Build the Best Accounting Profession through Diversity, Equity, and Inclusion

by Bernice Jenkins, CPA, CMA; Loreal Jiles; J. Stephen McNally, CPA, CMA | Mar 01, 2022

build-the-best-accounting-profession-through-diversity-equity-and-inclusionCPAs and other professional accountants need appropriate technical knowledge and leadership skills to be effective – whether they are auditors, tax accountants, or consultants at a firm, in management accounting, or finance professionals at nonprofit, academic, or governmental organizations. So, when it comes to discussions regarding diversity, equity, and inclusion (DE&I), why should our profession care, let alone invest time and resources to promote DE&I within our workplace? 

A few months ago, in fact, a management accountant underscored this position when he contacted one of this feature’s authors to express his concern that organizations such as the Institute of Management Accountants (IMA) and the PICPA are misdirected when they invest time and resources in DE&I initiatives. He said DE&I is not relevant to the profession and, as such, we shouldn’t even be discussing it. 

We couldn’t disagree more. Our profession is falling short when it comes to growing and expanding our community and, more concerning, many in our profession either lack awareness of DE&I or outright resist changes to the status quo.

In this feature, we will begin with a bit of DE&I 101, highlight insights from recent DE&I research, share why DE&I matters to our profession, and end with practical actions you can take.

Demystifying DE&I

To begin this discussion, let’s establish a baseline for DE&I. “Diversity” is any dimension that can be used to differentiate groups and people from one another. These dimensions could be visible or tangible (for example, aspects of physical appearance) as well as invisible or intangible (for example, thoughts, perspectives, experiences, belief systems, or culture). “Equity” speaks to promoting justice, fairness, and impartiality. “Inclusion” describes a state in which all are respected and valued. 

In some settings, the letter “B” is used with the DE&I acronym. This letter represents “Belonging,” the notion that you are a part of something bigger than yourself. Belonging describes the state of comfort that allows you to bring your “authentic self” to work and is a manifestation of a sense of acceptance. Liz Fosslien and Mollie West Duffy, co-authors of No Hard Feelings: The Secret Power of Embracing Emotion at Work, boil down the concept into this apt saying: “Diversity is having a seat at the table, inclusion is having a voice, and belonging is having that voice be heard.”

To take this aphorism one step further, equity ensures persons of all backgrounds have fair access to the table. In some instances, the letter “E” in the acronym represents “Equality,” which means the same treatment for all. Throughout this article and throughout our research, “E” represents “Equity” because we emphasize that sometimes sameness of treatment (equality) does not result in equity, or proportional fairness. (See Figure 1) No society is completely free from social imbalance or systemic differences in access to opportunities, which is illustrated by the different heights of the individuals in Figure 1. In the corporate setting, when persons who belong to marginalized or systemically disadvantaged groups have equality but not equity, they do not have fair access to opportunities, which inhibits entrance to certain professions or career advancement. Thus, equality shouldn’t be a starting point effort, but rather be the outcome we achieve through equity. Given the current state of imbalance, equity is necessary to achieve equality.

Equality shows three people of different heights reaching for apples standing on a single box of equal height. Only the tallest person can reach. Equity shows the same three figures, but boxes are added for the shorter people. All three people can reach the apples.

DE&I and Accounting

In February 2021, IMA and the California Society of CPAs (CalCPA), working with a host of collaborators that included the PICPA, published the results of a study on DE&I in the U.S. accounting profession titled Diversifying U.S. Accounting Talent: A Critical Imperative to Transformational Outcomes. The study focused on three demographic areas: race and ethnicity, gender, and LGBTQIA (lesbian, gay, bisexual, transgender, queer, intersex, and asexual) orientation, and was based on a survey of more than 3,000 current and former U.S. accounting professionals and interviews with more than 50 accounting, human resources, and DE&I practitioners and academics. The report clearly identified a diversity gap in the demographic background of executive leadership ranks and the rest of the profession as well as the U.S. population. The study found that for every 10 of the profession’s most senior leaders, nine are white and eight are male, though the profession is nearly 30% nonwhite, Hispanic, or Latino and more than 60% female. Only a few openly identify as LGBTQIA.

When analyzing the survey responses, only half of respondents of all backgrounds view the profession as equitable or inclusive; that proportion gets even smaller when only demographically diverse respondents’ answers are viewed. On average, less than one-third of respondents from the focus demographic groups report that, within the accounting profession, their particular demographic group receives equitable treatment.

When asked to identify the factors that contribute to underrepresentation of their respective demographic groups in senior leadership, most respondents say they are not advancing because of inequity and exclusion. They point to firsthand observations or experience of inequitable practices and exclusive behaviors, and cite contemporary instances of bias affecting recruitment, assignments, peer-to-peer interactions, promotions, compensation, mentoring and sponsorship, and retention efforts.

Beyond limited career advancement opportunities, 49% of respondents from the focus demographic groups report they have left a company due to a lack of equitable treatment, and 40% say they have left a company because of a lack of inclusion. Figure 2 shows the ratios of respondents from the focus demographic groups who said a lack of DE&I was a contributing factor to them leaving the profession. The opportunity cost to the profession and society is significant. These findings suggest that inequitable and exclusive practices have a direct effect on the retention and promotion of diverse talent within our profession. And this can be devastating at a time when retaining talent is more important than ever.

Figure 2. A lack of DEI contributes to diverse talent leaving the profession. LGBTQIA 1 in 5. Nonwhite, Hispanic, and Latino 1 in 10. Females 1 in 14.

Relevance to Accounting

Beyond promoting DE&I efforts to make a positive contribution to society, DE&I has a profound effect on how we as a profession source talent, deliver value, and demonstrate our ethical obligations. 

Talent – Identifying ways to attract, retain, and promote diverse talent is vital. According to the U.S. Census Bureau, by 2045 persons who identify as white (non-Hispanic) will drop from being the majority to one of many minorities making up the U.S. population (there will be no majority race). What will leadership look like then? Even today, the accounting workforce and its leadership do not accurately reflect the current demographic makeup of the population. Here’s a simple example: there are more women in the U.S. accounting profession than men, but not even one-third of senior leaders are female. Future professionals, the younger generation, are more racially and ethnically diverse. It is past time to embrace this.

Performance – There is an overwhelming business case for diversity in the workforce. Research reveals that organizations with above-average diversity in leadership report more innovation, higher earnings, and better overall financial performance than those with below-average leadership diversity. Thus, motivated by business strategy, public persuasion, and the profession’s foundational ethical imperative, many accounting leaders are deploying or supporting a range of initiatives to bolster DE&I within their organizations and the profession at large. Efforts include new policies, tool kits, mentoring programs, specialty groups, and sensitivity training.

Ethics – Professional accountants are bound by ethical commitments to act with integrity (being straightforward, honest, and fair), with objectivity (making decisions free from bias), and in the public interest. Organizational cultures that are highly attuned to these commitments tend to be effective supporters of DE&I programs because they understand how bias can affect the exercise of professional judgment. Thus, those moved by a responsibility to act with integrity, objectivity, and due care would be accounting profession leaders well-positioned to serve as credible and trustworthy champions of DE&I.

Where We’re Headed

Respondents of all backgrounds assert that DE&I efforts to date have not yet satisfied the profession’s ethical obligations, demands for talent, societal expectations, and prospective value delivery. In their perspective, bias still influences hiring, promotion, and development decisions at every point along the talent pipeline. The profession is competing for talent with other STEM (science, technology, engineering, and mathematics) industries that are making targeted efforts to reach youth of diverse backgrounds and embracing advancement of DE&I. Without targeted and coordinated efforts to improve diversity, recognize talent equitably, and foster an inclusive environment, professional accountants run the risk of not attracting or retaining the talent necessary for long-term success.

Our research has been a catalyst for collaborative action across the global accounting profession. IMA, CalCPA, and the International Federation of Accountants, along with the PICPA and a host of others, have embarked upon a DE&I solutions research initiative that will serve as the basis for action in four key areas: raising awareness by identifying and mitigating the effects of bias, attracting diverse talent, driving career promotion, and increasing accountability for DE&I progress. Here are a few examples of actions underway across the accounting ecosystem:

  • Community through high school: Professional accounting organizations arrange visits to high schools in underserved communities to raise awareness of the accounting profession and the varied career paths available.
  • Colleges and universities: Some members of academia have been intentional about equitably engaging every student in the classroom. In 1994, The PhD Project was founded with the goal of diversifying the corporate boardroom by diversifying role models in front of the classroom.
  • Corporations and CPA firms: Some corporate boards have written diversity goals into senior executives’ performance contracts. Sponsorship and mentorship programs have been formed and recruitment teams often mandate diverse interview panels and candidate slates.
  • Practitioners: Many practitioners are speaking up when they observe what is perceived to be biased behavior in the profession. Some commit to inclusion by consciously using terms such as “partner,” “spouse,” “we,” and “us” when appropriate, instead of “wife,” “husband,” “them,” or “they.”

Efforts are already underway to identify common areas of focus across professional accounting organizations, CPA firms, corporate finance, universities, and high schools. These efforts are translating into formal collaborative action to enact greater change. 

To attract more diverse talent, achieve greater diversity in senior leadership roles, and realize widespread progress in equity and inclusion, survey respondents indicate the profession needs more role models, courage, and innovation – role models to demonstrate the feasibility of progress, courage to have uncomfortable conversations, and innovation to develop and implement transformative approaches.

Call-to-Action

Macro initiatives are nothing without commitment to action on the ground. To that end, the following represent one CFO’s thoughts on potential actions accounting leaders can take today:

Build personal awareness and commit – Too often, we default to the status quo due to lack of awareness or the false belief that our ability to make a difference is limited. I was fortunate to work for highly successful women leaders throughout my career, but I didn’t initially realize other forms of diversity were lacking. Likewise, I was fortunate to “grow up” in a company that valued diversity, invested in DE&I training, and was on the forefront of implementing DE&I-friendly policies. Hopefully you have been similarly fortunate. Even so, it’s critical to proactively build your own personal awareness: read DE&I articles, participate in ongoing DE&I training, and take time to learn about the unique experiences of the people you meet. Then become a DE&I champion for underrepresented employees. You can drive awareness and positive change throughout your organization.

Invest in meaningful DE&I training – If we aren’t aware of the biases learned through family, friends, educators, and the media, our actions will unintentionally make others feel unheard, disrespected, unsafe, or that they don’t belong. By providing high-quality microinequity awareness and other DE&I training, you can help members of your team know themselves better, as well as recognize and address the biases of others. 

Require diversity when recruiting – The goal of recruiting is to identify the best candidate for a given role. During one search, our external recruiter provided a short list of candidates that lacked any obvious diversity. When challenged to include more diversity, the new slate included a highly experienced woman from Japan. She was, by far, the strongest candidate of all. Hiring diverse talent, and potentially the best talent, is impossible if the candidate pool lacks diversity. So, as the hiring manager, push back. 

Be an ally – Support new hires during their onboarding by helping them ease into their new role and build new relationships. Mentor underrepresented employees. Facilitate engagement, ensuring all voices are represented and heard. Make introductions, provide recommendations, and open doors to your network. Proactively sponsor the advancement of these employees.

Revisit workplace policies – Women, traditionally, have been their family’s primary caregiver. This role was amplified during the ongoing COVID-19 pandemic. As such, their career advancement has always been hampered by workplace policies that fail to support work-life balance. Revisit your company’s policies, prioritizing flexibility, caregiving, and work-life balance. Promote respect and dignity for all employees.

Keep the goal in mind – Ultimately, the goal of top management and their teams is to create economic value so the organization can thrive in the long-term and survive unexpected challenges, as we all faced with the COVID-19 pandemic. To do so, the team needs to make sound business decisions, often quickly, with limited data, in the midst of an evolving situation. Diversity of thought and perspective, which is more likely with a diverse and inclusive team, will absolutely increase the odds of making the best decisions under the circumstances. In other words, if the ultimate goal is to create economic value, DE&I is a key ingredient to the team’s success.

Finally, celebrate the successes and persistently work through any setbacks of your DE&I efforts. 

Conclusion

DE&I is increasingly becoming a competitive differentiator. Embracing diversity offers many benefits, including expanded creativity and problem-solving, better decision-making, enhanced employee engagement and retention, an improved company reputation, and increased productivity and profitability. Remember, organizations have a greater ability to obtain these benefits in an equitable and inclusive environment that incorporates diversity of thought into operational decisions. But it all starts with a personal commitment to promoting DE&I within your team and organization. Without a doubt, DE&I does matter!  


Bernice Jenkins, CPA, CMA, is a finance analyst for Blue Cross Blue Shield of Alabama in Birmingham, Ala. She can be reached at bernicejenkins03@gmail.com.

Loreal Jiles is vice president of research and thought leadership at Institute of Management Accountants in Beaumont, Calif. She can be reached at loreal.jiles@imanet.org.

J. Stephen McNally, CPA, CMA, is chair of the global board of directors for Institute of Management Accountants, chief financial officer, secretary, and treasurer for Plastic Technologies Inc. in Holland, Ohio, and a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at j_stephen_mcnally@att.net.

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