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October 3, 2011

Diversity research: Getting the balance right

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The accounting profession is breaking free from the shackles of stereotypes that have surrounded it for years, as firms globally strive to diversify their workforce and create a new, more contemporary image of an accountant. Ana Gyorkos investigates how diversity has been addressed across the world.

 

The days when the first women and people of varying races and backgrounds entered the profession are not as distant as one would imagine, with most changes occurring place in the past two decades.

The profession globally has acknowledged that staff diversity is essential for future business success. However, firm leaders tell the International Accounting Bulletin there is still a way to go before diversity will be at a sufficient level and fully reflect the demographics.

A survey conducted by this publication to accompany the report saw 308 accounting firms respond from around the world. The findings paint an interesting picture as we see how different continents approach diversity and where their priorities lay.

In order to better understand how different regions and countries approach diversity we have interviewed firms leaders and professional bodies across the world to cover some of the diversity basics: gender, race, mobility and educational background.


Charts showing the results of the IAB global diversity survey

 


Cracking the glass ceiling

Globally, there are more women entering the accounting profession each year and in some firms they outnumber male colleagues.

However, seeing women take on leadership positions in the profession is still rare and has been flagged as one of the important areas needing improvement.

At present, only one of the 10 largest global accounting networks has a female at the helm – RSM International’s Jean Stephens.

The Grant Thornton International Business Report 2011 found women currently hold 20% of senior management positions globally in privately held business, down from 24% in 2009, and up just 1% from 2004. The mid-tier firm’s research attributed the decline to difficult economic conditions.

The International Accounting Bulletin’s diversity survey found only a third of firms across the world have a workforce with fewer than 45% women, with firms from the Middle East having the lowest proportion of women. Forty percent of Middle Eastern firms surveyed had fewer than 10% female staff.

North American and European firms have the highest proportion of women. In North America, 84% of firms having at least 45% women, while in Europe it is 72% of firms. In the Asia-Pacific region, 44% of firms have more than 45% women.

At Singaporean firm Foo Kon Tan Grant Thornton, 70% of staff are women, which is relatively high in Asia. HR managwer Dolly Ng Soon Cheng said the female-friendly hiring policy is due to programmes to encourage women to come back into profession after a career break.

“As the birth rate is low in Singapore, to encourage working women to return to the workforce after giving birth, employers provide paid maternity leave of between 12 and 16 weeks,” Ng Soon Cheng says.

“Of this, four weeks of salary is reimbursed by the government.”

BDO Brazil chairman and chief executive Raul Correa da Silva says his firm has been trying to keep the gender recruitment ratio for entry level at 50:50, however at managment level the numbers of females significantly drops.

“In our profession, the number of women was small 15 years ago, but it has been growing in the past few years,” Correa da Silva says.

“So, now I would say the percentage of women in our company – senior level professionals – is of about 20%, but considering the current recruitment processes, it will start to increase fast.”

Da Silva says when he qualified there were only a handful of women in the profession; he married Brazil’s second female auditor.

KPMG UK head of recruitment Iain McLaughlin says the firm’s gender ratio is at about 50:50 “but there is considerable variety by grade and function”.

“Of course we would like to see more women at senior levels,” McLaughlin says.

“There are things that we are doing, one of them is our Reach programme. This three-month programme allows women to articulate their career goals, provides inspiration from various internal and external leaders, feedback on their leadership style, opportunity to build their networks, sponsorship and other support.

“We recognise we need to better representative of females at a senior level.”

PwC US diversity leader Maria Castañón Moatscould points out that, while her firm may recruit 50% women, “as women advance in their careers, those numbers change”.

“Perhaps women begin to make choices around juggling career, family, etc. By the time you get to the manager level you are not at 50%,” Castañón Moatscould explains.

“So we really invest in supporting working parents and we have put in place things like Full Circle.

“This is [a programme] where we assign women to a PwC coach – someone they can still have a relationship with even when they are not with the firm because they are taking time off.

“It also gives them access to our firm’s training to keep their skills current.”

As women slowly make their mark, firm leaders accept there is still a way to go before women well and truly break the glass ceiling.

Table showing how, in most regions of the world, accountancy firms have between 20% - 50% qualified workforce Racial diversity is another area that has improved in recent years for several reasons.

Businesses want to better reflect the cross-section of people in the societies they operate, while globalisation and improved mobility of the profession has led to a rise in secondments.

In some countries, such as South Africa, racial diversity is an important issue due to relatively low proportion of black African accountants compared to the countries demography.

South African Institute of Chartered Accountants (SAICA) chief operating officer Nazeer Wadee recalls that, when he qualified in 1998-99, South Africa was moving out of the racist and suppressive apartheid regime that stifled opportunities for black accountants.

“For me personally, the difficulty back then was finding employment,” Wadee says.

“Unless you were white, finding employment was really difficult, especially at the Big Five.

“What you then struggled with was getting somebody to believe that somebody who was not white could do the job. It just meant you probably had to work 40% to 50% harder than anyone else.”

Racial diversity has changed significantly in recent years and this is partly due to the Black Economic Empowerment Act, which imposes a quota of black employees per company.

So much so, Wadee says, that it has become difficult to satisfy the demand for qualified black accountants, particularly female black accountants.

Morison International member SizweNtsaluba Gobodo is the largest firm outside of the Big Four.

A forerunner firm, SizweNtsaluba was one of the first ‘black firms’ – a firm largely composed of black Africans. Chief executive Victor Sekese says when he did his professional training in the late 1980s and the early 1990s you could literally count the number of black chartered accountants.

“You sort of knew everybody because there were so few of us,” Sekese points out.

Prior to the merger of SizweNtsaluba and Gobodo earlier this year, the firms were known as black firms.

“Because of us having a majority of black staff you might say we are a black firm but that doesn’t mean we only employ black people,” Sekese says.

“At partner level we have representatives of the racial group: African black, coloured, Indians and whites, both male and female.”

Sekese says SizweNtsaluba Gobodo closely reflects the demographic of the country.

Across the Atlantic, Castañón Moatscould explains that PwC takes high-performing employees from minority backgrounds and matches them with an advocate at senior partner level to encourage them to progress within the firm.

“We have affinity groups – we refer to them as ‘circles’ – not only for women, but also minorities such as Asian Americans, African Americans as well as Hispanics,” she says.

“We also reach out to minority high school students and parents on navigating the college choice decision.”

Despite efforts such as these, Castawñón Moatscould adds: “My personal feeling is that our African-American and Latino students are still under-represented in the accounting programmes nationwide.”

Professional mobility

Another way firms are becoming more diverse is through secondments and other programmes that allow accountants to work abroad.

International Accounting Bulletin research revealed that Latin America employs the lowest number of people from abroad, with 74% of responding firms saying they have no expats.

Middle East is the region with the highest number of expats, with 44% of firms saying they have more than 40% foreign workforce. More than half of respondents from North America and Europe also said they have no expats working for their firm.

In Asia-Pacific. 50% of responding firms have between a 1% and 40% foreign workforce.

HLB International US member firm Anchin, Block & Anchin is increasingly recruiting and sponsoring accountants from the Philippines, South Africa and Asian countries such as China and Korea.

“We have always been open to hiring what we think are the best and the brightest,” human resources director David Finkelstein says.

“At the time when it was hard to get the quality we wanted from the US workforce, we heard that people coming over from Philippines, for example, were very talented and we decided to look at recruiting from overseas.”

Another firm with an internationally diverse work force of more than 18 nationalities is Foo Kon Tan Grant Thornton.

“As there is a shortage of local talent in the industry, foreign talent helps to complement the workforce,” Ng Soon Cheng says.

“On top of this, the special richness that foreign talent brings and blends provide us with a different perspective at work.”

Most foreign employees at the firm are from other Asian countries as well as the US and UK.

Professional accountancy body CPA Australia says that, in Australia, accounting is on the government’s skills shortage list, which provides an easy passage for migrant accountant workers to enter the country.

“The main countries of origin are China and India,” CPA Australia executive general manager for member engagement Jeff Hughes explains.

The UK has always been known for recruiting from abroad, however, recent government restrictions to lower immigration levels is likely to stem the flow of migrant workers entering the country and have an impact upon diversity.

“As a company, we have visa programmes and we have our allocation on the number of people we can bring in but there are so many hurdles now,” RSM Tenon HR & recruitment director Tony White.

“It is very difficult to do that now.”

To get around the restrictions, RSM Tenon has started to do intercompany transfers within the RSM International network.

“We have intercompany transfers where our people will go over to South Africa, America, Australia and will do anything from three months to two years,” White says.

“Then, on the flip side, we will get people coming to the UK to do that. So it is almost like a work exchange programme that is quite sophisticated.”

McLaughlin, from KPMG UK, says the firm is working with the UK government to better understand the regulation. As yet, it has not yet affected the firm’s recruitment strategy.

Table showing how, in most regions of the world, accoutnancy firms have two thirds of the work force with a university degree

The next generation

Traditionally, firms have sought accounting talent from business degree backgrounds but this is not necessarily the case in every country.

In regions where the talent pool is small or there is fierce competition from other sectors, firms have broadened the education criteria of candidates. Larger firms that provide a myriad of consulting services are also seeking professionals with backgrounds in IT, climate change, engineering and other industry sectors.

The most common degree of accounting recruits, according to International Accounting Bulletin survey respondents is a business and economics degree. In North America, 91% of recruits without an accountancy degree have a business or economics degree.

Some 27% of respondents from Africa also said they look at social studies degrees, While only 3% of respondents from North America said they would hire people with those qualifications.

Most firm leaders explain that, while there is a growing interest in other educational backgrounds, most recruitment activity is focused on business graduates.

Finkelstein says, for Anchin, Block & Anchin, most graduates have a master’s degree and majored in accounting.

“The pool is large enough that you don’t need to go outside accounting,” he says.

Sekese says, in the SizweNtsaluba Gobodo audit practice, most recruits have an accounting degree due to the way the profession has been structured historically.

“However, lately we are now employing non-accounting graduates to work in other divisions that we have,” he adds.

“For example, the next group of graduates we have are graduates in the IT space so we have got a number of people that are qualified from an IT point of view.

“But, to a very large extent, it is still accounting degrees. We find ourselves with teams of various skills, legal skills, investigative skills and accounting skills.

“With the new green economy, we are looking for people who have an understanding of environmental law and environmental issues.”

UK firms, however, are more open to people with non-traditional higher education qualifications. White says academic performance is as important as academic pursuit.

“Our policy would be to take people from a wide range of courses from politics, history, sociology, geography, maths, whatever,” White says.

“It doesn’t matter. What matters is seeing on the graduate assessment days why people want to be an accountant. What is their hunger, rather than have they have got a distinction in accountancy at xyz university.”

ICAEW head of member services Sharon Gunn says the institute is also looking to take in more students from non-accounting backgrounds.

“That is actually very typical of the make-up of our profession right now – we don’t just take relevant accounting graduates, but a really diverse mix,” she explains.

The survey accompanying this report found the majority of responding firms from around the world had more than 75% of workforces university educated.

The Middle East has the highest number of university educated professionals, with more than 84% of responding firms having more 75% of the workforce with a university education. In Europe, 40% or responding firms have more then 75% university educated staff.

Room for improvement

Although firm leaders have seen enormous changes in diversity there is still a way to go.

KPMG’s McLaughlin says the profession “probably isn’t quite diverse enough, there probably is a lot of room for improvement”.

“I think the profession overall, and frankly the service we provide the clients, would definitely benefit from increased diversity,” he adds.

“It is an industry challenge we recognise now. Our peer group recognise that now.”

Sekese says: “I think in five years’ time we’ll see a much improved situation in terms of changing the demographics of the profession to closely resemble the demographics of the country. I think there is still commitment and the commitment is reflected by the financial resources that are put aside.”

Firm and professional body heads agree diversity is an area that needs to be closely monitored and resources invested in order to improve the demographics of the profession.

Perhaps in certain areas additional regulation is required to bring along the next level of changes. For example, mandatory female quotas at management level might bring the additional push women need to break the glass ceiling in financial services.

Regardless of regulatory intervention the profession globally is aware of the importance of diversity; however there is still a way to go before firms are able to put this challenge behind them.

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