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June 9, 2011

KPMG lawsuit makes mockery of gender inequality

Gender equality is a serious issue but extreme discrimination lawsuits that seek stupid amounts of money do more damage than good.

KPMG US is being sued $350 million in a class action brought about by former employee Donna Kassman. Yes, that’s right, 350,000,000 big ones, in case you thought the last sentence contained a typo or two.

Kassman, who worked at KPMG’s New York office for 17 years, alleges the firm prevented her opportunities to climb to the top and that she was given a pay cut prior to maternity leave.

KPMG has denied the allegations and pointed out that the law firm representing Kassman is well known for bringing about employment discrimination disputes. Sanford Wittels & Heisler is pursuing gender discrimination claims against French advertising company Publicis Group, Japanese electronics maker Toshiba, Bayer HealthCare Pharmaceuticals and health insurer Cigna Corp.

Kassman alleges that KPMG cut her salary by $20,000 ‘without any business justification’ when she took maternity leave. Her claim also alleges men conspired against her when she was in line for promotion to managing director.

If, and this is a big ‘if’, KPMG did cut her pay due to maternity leave then the firm needs to seriously rethink its remuneration policy, which would be outdated and flawed and doesn’t belong to this day and age.

The insinuation she was denied opportunities because of her sex and her decision to have a child is a much more difficult claim to prove.

Businesses do get affected by maternity leave and this can have an impact upon the career of a woman, but does it prevent women from reaching the top?

I suspect it might, but it’s not a specific problem within the accounting profession, rather a broader problem within corporate culture, and It is changing, slowly.

There are plenty of high achieving women within the accounting profession.

For example, I regularly speak to RSM International CEO Jean Stephens, Morison International CEO Liza Robbins and PwC UK public policy guru Pauline Wallace, to name a few. They are some of my closest contacts because they are bright, intelligent thought leaders who contribute significantly to the profession I report on.

Gender gap closing

A couple of year’s ago, the International Accounting Bulletin carried out research that tackled gender diversity.

What we discovered is that the gender balance among professionals is evening out but there is still a significant imbalance at the senior executive and partner level.

Russia has the largest proportion of women at senior level with 37 percent, however the imbalance in Russia is getting worse.

In other countries it is improving. The UK reported the greatest improvement in opportunities for women at senior level. In 1998, only 6 percent of senior positions were held by women but in 2008 this increased to 20 percent.

In South Africa, 29 percent of partners and senior executives are women and in Australia it drops to 12 percent. Japan has the most unequal firms with only 3 percent of senior positions filled by women.

Punishment must fit crime

The problem with Kassman’s lawsuit is that it makes it hard to be sympathetic to a plaintiff when her class action seeks nearly 10,000 times my own salary for claims that are probably hard to prove, even if they have merit. Children in Africa starve to death each day and this money would be better spent helping their tragic cause.

This claim highlights broader problems with the US legal system than anything else – a system that makes some accounting networks paranoid to refer to their US member firms as ‘network firms’.

How ridiculous claims like this see the light of day, dragging reputable businesses through messy court cases, is anyone’s guess, but as a media outlet I have the responsibility to report it.

If there is a serious problem, why didn’t Kassman influence change during her 17 years at the firm?

Maybe she tried, and failed, who knows? Regardless, surely there is a better avenue to influence meaningful change to a business than the courts.

From my years of experience covering the profession, accounting firms are making strides to improve gender inequality and they take this issue very seriously. Like most industries, there is a long way to go.

I would like to see a day when women are treated equally to men at the upper echelons of business. I would also like to see a day when US legal claims are proportionate to the crime and can be taken seriously.

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