In the spirit of Black History Month — and in light of headlines like "Finance and Accounting Fall Short on Diversity" — it's worth asking: How much progress has been made around diversity and inclusion in the accounting and finance (AF) workforce? Where do we see encouraging signs of strides being made? And what areas should be organizational priorities going forward?
Here's an in-depth look at the state of diversity and inclusion in the AF workforce today.
women in the AF workforce
Viewed from the lens of gender representation, there are definitely encouraging signs about the future of diversity and inclusion in the AF workforce. As far as the state of affairs today, that's more of a mixed bag, as we shall see.
First, the good: For starters, studies show that over the past 20 years, women have come to constitute the majority of accounting graduates. The pipeline is healthy, in other words, setting the stage for further gains down the road. And not surprisingly, given the data around educational attainment, women also represent the majority of accountants and auditors in the U.S. today.
So that's the good news.
The not-so-good? Those gains don't appear to be translating up and down the org chart in equal measure. If you restrict your view to partners and principals at large CPA firms, for example, the same research shows that only slightly more than a quarter of them are women.
Unfortunately, similar disparities — asymmetries between overall representation and representation at the top — can be glimpsed across many other industries. Often characterized as "broken rung" problems, they suggest that what stands in the way of equality in the context of AF may have less to do with the notion of a "glass ceiling" than with the mechanisms of advancement or assessment that organizations have in place. Research reveals as much, too. For example, one study found that nearly three out of four women in finance think "unfair prejudice or bias towards women" negatively influences performance assessments, with predictably negative consequences for their career growth in turn.
Whether or not this is the case probably matters less than the perception that it is. Categorically changing that by addressing gendered discrepancies around professional advancement should be a top priority for every AF leader today.
demographics of the AF workforce
In the past, finance has been called out for being one of the least diverse corporate functions. Is that label still justified?
Unfortunately, according to research on corporate diversity from Gartner, it is:
- For starters, while people of color comprise 11 percent of the overall corporate finance workforce, the percentage in senior finance roles is effectively half that (6%).
- Worse, in terms of the percentage of employees from under-represented groups, finance and accounting teams rank below all other corporate departments. Not good.
Outside of the corporate context, what's more, a similar picture emerges when you look at the AF workforce at large. Among the one million-plus accountants in the U.S., for example, research shows that while 64.6 percent are white, only slightly more than one in 10 are Asian or Hispanic/Latino, and fewer than one in 10 are Black.
Looking ahead, in distinct contrast to the pipeline of women, recent trends suggest that existing demographic disparities are in danger of becoming more, not less, entrenched. Take the fact that overall Black undergraduate enrollment has declined by as much as seven percent since the onset of the pandemic, for example.
For an AF workforce already notable for its absence of professionals from under-represented groups, that doesn't bode well.
Yet, bad as that sounds, there's reason to think there could be a sliver of silver lining here. Interestingly, recent data shows that professionals who don't have accounting degrees make up an increasingly large share of new hires among AF employers. While that's surprising for any number of reasons — not least of them the fact that overall enrollment in accounting programs has reached all-time highs in recent years — it suggests AF leaders are actively rethinking hiring criteria, and pushing it in a direction that embraces greater inclusivity.
As such, it could be a much-needed counterweight to recent trends around educational enrollment. Indeed, it might even serve as a vehicle for bringing a larger proportion of talented professionals from under-represented groups, especially those without traditional accounting backgrounds, into the accounting and finance fold. But time will tell.
Clearly, as we have seen, AF leaders and employers across the board have a long way to go in order to advance equality in the workforce. Progress has been made in some areas, most notably where gender representation is concerned, but more work needs to be done in others.
Of course, with conferences and networking events geared toward diverse hiring largely off the table for now, what's much less clear at present is whether in-house HR teams have the tools, resources or capabilities to effectively move the needle.
But that shouldn't be a stumbling block for forward-thinking AF leaders. In fact, it's an area where strategic talent partners like Tatum can step in and deliver immediate value. Whether you're looking to tap into a pipeline of diverse talent, compile more inclusive shortlists or augment your workforce with interim resources, there are any number of ways we're advancing diversity and inclusion for accounting and finance today. Get in touch with us to learn more.