CPA INSIDER

9 ideas on how small firms can improve diversity

Being inclusive in hiring and advancement can bring equity and value to your team.
By Anita Dennis

In response to the renewed focus on racial equity, many organizations — including accounting firms — have pledged to make change.

But there's much work to be done.

According to the AICPA's 2019 Trends report, 29% of professional staff in accounting firms were non-white, and only 9% of partners were non-white. Those numbers are even lower for Black accountants and staff, with only 4% of CPA firm professional staff and 1% of partners identified as Black.  

Progress toward racial diversity has been slow in the past, but at a time when many organizations are embracing change and looking for ways to bring it about, several leaders of ethnic minority-owned firms offered tips for what small CPA firms can do to promote greater diversity.

Make diversity a priority. Firms of all sizes need to make a strong commitment to incorporating diversity goals into their practice, according to Jessica Velazquez, CPA, managing partner at Indiva Advisors LLP in Las Vegas and a member of the AICPA's National Commission on Diversity and Inclusion. Nearly all the employees of her nine-person firm are women, and more than half are considered ethnic minorities.

"It starts with evaluating your perspective as a leader and as an organization on the topic, then examining your true feelings and motivations for wanting a diverse team. Lean into and explore that," she said. "Are you approaching this like a check-the-box quota? Or have you researched enough to know diversity and inclusion is good business?"

One way to make diversity a priority is to incorporate diversity and inclusion discussions into strategic planning, with goals for new hires at various levels or a plan for adding diversity at leadership levels. Firm leaders should communicate their commitment to greater diversity to staff and explain how they plan to achieve it to all team members, she said. If the firm has an HR department, it should be challenged to expand the firm's hiring of diverse professionals, with specific goals in place.

"Owners should actively seek to hire people of color, women, veterans, or members of other underrepresented groups who can bring in the skills the firm needs to serve clients," Velazquez said.

Start early. Create your own pipeline of talented professionals by introducing students in your area to the profession while they're still in high school, before they've settled on a career. "When I interview young people for jobs and ask how they got into the profession, most have been exposed to it through family or friends or through a summer job that introduced them to the accounting and finance function," said Tim Watson, CPA, partner at the 15-person firm Benford Brown & Associates LLC in Chicago, where all of the staff is Black and 80% are women.

Since there are fewer accountants who identify as minorities in the profession, young accountants of color may not be exposed to the profession by growing up with CPAs in their families or communities. As a result, young people of color have less opportunity to learn what accountants do and aspire to become one. Watson recommended reaching out to schools that have high minority populations and offering to make presentations on financial literacy topics, teach accounting classes, or mentor students.   

Being exposed to someone in the profession can truly make a difference. "I decided to become a CPA because my high school teacher was a former CPA and mentored me, telling me about all of the opportunities the profession offered," said Robert Allen, CPA, president of the five-employee The Allen CPA Firm in Houston, whose staff are 60% ethnic minority and 40% female.

Expand your recruiting base. Allen noted that many accounting firms recruit new hires from the alma maters of the firm partners. "However, if their alma mater has an underrepresentation of minorities, the incoming new hires may not be as diverse," he said. To solve the problem, firms can get involved with minority accounting clubs at these schools or turn to organizations such as the National Association of Black Accountants, the Association of Latino Professionals For America, and Ascend for advice on recruiting minorities. Those organizations can also be good places to recruit more experienced professionals. Another solution is to recruit at schools beyond the ones that firm leaders are familiar with, especially historically Black colleges and universities (HBCUs) and schools with high Latino populations.

In addition, Watson said, "the acceleration to a remote workforce allows firms to recruit students and experienced professionals from any location," another step that can help firms expand their horizons.

Identify local opportunities. Consider as well looking in your geographic area when it comes to making hires. "Look in your community to identify talent from diverse backgrounds," Velazquez said. You can do that by reaching out to minority cultural and community organizations — which often mentor or give scholarships to talented young people before or during the college careers — or to community colleges, which may have many promising students from less privileged backgrounds. CPA firms can offer to do presentations on the many advantages of a career in accounting.

In addition, understand that for some students or young professionals working toward certification, the cost of CPA Exam preparation and materials may be a factor, Watson noted.

An informal study that was part of field work that the AICPA Private Companies Practice Section (PCPS) did to develop the CPA Culture of Support toolkit found that smaller firms that aren't able to afford to cover all the costs of the CPA Exam may allow paid time off for study, according to Kari Hipsak, CPA, CGMA, senior manager–Firm Services. Another option is to create a study-friendly work environment by letting staff dedicate some working hours or slow periods to studying.

Reach out to experienced professionals. Allen recommended that firms use social media platforms such as LinkedIn to connect with more experienced ethnic minorities. "They have a multitude of diverse industry and affinity groups — such as the Black Women in Accounting & Finance Network group — that firms can use to directly communicate and build robust relationships with qualified and talented minority individuals," he said. It's possible to see the candidate's profile and experience and make connections instantly. 

Understand the benefits. To set the right tone at the top within the firm, "leadership must speak out and have an open dialogue about how diversity and inclusion can create competitive advantages," Allen said.

The value is especially clear during challenging times. "There is ample evidence that diverse and inclusive companies are more likely to make better, bolder decisions — a critical capability in the crisis," according to a 2020 McKinsey report. Diverse teams also tend to be more innovative, the report said.

There are also recruiting advantages that will always matter. "Having a diverse leadership empowers and shows other diverse individuals that they can make it to the top as well," Allen said, adding that it gives a firm a competitive advantage in recruiting and retaining underrepresented professionals in the future. Allen noted that diverse organizations also enjoy broader perspectives and the chance to serve a wider range of clients.

Develop a clear career path. Even in the smallest firms, it will be easier for a talented professional to advance if leadership spells out what is necessary to move forward. "Newer CPAs should be mentored not only on how to do the job but also on what's involved in running a firm, including managing clients who may not look like them," Watson said. "You need someone who knows how to do it to show you."

Allen recommended that firms ensure that all professionals are being offered leadership training and stretch assignments that expand their skills and visibility, and be sure that minorities aren't excluded, even unconsciously. Firms can also provide training for all team members on issues such as unconscious bias and stereotyping. Showing staff that their ideas and experiences matter is key as well. "Smaller firms can easily evaluate and incorporate the ideas and perspectives of staff, which shows the staff they are valuable and that they have a direct impact on the firm's success," Allen said.

Make connections. Many CPAs relish the opportunity to network with other practitioners who may be valuable sources of referrals or expertise. Watson advised practitioners to make an intentional effort to network with minority-owned firms and develop friendships with their leaders to better understand commonalities and differences. In cases where the minority-owned firm is smaller or newer, a white-owned firm's offer to act as a mentor to firm leaders can give the minority-owned firm a sounding board and help strengthen understanding of their experiences, he said.

Learn more. AICPA diversity and inclusion resources — such as the Business Case for Diversity and Inclusion, the Accounting Inclusion Maturity Model, and the Inclusions Solutions newsletter — offer information and resources firms can use to launch their own successful efforts. Firms may also be able to turn to state CPA societies for training on equity, diversity, and inclusion.

Smaller firms can follow these steps to enhance their own diversity and achieve positive transformations. "It doesn't take that many people to make a difference in a small firm," Watson said.   

Anita Dennis is a New Jersey-based freelance writer. To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at Chris.Baysden@aicpa-cima.com.

SPONSORED REPORT

Scorecard preparation templates and tips

With Workiva, we've created a PowerPoint deck that helps you create your own scorecards -- quick reference reports used across organizations to update stakeholders on the performance of defined deliverables.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.