Wednesday, August 01, 2007

Report: Accounting Firms Face Significant Risk of Turnover by Women and Men of Color

IMDiversity recently published an announcement of a new report by, Report: Accounting Firms Face Significant Risk of Turnover by Women and Men of Color. The report is the first in a new series by Catalyst focusing on challenges surrounding the retention of people of color -- women and men -- in specific industries. The research organization has issued high profile reports in the past analyzing the participation of women in corporate roles, often parsing out differences in the career paths of and obstacles facing white women and women of color. The new series appears aimed at expanding the research focus to include males as well, while offering observations on strategies for diversity recruitment and retention, broadly defined.

In a Q&A, the researchers at Catalyst discussed the impetus behind the new series' approach, and some of the current study's findings...

Q: Why did Catalyst decide to do this study?
A: Previous Catalyst research documented differences in the experiences of white women and women of color and also highlighted top barriers to advancement for women of color in corporate settings. In addition, Catalyst’s 2006 Census revealed that women of color hold only 3.1 percent of Fortune 500 board seats. This 2007 research on retention of women and men of color provides context for Catalyst’s forthcoming series of large-scale studies on women of color in professional services firms.
Catalyst’s groundbreaking report series, Women of Color in Corporate Management, was the largest and most comprehensive examination of African-American women, Asian women, and Latinas in professional and managerial positions in the United States. Demand for this series remains high.

Q: Why is it particularly important to accounting and other professional services firms to invest in the retention of women and men of color?
A: The client service-centric nature of professional services firms renders the retention of talent particularly important for the accounting industry. Competition for top talent has always been fierce in the accounting industry. With changing client relationships, regulatory changes, and globalization, firms are faced with more work and longer hours. Firms cannot afford to train employees and then see many of their “best and brightest” leave to pursue other career options. Thus, if firms want to maintain a competitive advantage, it is imperative that they focus on retaining women and men of color.

Q: What are the key findings in this report?
A: This report shows that approximately 50% of women and men of color do not feel obligated to stay with their current firm.

-It is a matter of concern for accounting firms that between 37 and 50
percent of people of color surveyed harbor a general intent to leave.

-Women of color are more likely than men of color to leave for more
money and to do similar tasks at another firm.

-Nearly a third of women of color (29.1%) and nearly one-fifth of men of
color (17.3%) were at risk of leaving within the year during which the study was

-“Imperfect execution” still impedes full realization of a firm’s
commitment to support diversity and inclusion. Findings suggest that
although organizations make a strong commitment to diversity and inclusion,
often there are perceived disconnects between expressed commitment and actual
implementation of policies, programs, and initiatives.

Q: What types of factors cause employees to leave firms?
A: Factors that cause employees to leave their firms can be divided into two categories: “pull” and “push” factors. Pull factors arise from outside and include offers of high-paying jobs at other firms. Push factors arise from within the current employer and can include a perceived disconnect between a firm’s commitment to diversity and the execution of the practices that support that commitment. Whereas employers have little control over pull factors, firms can help retain their workforce by focusing on the push factors over which they have significant control.

Q: Did you find specific examples of these “push” factors that are causing people of color to leave their accounting firms?
A: One of the push factors this study identified was the “imperfect execution” of a firm’s commitment to diversity. Perceived gaps between diversity policy and practice are very much noticed by women and men of color. Those surveyed felt there is a perceived exclusionary environment and a lack of receptivity to outsider groups at large accounting firms, along with a lack of accountability when it comes to diversity policies. These examples show that diversity policies are not filtering down to racial and ethnic minority groups as effectively as they could.

Other push factors include a lack of access to informal networks, stereotyping, double-standards, and a lack of development opportunities. All of these push factors create an exclusionary work environment that make it challenging for women and men of color to advance.

Q: Why should organizations care about these factors? Can’t they just replace employees who leave?
A: There is a clear business case for retaining women and men of color. From an economic standpoint, when employees leave and replacements must be hired, recruiting costs, training time, and lower productivity associated with new employees are expected results. Research suggests that the cost of a professional or a manager leaving an organization can be as high as twice the average associate’s salary or a minimum of one year’s worth of salary and benefits. A diverse workforce also inherently brings to the table a diversity of thought and perspective that is extremely valuable in today’s global economy, particularly as the number of women and people of color entering the accounting industry continues to grow. In addition, as clients demand the expertise that comes with experience, firms can no longer afford to train their employees and watch them leave.

Q. What can organizations do to create an inclusive work environment that will reduce attrition and retain their top talent, including people of color?
A: To build awareness and more understanding regarding the experiences and perceptions of women and men of color, senior leaders, human resources and diversity professionals, and managers can follow these action steps:

Assess the work environment.
-Find out about your organization’s diversity strategy.
-Use internal surveys, focus groups, and interviews to document, by subgroup, the experiences and perceptions of women and men of color.
Self-assess: Examine your own opinions, assumptions, and behavior.
-How inclusive are you about socializing with staff members from different backgrounds?
-What priority do you give to institutional supports for staff members who are from backgrounds different from yours?
-Do your expectations for the performance of your staff who are of color vary from those
for your other staff?
-Do you ever make assumptions based on stereotypes?
Develop closer relationships with women and men of color.
-Learn their perspectives.
-Make an effort to ask women and men of color about their perspectives, backgrounds, and interests.
-Identify subgroups of women of color and men of color in your organization and go out of your way to learn about their unique experiences and challenges.
-Increase understanding of differences and similarities between groups and within groups, through education and informal dialogues, one-on-one and in groups.
-Encourage differences in behavioral and work styles.
Communicate and demonstrate your firm’s commitment to diversity.
-Use training programs, one-on-one mentoring with senior leaders, inclusion in high-visibility programs, and networking opportunities.
-Integrate diversity initiatives into routine organizational practices such as recruitment, orientation, training, career-development tools, and succession planning.
Hold managers accountable for the retention and advancement of women and men of color.
-Create clearly articulated plans for long-term development of women and men of color.
-Hold managers accountable for providing critical development opportunities and high-visibility assignments necessary for advancement.
-Review managers’ performance evaluations of subordinates by race/ethnicity and gender of subordinates.
About Catalyst
Founded in 1962, Catalyst is the leading nonprofit corporate membership research and advisory organization working globally with businesses and the professions to build inclusive environments and expand opportunities for women and business. With offices in New York, San Jose, Toronto, and Zug, and the support and confidence of more than 340 leading corporations, firms, business schools, and associations, Catalyst is connected to business and its changing needs and is the premier resource for information and data about women in the workplace. In addition, Catalyst honors exemplary business initiatives that promote women’s leadership with the annual Catalyst Award.