Big Accounting's Glacial Pace to Racial Diversity
Long ago, in a galaxy far away, I started my professional career with one of the “Big” Accounting firms. It was long enough ago that you needed more than one hand to count the number of said firms.
I worked in the tax division of the Denver office for 13 years before the Firm and I parted paths. During that time the tax division averaged probably 55 people and the audit division double that. Turnover at the Firm averaged 25-30 percent annually. In my years at the Firm I would estimate 900 to 1000 professionals passed through the Denver office.
Of those hundreds of people I would not need my full allotment of fingers to count the Black and Hispanic professionals that walked through the double doors (A clue to my Firm). I was among the less than one handful who reached a management level. I frequently attended events with personnel from other firms and they had similar workforce profiles.
I also frequently interacted with executive personnel at my clients and with attorneys and other advisors of those clients. Rare would be the meeting where I noticed another Hispanic professional or a Black professional. The CFO of one of my clients was Hispanic but always said his name in a way to hide its Mexican heritage. This I know because his last name is the same as my mom's maiden name. I would give him the stink eye every time he said his name, but I understood why he changed the pronunciation.
I have an Italian last name courtesy of my father's adoptive parents and primarily European heritage (I assume) from his biological parents. I know people sometimes wondered about my ethnicity. Few were so bold to ask "are you Mexican?" Instead I got a lot of "What kind of a name is Routa?" Truth be told I didn't think it was a good idea to discuss my Hispanic background. If you look around and don't see anybody that looks like you, especially in the higher ranks, you decide it isn't that good an idea to stick out. I recall a conversation with a friend over beers where we traded stories about our parents. When he learned my mom's maiden name was Vigil, he jokingly said "how did you get in here?" Joke or not, the question stayed with me. For most Black and Brown professionals "sticking out" is unavoidable because you are alone.
About five years into my Firm tenure we had facilitators come in and lead a course called “Men and Women as Colleagues”. The format of the course was to break into small focus groups and discuss the male/female dynamics of the Firm’s structure and how we as individuals could break down some of the barriers that led to what was labeled as inherent gender inequality. There is no debating that the Firm environment at the time resulted in an uneven playing field for men and women. There is also no argument that the Big Firms that exist today have made progress in this area but still have a long way to go.
https://goingconcern.com/report-big-4-audits-are-rarely-led-by-women/
The facilitator in our focus group asked us each to present one question about workforce inequality that we would like to address. My question was: “I understand why we are addressing inequality from a male/female framework, but I look around and see that half of the people the Firm hires are women. I look around and see that less than 1% of the people we hire are Black or Hispanic. When will we address that aspect of inequality?”
The facilitator leading our discussion politely responded: ”I appreciate that the accounting profession is in some ways the Whitest place on Earth - but that is outside the scope of this session. Let’s move on.”
That was 30 years ago and in some ways the issue of racial diversity, especially as relates to opportunities for Blacks and Hispanics, still seems outside the scope of what the accounting profession, and especially the Big Firms, want to address when they speak to diversity.
It is not easy to find reliable racial diversity numbers for US accounting firms and for the US offices of the Big Firms. A 2016 survey by the AICPA of 608 public US accounting firms published in Bloomberg Tax and Accounting revealed that only 4% of the CPAs in those firms were Black or Hispanic. It gets worse if you are looking for Black or Hispanic professionals among the partner ranks - 2.3%. My informed guess is that the percentages are worse for the Big Firms. The overall population in the US is ~31% Black and Hispanic.
https://news.bloombergtax.com/financial-accounting/fifty-years-little-progress-for-black-accountants
The Big 4 firms like to tout their diversity programs. KPMG in particular makes note that in 2020 it once again was the only Big Firm to rank in the top 50 (#12) of DiversityInc’s list of the top 50 companies for diversity: Down from number 9 in 2019 -- but still Kudos to KPMG. I will leave you to judge the relevance of the reasons why KPMG received such ranking - -but notably, the presence of Blacks or Hispanics among KPMG’s leadership ranks was not a contributing factor.
A former colleague of mine heads a Big Firm office in a mid-market US city. Every year he proudly posts the pictures of the new partners and directors in his office. Every year I look for faces that indicate racial diversity among those reaching Director and Partner ranks. I am still looking. I ask him about the lack of diversity but never get a reply. I guess there isn’t much to say. Another partner in that office indicated to me that she was the champion for Hispanic recruitment. I had to laugh because, well, she is decidedly non Hispanic. But we both understood the unspoken - there were not any Hispanic leaders to take on the role.
Why the lack of diversity? I remember a conversation I had with an audit partner at the Firm some 25 years ago. We were driving to attend a sporting event sponsored by one of our mutual clients. He asked me whether I thought the Firm did a good job of creating opportunities for its people. I don’t think he was asking it in the context of me being a Hispanic Senior Manager, but I avoided the question and instead asked him one. “Why do you think we (The Firm) are not able to identify, attract, develop and progress people of color?” (I am not a big fan of that term, but it seemed to make people less defensive than asking why the Firm very rarely hired Blacks or Hispanics). I paraphrase his response after so many years - but it was something to the effect of “I don’t think a lot of people from those backgrounds consider Big Firm accounting an attractive place to work.”
There were two other people in the car so I had to keep my response measured (again paraphrasing) “What exactly do you mean by ‘those backgrounds’? Are you saying that there is something inherently different about people of color such that they wouldn’t want to gain entry into a profession that:
Paid well?
Taught them about the business world and offered excellent training?
Allowed them to work with smart and interesting people on a daily basis - -fellow professionals and clients?
Provided ample opportunities to travel for work assignments?
Offered clarity and milestones for career growth?”
The partner responded “What I meant was I don’t think they are comfortable working here.”
All I could offer in response was “Whose fault is that?”
And here we still sit. I can guarantee you there are smart and ambitious Black and Hispanic men and women that would love the opportunity to work in Big Accounting - -with all its glory and all its warts. Sure, it is hard to be comfortable working in a place where few people, and even fewer people at leadership levels, look like you, but Black and Hispanic people are used to that. My guess is that the leaders of these firms are the ones not comfortable doing what is needed to develop and promote racial diversity. If that offends anybody, I say do something about it and prove me wrong.
Super Bowl winning coach Bill Parcells once famously commented “You are what your record says you are” when asked if his team was making progress. Results are what matter. In the area of racial diversity, the Big Firms do not have a good record. 30 years is a long losing streak.
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