity and inclusion is leaving a gaping hole in their business strategies, one of the big questions they’re facing is where to spend their tightly held dollars to maximize change. In a profession so focused on figures, a measurable ROI drives most decisions, but it’s also very hard to define in this space. Some would argue that diversity and inclusion promises more return in productivity and loyalty than you can imagine or measure.
Listening in on the Accounting Firm Diversity Leaders Group meeting recently hosted at the ICPAS Chicago offices, firms seem most willing to invest in their own people. Funding comes easiest for mentoring programs, partner and staff diversity and inclusion training, and all-inclusive business resource groups (BRG)—think women’s executive committees and cultural committees in which any employee can take part—that raise awareness of the issues surrounding inclusion and spearhead discussions and initiatives addressing them. Of course, as one participant pointed out, finding support becomes easier when you keep the “B” (business) in BRG. After all, involving clients, business partners and other professional associations in initiatives serves many purposes, from funding and networking to generating more diverse ideas and solutions.
“Public accounting is the feeder to corporate America; what we do here has the opportunity to make a much broader impact,” says O’Malley. “All the research indicates that diverse teams provide better, more creative and innovative solutions. So, are we going to let the voices of our diverse groups and our diverse leaders be heard?”