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Guest Article | Accounting for Diversity

Last updated: 15 Apr 2024 09:00 Posted in: AIA

Geffrye Parsons, CEO of The Inclusion Imperative, shows how many benefits diversity and equality can bring to the workplace, and the mindset shift we all need to bring them about.

In many ways, 1987 seems like a long time ago. The Berlin Wall was still in place, Hong Kong was still a British colony, the internet barely existed, and The Simpsons was only just debuting on TV… In reality, it was not that long ago. It was the year that I started my professional career. That autumn, I joined a medium-sized accounting firm based in Piccadilly, in London’s vibrant, cosmopolitan West End, as a trainee chartered accountant.

My personal experiences

I was one of an intake of 15 people. On our first morning, we all gathered in a conference room for our induction. As I looked around at my new colleagues, I incredulously observed that every single one of us was an able-bodied, white cis man. There were no women or people of minority ethnicity. No one was differently abled.

There had been no attempt to do anything other than to replicate the firm and the industry in its own image. We were an example of affinity bias writ large, a bubble of uniformity and exclusion right in the heart of one of the most diverse places on earth.

The firm did not know it but there was an LGBTQ+ person among that intake: me. But conformity was clearly received wisdom in my position, so deep in the closet I stayed. Only a few days later, the British Prime minister Margaret Thatcher made the homophobic conference speech that would shortly lead to the introduction of the notorious Section 28 legislation. That effectively ensured that I would remain in the closet, condemned to cover and codeswitch every day throughout my tenure.

Four years later, by now qualified as a chartered accountant, I moved to Hong Kong to join one of the Big Four as an audit manager. Surely a firm in a dynamic international setting like that would be more inclusive of diversity, I thought. I was wrong. Even senior personnel there were de-personalised by being referred to in documents by their department number, rather than by their name. Female staff were required to wear skirts or dresses at all times. All correspondence has to be signed off by a partner. And new ideas – such as modern audit techniques – were met with disdain by many of the partners – all of whom were, of course, male.

The cost of conformity

The effect of all this was massively detrimental. The first step towards psychological wellbeing is inclusion safety – which means feeling safe to be yourself. Being denied this most basic right means that there is no chance of feeling safe to question received wisdom, habitual practice and the status quo in the interests of forging improvement.

A culture of trepidation, bordering on fear, prevailed in my firm. I was encouraged to give feedback to the audit teams who worked under my supervision. However, most chose to slavishly follow precisely what had been done on the previous year’s audit for fear of possible retribution, never daring to consider whether a more efficient or accurate test could be found.

They certainly worked hard (we all pulled over a hundred hours a week during the peak reporting season) but they absolutely did not work smart. In sporting parlance, they played not to lose, rather than to win. The latter just felt too risky.

Such a culture squashes both creativity and corporate citizenship. Experts like Peter Drucker and Robert Greenleaf have noted that by creating or perpetuating an environment which is the antithesis of psychological safety, authoritarian leaders will never get the maximum possible discretionary effort from their staff.

The risks in our industry are massively amplified when psychological safety is sacrificed. This lies at the root of calamitous audit failures over recent decades – like Bernie Madoff’s Ponzi scheme, the loans masquerading as sales at Lehman Brothers, the understated debts of Enron and the inflated income and assets of WorldCom. Might these scandals – two of which led to the demise of Arthur Andersen – have been avoided if diversity of experience, perspective and opinion had been embraced rather than suppressed?

Where are we now?

All these years later, how much has changed? Does the industry now understand and celebrate the potential value – in both promoting creative innovation and strengthening risk awareness – offered by being inclusive of diversity?

Statistically, things certainly appear much better, although there remains plenty of room for improvement.

According to the UK Financial Reporting Council’s ‘Key Facts and Trends in the Accountancy Profession’ annual reports, the number of male and female trainees recruited by the industry is now roughly equal. Equality is building slowly though. The rates for female, minority ethnicity and disabled staff working at partner level are only about half those working at manager level.

The only exception to this trend toward growing diversity among minorities seems to be LGBTQ+. But declarations are often implausibly low. This not only undermines the integrity of the data, but also speaks volumes about the perceived lack of safety felt by junior staff when it comes to declaring what is typically a less visible minority characteristic.

In its 2020 (industry-agnostic) research report ‘LGBTQ+ voices: Learning from lived experiences’, McKinsey observed that while 80% of senior leaders identify as LGBTQ+ at work, only 32% of junior staff do so. This shines a harsh light on the robustness of any positive statistics around LGBTQ+ inclusion.

Actions to promote diversity

In the US, the American Institute of Certified Public Accountants (AICPA) and the Chartered Institute of Management Accountants (CIMA) certainly seem keen to promote diversity in the profession. There is a National Commission on Diversity and Inclusion, as well as a Pipeline Acceleration Plan, with the stated aims of promoting of diversity, equity and inclusion. The Private Companies Practice Section (PCPS) is running a project to ‘Transform your business model’, and is seeking to ‘create cultures that attract, retain, and develop talent from diverse backgrounds’.

In an article published at the end of 2022, ‘Diversity is critical to the future of the CPA profession’, the AICPA and CIMA stated categorically: ‘Whether a firm embraces diversity and inclusion for the business case or for the ethical reasons, a commitment to diversity, equity and inclusion is essential to long-term sustainability’.

Statistically, there appears to be some pay-off from this effort. According to the AICPA’s annual Trends Reports, between 2018 and 2020 the hiring of ethnically diverse graduates rose from 30% to 35%, while the proportion of women at partnership level increased from 23% to 39%. On the other hand, only 2% of CPAs are Black, and there is little data to speak of for less visible minority characteristics, like LGBTQ+, ability or neurodiversity.

And anyway, regardless of geographical location, raw statistics speak only to quantity, not quality. Just how much is this increased representation overlaid by inclusive practices, empowering staff to leverage their difference to really add value?

Ranjana Bell MBE, Director, rba Equality and Diversity and AIA Council member said “Diverse teams, facilitated by inclusive management, consistently outperform their homogeneous counterparts. It’s vital for businesses to shift focus away from token gestures and recognise the true benefits of diversity. Embracing diversity unleashes vast potential, in terms of innovation, productivity, creative problem-solving and risk awareness.”

Are our efforts working?

One of the biggest challenges in this context – and one that is not at all limited to the accounting industry – may be the failure to make the case other than from a compliance-oriented perspective.

This approach manifests itself in the way that many staff experience learning and development about diversity and inclusion. Typically focused on employment law, often this might as well be subtitled: ‘How not to get sued’. For example, standardised module-based online training packages are routinely used by many firms, covering legally protected characteristics and discriminatory behaviours. This style of formal training can all too often feel removed from the everyday work environment, rather than truly encouraging the development of inclusivity and a shared understanding of diverse cultural practices.

In their Harvard Business Review article, ‘Why diversity programmes fail’, Frank Dobbins and Alexandra Kalev stated that: ‘It’s more effective to engage managers in solving the problem, increase their on-the-job contact with female and minority workers, and promote social accountability.’ Rather than relying on formalised training packages, they recommend interventions such as targeted college recruitment, mentoring programmes, self-managed teams and task forces to boost diversity in businesses.

Yet how far have these issues permeated our businesses? The 2023 Global Advisory Trends Report by Spotlight Reporting was focused on the accounting profession. When asked to identify the biggest challenges in the coming year, only 10% of survey participants cited diversity and inclusion – the lowest of all the listed priorities. Not uniquely to the accounting industry, this suggests a persistent belief that diversity and inclusion is a ‘nice to have’, rather than a commercial imperative. This is incorrect. It is so much of an imperative that I named my diversity, equality and inclusion (DE&I) consulting practice – The Inclusion Imperative – after it!

What we really need

What is needed by the accounting industry is a mindset shift. Inclusively embracing diversity is the right thing to do – and also the best thing to do. Inclusively managed diverse teams always outperform better qualified homogeneous teams. The platitude that ‘great minds think alike’ is actually a constraint. So firms must stop focusing only on the downsides (trying to avoid grievance lawsuits) and convincing themselves that the odd token hire or promotion is a silver bullet. Instead, they should unleash the upside of diversity – the pollinating potential synergies it offers in terms of innovation, productivity, creative problem solving and risk awareness. They should prioritise empathetic leadership, moving beyond the conceptual to the practical in allowing individuals to flourish.

This overhaul necessitates improved recruitment practices – for example, by disrupting cloning tendencies triggered by affinity and confirmation unconscious biases, recruiting for team fit and stretch, using expanded candidate pools and acknowledging that minoritised individuals often present themselves differently in interview situations.

It also means that corporate culture must be regarded as bi-directional. Rather than forcibly assimilating away all potential value from new recruits’ perspectives, organisational culture should embrace the stretch and development which they offer – through better learning and development, as well as tools such as mentoring, sponsorship and staff networks, and a commitment to disrupting those structures and policies which, based on traditional norms, implicitly favour majority groups over others. Especially in turbulent times like now, this is a worthy ambition, and one that the industry should wholeheartedly aspire to.

As The Charity CFO put it perfectly in its March 2023 article ‘Does the accounting industry have a diversity problem?’: ‘By committing to diversity with intention, impact and financial resources, an organisation can be in a prime position to attract high quality professionals, grow their firm, and become a leader and an example of how great the accounting profession really can be.’


Author Biography

Geffrye Parsons FCA, CEO of The Inclusion Imperative,  helps organisations to build leadership capabilities and harness the power of inclusion as a key strategy for wellbeing, organisational learning and superior business outcomes. He promotes a holistic, intersectional approach, challenging received wisdom and practices to facilitate culture shift and business learning.

“Embracing diversity unleashes vast potential, in terms of innovation, productivity, creative problem-solving and risk awareness.”

Ranjana Bell MBE, AIA Council Member