Millennials, Diversity, and the Accounting Profession

Apr 21, 2020

DigJrnlDiversity_250x383Today’s business environment is characterized by globalization, technological advances, and a workforce that is aging while simultaneously becoming increasingly diverse among its new entrants. The accounting profession is subject to these same forces. With a looming talent shortage as the baby boomer generation continues to retire in large numbers, attracting and retaining professionals capable of operating in a complex business environment should be a top priority for all CPAs in leadership positions, whether in public accounting or in industry. This article calls on leaders to be intentional about attracting, retaining, and developing millennials, especially those of diverse backgrounds, to help ensure the profession thrives for generations to come.

Characteristics of Millennials

By 2024, 25% of the workforce will be 55 and older, and there will not be enough skilled Generation X and millennial workers to replace the expected number of baby boomers who will retire.1 Further, according to a study conducted by The Global Accounting Alliance, approximately half of all CPA firms in the United States have lost one partner or principal to retirement in the past five years. As a result, CPA firms should be strategic about their succession planning models to help promote millennials into top leadership positions.

To attract and retain young professionals, firms should design and build a workplace environment that considers what millennials value most. According to a study by Gallup Inc., there are three characteristics unique to millennials compared with previous generations: they are connected, unconstrained, and idealistic.2 Being connected refers to the fact that millennials were raised with instant access to the internet; thus, they have greater awareness of a vast array of perspectives and lifestyles, broadening their definition of diversity. Unconstrained means they are more comfortable with discussing sensitive topics such as diversity and bias in the workplace. Part of their idealism is reflected in a vision of a workplace where everyone’s voice is heard and valued in pursuit of diverse perspectives and ideas.

Millennials also place a much higher emphasis on the quality of the work experience: they want jobs that provide opportunities to fulfill both career and personal goals. A study by Fidelity Investments found that millennials are willing to take a $7,600 discount in pay for an improved “quality of work life,” such as career development, purpose, work-life balance, and company culture.3

Diversity and Inclusion

There are compelling business, ethical, and societal reasons why the accounting profession must strive toward being more equitable. From a business perspective, having a diverse workforce fosters innovation and problem-solving by leveraging perspectives from a wide range of backgrounds. A McKinsey & Co. study found that public companies in the United States with diverse boards have a 95% higher return on equity compared to boards with nondiverse leadership.4 Further, diverse staff will attract a more diverse, and thus larger, client base. From an ethical and societal viewpoint, it is simply the right thing to do. The accounting profession should reward talent, ideas, proficiency, and problem-solving, regardless of someone’s background. CPAs must understand and not be limited by implicit or explicit biases that may exist within their organizations.

It is imperative for all within the profession to become educated on matters such as implicit bias and intercultural competence. Increasingly, accounting firms across the country are recognizing the importance of embracing a diverse workforce as a catalyst for attracting and retaining talent and enhancing employee engagement.5 Diversity and inclusion initiatives have become an essential strategy for many across the country. Beyond being the right thing to do, increasing diversity and inclusion is competitively advantageous.

Diversity comes in various forms, as noted in PwC’s commitment to diversity statement: “Our diversity initiatives and strategies are designed to attract, develop, and advance the most talented individuals regardless of their race, sexual orientation, religion, age, gender, disability status, or any other dimension of diversity.”6 The focus of this article is on ethnic and racial diversity, but it is important to note that all forms of diversity are equally as important.

According to The U.S. Census Bureau, more than half of all Americans are projected to belong to a nonwhite racial group by 2044. The 2019 AICPA Trends Report found that 44% of undergraduate accounting students and 42% of accounting graduates were Black, Latino, American Indian or Alaskan Native, Asian or Pacific Islander, multiethnic, or other, compared to 31% and 30% respectively just 10 years ago.7 This same report found that, although the workforce is becoming more diverse, the number of total hiring of people of color by U.S. CPA firms has remained flat since 2012 (30%). More can and should be done by leaders in accounting firms and industry to make sure that the accounting profession reflects the evolving ethnic and racial makeup of our country.

Millennials and Diversity Go Hand in Hand

Recruitment of a diverse workforce and younger talent should not be viewed as separate initiatives. Not only are millennials demographically more diverse than previous generations, but they also seek to work at diverse organizations. According to Monster, diverse organizations are better at attracting millennials than nondiverse organizations.8 One study found that 47% of millennials consider diversity and inclusion to be an important factor when considering a new job, compared to 33% for Generation X and 37% for baby boomers.9 An article published by Gallup Inc. states that, “Millennials have not only opened the floodgates on the definitions of diversity and inclusion, they’ve begun to shape the workplace to reflect those definitions.”

The PICPA has numerous papers to assist accounting firms with building diversity into their organizations. In Increasing Talent, Clients, and Revenue at Your Organization, the PICPA provides a toolkit that recommends four major focus areas: building a diversity-focused culture; implementing a diversity strategy; supporting and retaining new hires; and building the talent pool through recruitment and retention. Here is an outline from the paper, and the detailed guidance is available for download.10

Build a Diversity-Focused Culture

  • Set the tone at the top
  • Designate diversity as a priority business objective
  • Establish diversity as a shared responsibility of all employees
  • Incorporate diversity commitment into annual performance reviews

Implement Your Diversity Strategy

  • Define objectives
  • Designate a diversity champion
  • Establish a Diversity Council to build consensus
  • Build diversity into communications
  • Include diversity in internal training and education programs
  • Support affinity group relationships
  • Measure progress

Support and Retain New Hires

  • Teach your culture to new hires
  • CPA Exam support for new hires
  • Provide strong mentors
  • Provide fair opportunity and challenging assignments for aspiring professionals
  • Review your evaluation process to account for unconscious bias

Build the Talent Pool

  • Participate in your community and educate it about accounting
  • Establish a presence on campus, partnering with colleges and universities
  • Build your external networks
  • Reevaluate criteria for new hires

Millennials should be engaged in the recruitment and development of a diverse workforce. Accounting firms may want to consider partnering with consultants to help implement these initiatives, or technology solutions such as Culture Amp can be used to help firms determine the degree to which their organization is inclusive. This platform uses research-backed survey templates, enabling firms to use analytics to filter based on demographics and then compare to industry benchmarks. The platform can also be used to reduce bias during performance reviews by using AI-driven feedback to collect data from a diverse range of perspectives and then learn from the expertise and experience of the companies in the Culture Amp community. Successfully implementing a diversity strategy will attract more millennials to the accounting profession and help ensure the talent pool remains strong.

Conclusion

Successfully meeting the staffing challenges of the future and making progress toward being an equitable profession requires CPAs to be vigilant and intentional about recruiting, retaining, and developing millennials, especially those of diverse backgrounds. It makes good sense from a business, ethical, and societal perspective. Firms, national and state societies, and leaders and staff within the profession need to join arms in this effort to ensure that the accounting profession remains relevant, respected, and trusted. 

1 David Haass, “Retirement Trends of Baby Boomers,” Forbes (September 2019). www.forbes.com/sites/forbesfinancecouncil/2019/09/03/retirement-trends-of-baby-boomers/#2bc17cd67378

2 Camille Patrick and Ella Washington, “3 Ways Millennials Can Advance Workplace Diversity and Inclusion”, Gallup (November 2018). www.gallup.com/workplace/245084/ways-millennials-advance-workplace-diversity-inclusion.aspx

3 “Better Quality of Work Life Is Worth a $7,600 Pay Cut for Millennials,” Fidelity (August 2016). www.businesswire.com/news/home/20160407005736/en/Quality-Work-Life-Worth-7600-Pay-Cut

4 Thomas Barta, Markus Kleiner, and Tilo Neumann, “Is There a Payoff from Top-Team Diversity,” McKinsey Quarterly (April 2012). www.mckinsey.com/business-functions/organization/our-insights/is-there-a-payoff-from-top-team-diversity

5 Karen Horting, “The Business Case for Diversity and Inclusion,” Forbes (June 2019). www.forbes.com/sites/forbesnonprofitcouncil/2019/06/05/the-business-case-for-diversity-and-inclusion/#463a6ab72324

6 www.pwc.com/us/en/about-us/diversity/pwc-diversity-commitment.html

7 “2019 Trends in the Supply of Accounting Graduates and the Demand for Public Accounting Recruits,” AICPA (2019). www.aicpa.org/content/dam/aicpa/interestareas/accountingeducation/newsandpublications/downloadabledocuments/2019-trends-report.pdf

8 Reva Nelson, “What Workforce Diversity Means for Millennials.” https://hiring.monster.com/employer-resources/recruiting-strategies/workforce-planning/workforce-diversity-for-millennials

9 “Millennials at Work: Perspectives on Diversity & Inclusion” (December 2016). www.webershandwick.com/news/millennials-at-work-perspectives-on-diversity-inclusion

10 Increasing Talent, Clients, and Revenue at Your Organization: The Business Case and Toolkit for Diversity, PICPA. www.picpa.org/docs/site/keep_informeddoc/DiversityDoc/diversitywhitepaper.pdf

 


Cory Ng, CPA, DBA, CGMA, is an assistant professor of instruction and the undergraduate program coordinator of accounting at the Fox School of Business at Temple University. He is also a member of the Pennsylvania CPA Journal Editorial Board. He can be reached at cory.ng@temple.edu.

 

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