The accounting profession - has and will - continue to play a key role in making the capital markets more efficient: driving new innovations and promoting economic prosperity key to supporting democracy and freedom for its participants by reporting and verifying financial and non-financial information for business decisions. The greater the inclusion -- the greater the economic prosperity. Marginalization of participants in a capital markets environment drains its growth and creates ineffectiveness and promotes instability in a democracy.
According to a recent study by the McKinsey Global Institute (MGI), employee diversity is associated with better business results. In the study, titled “Diversity Matters”, 366 public companies were surveyed from different countries in the Western World. Two key findings:
- Gender-diverse companies are more likely to perform 15% better
- Ethnically-diverse companies are more likely to perform 35% better
Although being diverse doesn’t directly translate to more sales or profit, companies who have a diverse population tend to be more successful. Here are some other statistics for you to consider:
- Earnings before interest and taxes (EBIT) increased by 8% for every 10% increase in the ethnic and gender composition of senior executive teams in the United States
- In the United Kingdom, companies have seen a 3.5% increase in EBIT for every 10% increase in gender diversity in the same senior executive team.
The IMA is one of the engines promoting DIVERSITY AND INCLUSION IN THE ACCOUNTING PROFESSION and corporate/business community with several recent articles in Strategic Finance Magazine to help members:
But the accounting profession has a long way to go with DIVERSITY AND INCLUSION according to Accounting Today in 2017:
African-American and Asian professionals at just 4 percent and 5 percent of accounting partnerships, respectively, as of 2012. Similarly, female professionals only make up 19 percent of partners across the country.
There are no numbers or stats related to LGBT.
Why is DIVERSITY AND INCLUSION needed to be addressed by the accounting profession today?
In addition to the stats presented above the US population/marketplace is also changing and the business community needs to be prepared to service this growing marketplace.
“As minority populations grow in the U.S., the accounting profession (and all professions, for that matter) must grow to reflect the customers they are serving. A well-known U.S. Census prediction has minorities in the majority by 2042, and with this, professionals must understand that their window of opportunity for acting to transform the profession is closing.”
But in different parts of the country minority populations are already majority and based on this study: The new census projections indicate that, for youth under 18–the post-millennial population–minorities will outnumber whites in 2020.
African-American Business Owners in America:
Minority-owned employer firms in the United States increased by approximately 4.9 percent in 2015 to 996,248 from 949,318 in 2014, according to findings from the U.S. Census Bureau’s 2015 Annual Survey of Entrepreneurs.
Payroll and employment for minority-owned employer firms in the nation also increased from 2014 to 2015 by approximately 7.0 percent ($237.5 billion to $254.0 billion) and 6.2 percent (7.6 million to 8.0 million people employed), respectively. Receipts for minority-owned firms in 2015 were estimated at $1,168.5 billion — not statistically different from the 2014 total of $1,089.7 billion.
“California led all states in the number of minority-owned firms with approximately 228,148 (22.9 percent of the U.S. total of minority-owned firms) and the New York-Newark-Jersey City, NY-NJ-PA metropolitan area led the 50 most populous metropolitan statistical areas in the number of minority-owned firms (approximately 127,736 or 12.8 percent”), said Kimberly Moore, chief of the Economy-Wide Statistics Division.
More than one-quarter (14) of the 50 most populous metropolitan statistical areas had approximately 15,000 or more minority-owned employer businesses. About one-third of employer firms (34.6 percent) in the accommodation and food services sector were minority-owned.
Source: US CENSUS
Women Business Owners Becoming Mainstream in American and their economic and political power continues to grow:
As of January 2017, there are an estimated 11.6 million (11,615,600) women-owned businesses in the United States that employ nearly 9 million (8,985,200) people and generate more than $1.7 trillion ($1,663,991,700,000) in revenues. Over the past 20 years (1997–2017), the number of women-owned businesses has grown 114% compared to the overall national growth rate of 44% for all businesses. Women-owned businesses now account for 39% of all U.S. firms, employ 8% of the total private sector workforce and contribute 4.2% of total business revenues. The combination of women-owned businesses and firms equally-owned by men and women account for 47% of all businesses. Women business owners are looking for women accountants but only 19% of the accounting profession are women.
THE 2017 STATE OF WOMEN-OWNED BUSINESSES REPORT Commissioned by American Express
LGBT Business Owners and its relationship to Diversity & Inclusion in the Accounting Profession/Business Marketplace:
An estimated 1.4 million American LGBT business owners is considered -- LGBT input to the economy is over $1.7 trillion. That would make LGBT Americans the 10th largest economy in the world. For a little perspective, that’s bigger than the economies of Australia, Canada, and South Korea combined.
More than 75 percent of LGBT adults and their friends, family, and relatives say they would switch to brands that are known to be LGBT friendly. In 2017 alone, the LGBT consumer buying power was over $917 billion.
ADVOCATE MAGAZINE: The LGBT ECONOMY IS AMERICA’S FUTURE
The “Big Four” accounting firms and several professional associations are taking actions to address the LGBT community through their DIVERSITY AND INCLUSION EFFORTS - note mostly in the UK:
“Big Four” Accounting Firms target LGBT marketplace in DIVERSITY & INCLUSION efforts
ICAEW IN THE UK SUPPORTING LGBT DIVERSITY AND INCLUSION IN THE ACCOUNTING PROFESSION
Why is DIVERSITY AND INCLUSION IMPORTANT IN THE CAPITAL MARKETS:
The most recent Cone Communications Millennial Corporate Social Responsibility Study gives an inside look into the unique attitudes, perceptions and behaviors of different Millennial segments when it comes to engaging with companies around social and environmental issues.
Key findings of the study included:
- 63% of Americans are hopeful businesses will take the lead to drive social and environmental change moving forward, in the absence of government regulation
- 78% want companies to address important social justice issues
- 87% will purchase a product because a company advocated for an issue they cared about and
- 76% will refuse to purchase a company’s products or services upon learning it supported an issue contrary to their beliefs
Based on these findings and others -- the CEO ACTION was created and a nationwide educational tour was launched on June 11, 2018 to help the current and future workforce recognize and minimize their unconscious bias and to take action to promote greater DIVERSITY AND INCLUSION in the workforce. Many accounting organizations – including the “Big Four” are leading this important initiative to ADAPT corporate cultural thinking to include DIVERSITY and INCLUSION in their key initiatives.
Representing a cross-section of more than 450 CEOs and 12 million employees, CEO Action for Diversity & Inclusion™ (CEO Action) was created to address this growing need in the capital markets to address DIVERSITY AND INCLUSION.
The US Accounting Profession is playing a major role in this Corporate DIVERSITY & INCLUSION CAMPAIGN:
This effort is being led by Tim Ryan, US Chairman and Senior Partner of PwC and chair of the steering committee for the CEO Action for Diversity & Inclusion™. "As a lead signatory, PwC is investing $10 million over the next twelve months to create the Check Your Blind Spots mobile tour and help organizations build the inclusive environment employees are not only asking for but deserve."
As the press release announcing this nationwide tour states:
The mobile information centers will provide free unconscious bias education for any organization.
This action builds upon one of the coalition's three initial pledge goals to help individuals begin recognizing, acknowledging, and therefore minimizing unconscious bias. Furthermore, it responds to the number one request by signatories in year one for additional resources to engage the workforce, and recent research that 78 percent of Americans want companies to address important social justice issues. While institutional change must be initiated at the leadership level, CEO Action recognizes that in order to drive real change, it must create opportunity for CEOs as well as the current and future workforce to collectively participate in cultivating inclusive environments.
Marking its first year, CEO Action for Diversity & Inclusion™ has rallied a record number of CEOs who acknowledge that more can be done to drive diversity and inclusion in the workplace. In addition to achieving a significant number of signatories and sharing nearly 500 actions on the CEOAction.com database, the coalition has focused on helping its signatories fulfill their commitments within the pledge. Key accomplishments include: hosting leaderships sessions that facilitated hundreds of conversations between signatories in order to share resources as well as creating formal peer networks to help signatories remain motivated, persistent and focused on driving change within their workforces.
"Greater equality is not only good for society, it's good for business. A more equal world brings forth economic inclusion and has both short and long-term benefits. But we know getting there is not easy," said David Taylor, Procter & Gamble Chairman of the Board, President and CEO. "Beyond simply doing the right thing, it requires continued, productive dialogue on tough topics leading to greater understanding and collaboration."
With recent news article citing companies reportedly spending almost $8 billion a year in diversity training, CEO Action will also release a free suite of educational materials to help organizations create and maintain a diverse and inclusive culture. The tools will be designed in part by the CEO Action Working Groups, which are comprised of more than 120 experienced diversity and inclusion and human resources leaders, and represent a key part of the coalition's evolved strategy to truly impact the existing and upcoming workforce and engage more CEOs. Included in the suite of materials will be tools to measure diversity and inclusion within companies, complete self-assessments to gauge progress and toolkits on a range of topics.
CEO Action for Diversity & Inclusion™ aims to drive investments that create collective opportunity for CEOs as well as the current and future workforce to address the diversity and inclusion challenges faced by the business world and society at large. Leaders interested in learning more about the coalition and accessing the upcoming free resources can visit CEOAction.com.
CEO Action for Diversity & Inclusion™ steering committee quotes:
Accenture North America CEO Julie Sweet: "At Accenture, we have an unwavering commitment to inclusion and diversity and creating an environment where every person has a sense of belonging — and can succeed both professionally and personally. With more than 50,000 employees in the United States, we have a responsibility to not only create this environment for our employees, but also to contribute to the communities where our people work and live. We have benefitted from the rich conversations and sharing of best practices with CEO Action committee members."
BCG's Regional Chairman of North America Joe Davis: "The CEO Action for Diversity & Inclusion™ speaks to the need for business leaders to work together, across organizations and industries, as we tackle one of the most pressing issues of our time. Direct engagement with our people leads to informed action and thoughtful conversation at the organizational level, by pushing further and collaborating across our organizations we aim to harness the power of this collective thinking to affect even deeper change."
Deloitte US CEO Cathy Engelbert: "We recognize that teams with a variety of backgrounds, experiences, thoughts, and insights lead to more meaningful dialogue, stronger solutions, and better business outcomes. We should be purposeful in helping each other to recognize unconscious bias in our everyday interactions, and the CEO Action for Diversity & Inclusion™'s unconscious bias education and training will help people to grow into inclusive leaders who facilitate more open and honest conversations."
The Executive Leadership Council President and CEO Skip Spriggs: "Continuing to bring the CEO Action for Diversity & Inclusion™ pledge to life by creating these tangible moments is key to bringing about continued growth, leadership and impact in the business community and in the communities where we work and live. The more we can cultivate diverse leaders who make a conscious effort to have their actions match their values, the better we will all be. "
EY US Chairman and Americas Managing Partner Stephen R. Howe Jr: "Our current workforce and the next generation of leaders demand a lot of us, and we strive to live up to their expectations. The CEO Action for Diversity & Inclusion™ pledge brings together leaders with a mindset that encourages us all to take on one of society's toughest challenges and create workplaces that empower people to drive innovation through diversity."
General Atlantic CEO Bill Ford: "With more than 450 CEOs coming together in such a unique way, CEO Action for Diversity & Inclusion™ continues to represent an incredible opportunity for innovation and disruption for the business community. Through growth and the transformational power of collaboration, we have the chance to bring new experiences and resources to our people that will hopefully not only impact their workplace, but their communities as well."
KPMG US Chairman and CEO Lynne Doughtie: "As leaders we are raising a mirror to ourselves and the business community at large to redefine the tools we all use to advance inclusion and diversity. By collaborating on the development of resources and making those tools available at scale, we are helping to position the business community to thrive. At KPMG, we embrace that responsibility and CEO Action for Diversity & Inclusion™ provides a platform for all leaders to come together to achieve this goal."
New York Life Chairman and CEO Ted Mathas: "The role we share affords us the opportunity – and the responsibility – to lead by example and help society get to a place that reflects America's true spirit and values. The CEO Action for Diversity & Inclusion™ pledge enables us to work more closely together, learn from each other, and drive integrity and respect within the communities we serve."
Procter & Gamble Chairman of the Board, President and CEO David Taylor: "Greater equality is not only good for society, it's good for business. A more equal world brings forth economic inclusion and has both short and long-term benefits. But we know getting there is not easy. Beyond simply doing the right thing, it requires continued, productive dialogue on tough topics leading to greater understanding and collaboration."
About CEO Action for Diversity & Inclusion™
CEO Action for Diversity & Inclusion™ is the largest CEO-driven business commitment to advance diversity and inclusion within the workplace. Bringing together more than 450 CEOs and presidents of America's leading businesses, academic institutions and nonprofits representing 12 million employees, the commitment outlines actions that participating organizations pledge to take to cultivate a workplace where diverse perspectives and experiences are welcomed and respected, employees feel comfortable and encouraged to discuss diversity and inclusion, and where best known—and unsuccessful—actions can be shared across organizations. Learn more at CEOAction.com and connect with us on Facebook: CEO Action for Diversity & Inclusion and Twitter: @CEOAction.
Technology and Transparency and Accountability - DIVERSITY AND INCLUSION
Great article on this topic using data analytics to boost DIVERSITY and INCLUSION efforts by corporations but the key question is if technology could be deployed to remove bias in the workplace or more importantly checking to see if technology is being used to create BIAS or indirectly discriminate to prevent DIVERSITY AND INCLUSION via the companies operations.
Companies and organisations now recognise that applying the metadata lens to data relating to employees or prospective employees, derived from a multiplicity of sources, can offer significantly amplified signals of workplace problems and at the same time, it can reveal new potential and opportunities for the business. This is known as People Analytics or Talent Analytics.
For HR, gaining new insights through a comprehensive analytics system can undoubtedly improve performance, help to make the work experience more satisfying for employees and identify trends on engagement and culture and offer companies a competitive advantage. This intelligence can offer new strategies to help direct how, when and where interventions should occur.
Thus, Pfizer, AOL and Facebook use People Analytics to identify factors that correlate with high performance and retention; BP uses it to evaluate its training programs, Google uses it to dissect interviews in order to extract maximum insight as to the possible suitability of prospective hires.
In Australia, Commonwealth Bank has been using a predictive analysis tool for the past three years to answer such questions as which employees are most likely to resign and which employees will be the best performers. The analytics tool affords the Bank a predictive capability so that future problems can be avoided.
In the USA the most progressive companies in the diversity arena have already implemented big data analytics to accelerate the progress of women and other diverse groups in their organisations. The vast majority of companies ranked in the top 50 for Diversity in 2016 have achieved this status through exploiting the abundance of available data. Many of the top diversity companies employ data scientists and have installed dedicated software to help discover new pools of talent as well as to produce metrics showing that diversity and inclusion gives businesses a competitive advantage.
Can management accountants play a role as AI is rolled out for Diversity and Inclusion initiatives by companies and be part of the DATA ANALYTICS and be that TRUSTED ADVISOR to the CEO?
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