Why Diverse Talent Isn't Advancing To Leader Roles
Today marks the first day of Women's History Month, and AccountingWEB is kicking it off with an article from Loreal Jiles, the Director of Research at the Institute of Management Accountants. She presents the results of a report on why diverse talent still isn't advancing to leadership roles in accounting firms, despite the recent push for continued diversity and inclusion, and presents some possible solutions.
As our society takes a closer, introspective look at how our actions match assertions of “equality for all,” many of us in the U.S. accounting profession confront the sobering reality that we have not made as much progress as needed in attracting, retaining and promoting diverse talent to roles where they can be firm leaders. According to a recent research report from IMA® (Institute of Management Accountants) and the California Society of CPAs (CalCPA), there is an alarming lack of diversity among U.S. accounting executive leadership ranks. The research reveals that inequitable treatment and non-inclusive behaviors result in talent from underrepresented groups feeling unwelcome in organizations, remaining “stuck” in mid-level jobs, and, in some instances, leaving the profession entirely. Unless we achieve expansive improvement in diversity, equity and inclusion (DE&I), the resulting talent attrition poses challenges to our profession’s ability to meet twenty-first century demands.
The report “Diversifying U.S. Accounting Talent: A Critical Imperative to Achieve Transformational Outcomes” reflects the findings of a survey of over 3,000 current and former U.S. accounting professionals, in addition to interviews with nearly 60 individuals in accounting, human resources, and DE&I practitioner and academic roles. The study focused on three demographic areas: race and ethnicity, gender and LGBTQIA (lesbian, gay, bisexual, transgender, queer, intersex, asexual). By engaging the profession’s members, IMA and CalCPA examine the current state of the profession as it relates to DE&I and present solutions for how to attract, retain and promote the talent needed to carry the profession into the future.
Diversity Gap Among Senior Leadership
Although there has been noteworthy progress in diversity across the U.S. accounting profession, this progress does not manifest at senior levels. Women now comprise 62 percent of the profession, and more than one-fifth of the profession is nonwhite. Yet, IMA and CalCPA report that for every 10 of the profession’s most senior leaders, nine are white and eight are male, with few identifying as LGBTQIA. The disparity is even greater for specific demographic groups. For instance, African Americans comprise 13.4 percent of the U.S. population and 8.5 percent of the U.S. accounting profession, but only 1.4 percent of CFOs at Fortune 500 and S&P 500 companies and 1 percent of partners in accounting and finance functions of U.S. CPA firms. The dramatically low presence of demographically diverse talent in the profession’s most senior roles, in the face of greater diversity broadly across the workforce, reveals a diversity gap at senior levels.
Why Isn’t Diverse Talent Advancing?
When assessing the current state of equity and inclusion within the profession, we learned that only half of all survey respondents view the profession as equitable or inclusive. An even lower number of people from groups underrepresented at senior levels share this view. As these areas were explored further, people who identify as nonwhite, Hispanic, Latino, female and/or LGBTQIA report that they aren’t advancing because of inequity and exclusion. Among these groups, each cited similar factors contributing to underrepresentation of their specific demographic group in executive roles that include:
- Unfair treatment in the recruiting process
- Greater emphasis on recruitment rather than retention
- Inequitable access to organizational sponsors and mentors
- Unfair prejudice or bias demonstrated by leadership that negatively affects promotion
In addition to these factors leading to inequitable access to advancement opportunities, respondents from every demographic group report they have left an employer while working in the U.S. accounting profession because of DE&I issues. IMA and CalCPA reported that among nonwhite, Hispanic, Latino, female and LGBTQIA respondents, as many as 55 percent have left an employer due to a lack of equity or inclusion. Underscoring the impact on the talent pipeline are the ratios of respondents from these demographic groups who pointed to a lack of DE&I as a contributing factor to them leaving the profession altogether: one in 5 for LGBTQIA respondents, one in 10 for nonwhite, Hispanic and Latino respondents, and one in 14 for female respondents. These findings present urgent signs that change is needed.
The Impetus for Change
Additional factors that reinforce the critical importance of ensuring the presence of diverse talent throughout the talent pipeline are as follows:
- Research has proven that more diverse teams, especially at the leadership level, realize greater innovation and overall performance than less diverse counterparts.
- By 2045, racial and ethnic “minorities” will become the majority of the U.S. population. The source of future professionals is the younger generation. In the U.S., this generation is more diverse. Identifying ways to attract diverse talent to the profession is vital.
- Equitable and non-discriminatory treatment directly overlaps with ethical obligations, by which accountants are bound to act with integrity and objectivity and exercise fair judgment without being compromised by bias.
Closing the Diversity Gap
Given the current state of DE&I across the profession, our research team shifted focus to the future. Although 10 percent of nearly 1,400 open-text survey responses cite the belief that further action to improve DE&I is unnecessary, inappropriate and, in some instances, discriminatory, most study participants report the belief that DE&I improvement is needed within the profession. When asked how to close the diversity gap among senior leaders, respondents and interviewees submitted a host of ideas for new initiatives and bolstering existing efforts. These ideas fall into four key focus areas detailed in the report:
- Raise awareness of DE&I issues and how to identify and mitigate bias so people of all backgrounds are recognized, valued and included.
- Attract diverse talent by actively increasing exposure of youth to the profession and promoting accounting career paths as desirable and achievable for all.
- Drive career promotion by ensuring people of diverse backgrounds have equitable access to the factors that enable career advancement.
- Increase accountability for progress by defining, transparently reporting and linking performance to DE&I metrics.
A Path to the Future
Beyond the focus areas presented above and acknowledgement of the need for greater progress, study participants resoundingly said it will “take a village” to achieve the amount of change needed. Without expansive, targeted efforts across the entire accounting ecosystem, we, as a profession, risk being unable to attract and develop the human capital resources needed to meet transformational demands. As accounting and finance professionals, we have a responsibility to influence culture in our own organizations and across the profession to ignite wider change, spark meaningful conversations, and take on educational initiatives. Identify how these findings are relevant to your role. Design solutions. Collaborate with others. Act now.