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Over the past 18 months, the corporate community has pushed social responsibility toward the top its agenda, pledging the prioritization of diversity, equity and inclusion (DEI) to improve internal culture and demographics. As external pressures mounted, shareholder visibility around racial issues soared this year, highlighted by NASDAQ’s new rules, recently approved by the SEC, on corporate boards meeting certain targets for racial, gender and sexual orientation representation. But pledging support for greater diversity and representation doesn’t automatically translate to any meaningful progress or transformation. Transformative change only happens when the pledge matches the DEI investment – an investment in resources, education, transparency and accountability across the spectrum of the business.
The first way finance leaders can take steps toward meaningful progress is to begin with diagnosing and acknowledging their starting points. In focusing specifically on the finance and accounting profession (F&A), we can identify several data points that need significant improvement. According to a report issued this year by IMA (Institute of Management Accountants) and CalCPA (California Society of Certified Public Accountants), more than 90% of Fortune 500 CFOs and partners at U.S. CPA firms are white. The lack of diverse representation in senior leadership roles was matched by low marks given by respondents to a survey, comprised of U.S. finance and accounting professionals of all backgrounds, when it comes to equity and inclusion. Only 50% said that their profession is inclusive, while 48% said it was equitable, percentages that drop significantly when only Black, Indigenous and People of Color (or “BIPOC”), women and LGBTQ+ are included. Most alarmingly, “43% to 55% of female, nonwhite, Hispanic, Latino and LGBTQ+ respondents voluntarily left an organization due to a perceived lack of equitable treatment.” In a country whose demographics are rapidly changing, this should serve as a jarring statistic for corporate finance functions and the F&A profession.
To address these inequities, actions – not just statements – must be driven by senior leadership. However, what’s potentially problematic are the voices contributing to the internal DEI action plans and policies. Who has a seat at the table when discussing DEI? Who is providing a voice for the historically marginalized talent and sharing diverse perspectives and experiences? If DEI is going to be a strategic priority, quality education and recurring training is the second way leaders in which can drive progress. Education/training can assist executive teams with ascertaining whether their hiring processes, branding and messaging, and career development initiatives are encouraging/growing or deterring/stunting diverse talent. Training also provides staff with an enhanced understanding of how and why DEI impacts them and the company’s bottom line. Programs can introduce the benefits of bringing true diversity and equity into the workspace, discuss common barriers to success and provide practical steps for creating a culture of inclusivity. Such programs are invaluable to executives trying to reshape policy to achieve their DEI goals.
The third way in which finance leaders can drive change is through accountability. Allow data to be the guide in developing DEI initiatives with measurable and actionable goals. Be accountable to the stated goals and transparent in the successes and failures. Success should lead to more aggressive goals, while failures should lead to greater investment. Sustainable results are achieved with increased accountability and transparency.
It’s important for finance executives to remember that an investment in DEI is not only the right thing to do but also has tangible financial benefits. According to the McKinsey & Company 2020 Report “Diversity Wins: How Inclusion Matters,” “the most diverse companies are now more likely than ever to outperform less diverse peers on profitability.” Diverse and inclusive cultures lead to increased employee engagement with a more robust exchange of ideas that enhance decision making and creative problem solving. Companies embracing DEI as a business imperative are building a competitive advantage, cultivating a bench of innovative leaders and endowing the future success of their organization.
Nikki Watson is Senior Manager, National Sales for Becker Professional Education.