Diversifying Tax Workforce Could Start With Hiring Practices

Carolina Vargas Washington Meg Shreve Washington

By Carolina Vargas

To hire a more diverse workforce, tax and accounting companies should first look at diversifying their managers who make hiring decisions.

That’s the message from diversity professionals at firms contacted by Bloomberg Tax and recent surveys by Bloomberg Tax and McKinsey & Co.

White males make up the vast majority of hiring decision makers, according to the Bloomberg Tax survey of more than 400 tax and accounting professionals. The survey found that 63 percent of directors and those higher in rank at accounting firms are male, and 76 percent are white. Among corporate tax departments, 71 percent are male and 80 percent are white, it said.

That lack of diversity at the hiring level is hurting the tax world’s ability to recruit and retain a diversified workforce, tax professionals said.

The Bloomberg Tax survey found that 74 percent of accounting firms and 81 percent of corporate tax and accounting departments had implemented diversity and inclusion hiring efforts. But a disconnect was found between hiring managers’ and nonmanagers’ perceptions of how well those efforts were working. Eighty-six percent of decision makers at accounting firms rated their overall diversity at 7 or above, on a scale of 1 to 10. Only 46 percent of non-decision makers gave similar ratings.

Historically, the workplace has primarily been dominated by white, heterosexual men, Richard Caturano, a partner and national leader of culture, diversity, and inclusion at RSM US LLM in Boston, told Bloomberg Tax. This continues to be a problem today, according to many companies making efforts to boost diversity and inclusion.

Tax and accounting companies looking to hire a diverse workforce should consider revamping their hiring practices, including using panels to interview candidates, and training managers to be aware of their biases, tax professionals told Bloomberg Tax.

Interview Process

Diverse candidates want to see people like themselves represented in the companies where they seek employment, starting with the interview process. If they don’t, that may be a sign the company isn’t promoting a diverse and inclusive work culture, Sharon Jones, CEO of Jones Diversity Inc. in Chicago, told Bloomberg Tax.

Jessica Akue was one of the first black women to be hired at her law firm in Canada. At recruitment events, minority students would reach out to her, asking about her hiring experience.

“When they saw me, it was a big deal,” Akue, who is now studying for her master of laws in taxation (LL.M.) at the University of Florida Levin College of Law in Gainesville, told Bloomberg Tax. “I noticed that seeing me, it was like giving them hope.”

Candidates are looking to see how a company promotes its diversity, she said. When she goes through the interview process, Akue said she constantly asks herself if her look fits within the company.

“When you go on the website, they all say they are welcoming to minorities,” she said, but “when they hire, I don’t think that it’s true.”

Some organizations have started to use diverse hiring panels during interviews.

“We seek to diversify the interview teams as much as possible, set metrics to track results, as well as many other focused efforts and programs,” Kim Goings, talent leader for Ernst & Young LLP’s National Tax Department in Washington, told Bloomberg Tax. “We realize people need to see themselves reflected in the organization as they are engaging with us in the recruiting process.”

The ideal scenario would be to have your panel look like your company, said Cristina Hernandez, vice president of client relations at Verna Myers Consulting Group LLC in Altadena, Calif. But she warned that diverse hiring panels aren’t necessarily a quick fix.

“Even if you have a diverse panel, it is not a magic bullet. You really have to have training for your interviewers and the people who are making the hiring decisions so that they understand what biases can be inherent in the hiring system that can preclude entire groups of people from even being considered,” Hernandez said.

Despite the best intentions, challenges to the diversity and inclusion efforts persist, tax professionals said.

“It’s hard when you want to improve diversity numbers but you don’t have the diversity population in recruitment, so you have to compensate for that,” Caturano said.

Fighting Bias

Hiring managers also need to be aware of unconscious biases when making decisions, Goings said.

For example, affinity bias can occur when hiring managers think they share the same qualities as the person they are interviewing, such as having graduated from the same school or being from the same hometown. That feeling of familiarity can create a bias, Jones said. Stereotypes come into play with confirmation bias when people look for evidence that supports their preconceived notions.

“Bias, even unconscious bias, in the recruiting and hiring process can result in decisions based on preference,” Goings said. Those decisions create homogeneity, leaving managers with employees that think exactly like each other and lack the diverse backgrounds and experiences that can help avoid “group think,” she said.

RSM conducts several training sessions on unconscious bias, including a four-hour class for those involved in the interview process and other leaders in the company, Caturano said.

“We want to make sure from the beginning of the process that the interviewer is aware of any potential bias,” Caturano said. “If they can recognize that bias, then they can take action to overcome that bias.”

“Unconscious bias is a lot like alcoholism—you have to first recognize you have a problem to work on it,” Jones said.

Jones agreed that training sessions can be effective in reducing unconscious bias, but emphasized the importance of making them mandatory and in person.

“This type of training needs to be mandatory, because if you make it optional, guess who won’t show—the people who are the worst offenders,” she said.

Good for Business

While diversity is an important goal, it is also good for a company’s bottom line.

“When you have a diverse team, you’re more likely to have a better result for your customers,” Hernandez said.

A 2015 report by McKinsey & Co. examining diversity in the workplace found that “companies in the top quartile of racial/ethnic diversity were 35 percent more likely to have financial returns above their national industry median.”

The company’s most recent report in January found that this correlation between diversity and increased profits continues to hold true. Key findings from the latest McKinsey report include:

•  Gender diversity is correlated with both profitability and value creation.
•  Executive-level ethnic and cultural diversity is correlated to superior profitability.
•  Companies face a penalty for not being diverse, in the form of relative financial underperformance.

Looking Ahead

Companies seeking to improve their diversity efforts need to make sure the message comes from the top down, Caturano said. It’s important that leadership—particularly a CEO—prioritizes diversity and inclusion, he said.“It’s not going to happen accidentally. Hope is not a strategy,” Caturano said. “Unless it’s a priority, like anything else, it’s not going to happen.”Paradigm for Parity, a coalition made up of business leaders from companies such as Cargill Inc. and Bank of America Corp., is focused on “addressing the corporate leadership gender gap” through a five-step action plan for companies to implement with the goal of achieving gender parity by 2030.

“The data is clear: diversity is good for the bottom line. And the biggest barrier to progress that companies have faced is figuring out how to get there,” said Jewelle Bickford, co-chair of the coalition.

The action plan includes minimizing and eliminating unconscious bias; increasing the number of women in senior operating roles; measuring targets at every level and communicating progress and results regularly; basing career progress on business results and performance not on seniority; and identifying women of potential and providing them with sponsors and mentors.

So far, 65 companies have committed to the action plan, and the coalition aims to get more signed on soon.

CEO Action for Diversity & Inclusion, made up of more than 350 CEOs, including the Big Four accounting firms, strives to make “measurable action in advancing diversity and inclusion in the workplace.”

As part of the coalition, CEOs commit to a three-part pledge to create environments that foster open dialogues about diversity and inclusion, implement and expand unconscious bias education, and share their own companies failures and successes in implementing different initiatives around diversity and inclusion.

To contact the reporter on this story: Carolina Vargas in Washington at cvargas@bloombergtax.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bloombergtax.com

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