How firms can overcome challenges and develop a diverse workforce

Building relationships in new places has helped Dixon Hughes Goodman make significant strides toward diversity.
By Ken Tysiac

Recruiting a diverse workforce can be a challenge for CPA firms outside the Big Four, but it can be overcome with a commitment to building relationships, said Kent Satterfield, CPA, chairman of Dixon Hughes Goodman (DHG).

The Charlotte, N.C.-based firm has made significant diversity and inclusion strides in recent years, and offers something of a case study on how to be successful in those efforts. The firm, which has over 2,000 employees, more than 250 partners, and offices in 13 states, was recognized for its efforts in this area with the Corporate Diversity Award in 2016 from the National Association of Black Accountants (NABA).

Former AICPA Chairman Rich Caturano, CPA, CGMA, said in a 2015 speech at the AICPA fall governing Council meeting that leaders of firms from outside the Big Four should be persistent even though the Big Four's thorough minority recruitment efforts decrease the number of diverse candidates who are available for smaller firms to pursue.

DHG's many efforts to improve its diversity and inclusion include:

  • Sponsoring college scholarships and a summer leadership conference.
  • Partnering with organizations such as NABA on a variety of projects.
  • Forming a diversity and inclusion council that discusses issues and opportunities.
  • Sponsoring a leadership and business development program for employees and partners called Women Forward.

The common thread that runs throughout the programs is the pursuit of relationships with people who can help the firm pursue its diversity and inclusion goals.

"It's just like with clients or prospects," Satterfield said. "If you can begin to build relationships with people where you know them, [you will make progress]. What won't work is just sending a school some money or showing up at an event with a bunch of other firms. That may get you started, but it's not going to take you very far."

Why pursue diversity

Recent studies have made clear the business case for improving diversity and inclusion.

Ethnic diversity may lead to improved decision-making in a group because a variety of perspectives can enhance debate and upend conformity, according to a study published in 2014 in the Proceedings of the National Academy of Sciences.

Meanwhile, gender-diverse business units were found to have better financial outcomes than those dominated by one gender in a Gallup study published in 2014. In the study, gender-diverse business units in a retail company posted average comparable revenue that was 14% better than in less diverse business units, and gender-diverse units in a hospitality company posted 29% higher average quarterly net profits.

"I think the data is really clear that more diverse teams perform better than homogeneous teams," Satterfield said. "Whether that's ethnic diversity, gender diversity, we believe we can serve our clients better with more diverse teams and more diversity in the firm."

Establishing the case for diversity and inclusion is much easier than making it happen, because the supply of diverse candidates isn't huge. According to the most recent AICPA report on the trends in supply and demand in the CPA profession, 7% of the enrollees in university accounting bachelor's and master's degree programs in 2013–14 were African-American, and an additional 7% were Hispanic or Latino. And male enrollees (53%) continued to outpace female enrollees (47%).

DHG has undertaken numerous efforts to improve its diversity and inclusion in this environment. Several of the efforts have taken place on campus, as the firm has provided scholarship money for first-generation college students and funded the formation of NABA student chapters at schools where it recruits.

The firm also has developed numerous relationships with North Carolina A&T State University, a historically black university in Greensboro, N.C., about 90 miles from the firm's headquarters. Taking the time to speak to classes and getting involved in on-campus recruiting have made those relationships strong and helped students see themselves as candidates at a firm they previously were not familiar with.

Other relationships have been formed through the firm's involvement as a sponsor of the PhD Project, which works to help African-Americans, Hispanics, and Native Americans obtain business doctoral degrees that lead them toward professorships at business schools. Building relationships early with these individuals has given DHG access on campus to a diverse student population.

Finally, DHG sponsors a leadership conference for students in Charleston, S.C., each summer. There, about 100 students from 50 universities attend seminars, participate in community service projects, and tour the city and harbor in the evening as the firm creates bonds with sophomores and juniors who haven't yet committed to a job for the future.

"If we're not getting to know students sooner, really by the time they [would] go through the recruiting process, they've already done two or three internships and already accepted a job," Satterfield said.

Focus on retention

In addition to working hard to identify diverse talent in the recruiting process, DHG makes significant efforts to retain the people it has hired. The effects of these efforts often can multiply.

As the leadership ranks become more diverse through promotion, the firm can become more attractive to prospective employees with diverse backgrounds because they see that people like them can succeed at the firm.

The Women Forward program helps prepare female employees for promotion (its seminars on leadership and business development also are open to men, many of whom take advantage of the opportunity to participate).

In addition, DHG's inclusion and diversity council proactively addresses areas that help the firm retain diverse talent. The council is made up of about 10 people from various firm offices. It includes people of diverse backgrounds with respect to ethnicity, gender, sexual orientation, and age. The council meets in person two or three times each year, with a teleconference each month (although the frequency of the calls may lag during busy season).

Members of the council look for ways for the firm to connect with clients and the community on diversity issues. The council also keeps management informed on inclusion issues that may need to be addressed within the firm.

Recently the firm also launched an employee resource group for its African-American employees.

"We still feel like we have a long way to go," Satterfield said. "There's no finish line, and we continue to work all the time to do a better job on this. But we have had some success, mainly because we've been intentional about it, I think."

How to improve

Satterfield doesn't pretend to have all the answers, but said the following tactics can help CPA firms attract and keep a more diverse workforce:

  • Get management buy-in. If top management resists the pursuit of diversity, explaining the business case may lead to a change of heart. "It will work better and firms will go much further faster if there is support from firm managing partners, chief executive officers, and the top leadership," Satterfield said.
  • Partner with diversity-focused organizations. DHG's partnerships with NABA, the Association of Latino Professionals for America, and the PhD Project have been rewarding. "We can only do so much on our own," Satterfield said.
  • Find students who are overlooked. After developing strong relationships on campus, firms may be able to ask their contacts to put them in touch with students who have excellent potential but are being overlooked by large firms for some reason. At a number of schools, Satterfield said, DHG has close relationships with professors who call to alert them about a promising student who has been overlooked.
  • Watch for experienced professionals. Although CPA firms are making progress in retaining their people, turnover does occur. "There are opportunities for smaller firms with people coming out of Big Four or regional firms who would prefer to be in a smaller firm environment," Satterfield said.
  • Ask for help. "You will find a lot of people that will help you," Satterfield said. "Although we're all competitors, we, for instance, would be more than happy to share." DHG (and EY) did just that by opening up about their experiences in a recent report by the Charlotte Chamber of Commerce and the Charlotte campus of the University of Phoenix.
  • Be patient. Success in this area is likely to take many years, and progress often comes in small increments. "It really is a long-term effort, because there is no quick fix for firms like us, or any other firm for that matter," Satterfield said. "You can't all of a sudden wave a wand and have African-American or female top leaders. It doesn't work that way. It takes effort and diligence over a number of years."

The issue of how to measure success can be tricky, too. DHG does not have quotas for diversity, Satterfield said, because the firm's goal is always to hire the best people. But the firm does track diversity metrics to evaluate its progress, and particularly has goals related to gender diversity in its leadership ranks. Satterfield said the portion of the firm's leaders who are female is about 19%, and the firm would like to increase that to at least 25% over the next five years.

The firm also includes diversity metrics in leaders' evaluation systems to monitor how they are performing in recruiting and retaining diverse talent.

"A key way to make progress is how you judge people, how you judge performance," Satterfield said, "and it makes a statement to our partners that this is important to us when among the various performance indicators, diversity and inclusion is one of them."

The firm's strategy for improving its diversity is to recruit in different places for people who are going to be top-notch, rather than changing the qualifications it's looking for. Having new relationships in places with diverse candidates is helping DHG succeed.

Relationships with vendors also may eventually play a role in DHG's diversity efforts. The commitment to diversity of DHG's suppliers is something the firm plans to focus on in the future when it makes purchasing decisions. This, too, can aid in retention as firm employees may appreciate the firm's commitment to working with suppliers who embrace inclusivity.

Although all of these efforts take time to produce results, Satterfield is confident that pursuing them will help DHG overcome the challenges that firms face in developing a diverse workforce.

"It's like planting trees," he said. "You plant a seed, but it takes a good long while for the tree to grow and then bear fruit. I guess the good news for us, we at least are seeing some of the trees come up from the seeds that we've been planting."

Ken Tysiac is a JofA editorial director.

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