Preparing Future-Ready Professionals

Diversifying the Finance Function: How CFOs Can Meaningfully Promote DE&I

Jeffrey C. Thomson | March 15, 2021

In 2015 Google CEO Sundar Pichai wrote, “…a diverse mix of voices and backgrounds and experiences leads to better discussions, better decisions and better outcomes for everyone.” As a non-U.S. born CEO, he extolled the unique virtues of America, where everyone, regardless of race, creed or color, could succeed if they had the will and determination. Six years later, we are at a tipping point in our thoughts about diversity, equity and inclusion (DE&I). Business leaders are growing to recognize the benefits of DE&I when it is embedded in their corporate culture. This is also true in the finance function, where DE&I initiatives can address some of the most pressing challenges we face, like talent management, digital transformation, managing risk and creating long-term, sustainable value in an increasingly competitive and global marketplace.

IMA® (Institute of Management Accountants) and cosponsor CalCPA (California Society of Certified Public Accountants), in collaboration with IFAC as global research partner and several other accounting organizations, released a U.S. focused report on DE&I in the accounting and finance profession. Entitled “Diversifying U.S. Accounting Talent:  A Critical Imperative to Achieve Transformational Outcomes,” the report is eye-opening. It examines DE&I in the U.S. accounting profession, looking in-depth at race and ethnicity, gender, and LGBTQIA orientation. Responses were gathered from an online survey of over 3,000 current and former U.S. accounting professionals and interviews of nearly 60 accounting, human resources and DE&I practitioners and academics.

The story this report tells is of a profession in need of a critical re-think when it comes to DE&I. First, the report reveals a diversity gap at senior levels of the profession: Relative to much greater diversity in the U.S. population and the U.S. accounting profession, there is significant underrepresentation of diverse talent in U.S. CPA firm Partner roles and among CFOs of Fortune 500 and S&P 500 companies. For instance, though women comprise more than half of current finance and accounting professionals, and people of color comprise one-fifth of that population, this representation is conspicuously absent in senior leadership roles.

Beyond diversity, our research team sought to examine equity and inclusion. We found that “only half of respondents of all backgrounds view the profession as equitable or inclusive, and an even smaller proportion of demographically diverse respondents share this view.” Reading this statement made me realize how much more we need to do to make our profession truly inclusive, fair, and diverse.

Other findings were even more impactful. The survey identified that relatively high numbers of each demographically diverse group have reported leaving a company for reasons related to DE&I, and many say a lack of DE&I contributed to them leaving the profession altogether. Equally troubling is the fact that persons of diverse demographic backgrounds report they are not advancing in the profession because of inequity and exclusion.

I am in total agreement with one of the report’s conclusions, which is that “the lack of DE&I poses risks to the success of the profession’s transformation currently underway.” With the onset of COVID-19, digital transformation has accelerated in every industry and business. We need people with diverse skillsets and an agile mindset to lead us forward. These attributes are not exclusive to one gender, one race or one sexual orientation. Rather, they are present only when we have people of diverse backgrounds challenging one another, supporting one another and partnering to strike a path into the future.

Corporate leaders, especially CFOs, should recognize the business imperative of DE&I in addition to the ethical one, because a lack of DE&I in the finance function is both a business and moral challenge, and one that is existential to many organizations’ finance teams. A special responsibility lies with CFOs to ensure that they are following and constantly adapting to best practices in promoting DE&I. Though this will be an ongoing, evolving process, there are some key recommendations of the report that CFOs and other finance leaders can begin doing now:

  1. Raise awareness by identifying and mitigating unconscious bias so people of all backgrounds are recognized and valued.
  2. Attract diverse talent by promoting the profession as a desirable career path for people regardless of gender, ethnicity, race or LGBTQIA identification.
  3. Drive career promotion by taking specific steps to ensure that people of diverse backgrounds have equitable access to the factors that enable career advancement.
  4. Increase accountability for progress by defining, transparently reporting and linking performance to DE&I metrics.

As a former CFO myself, and a lifelong finance professional, I see the last recommendation as being particularly important. For accountants, whose professional titles share a root word with accountability, the notion that we can simply say we’re going to do something and then not offer concrete metrics for measuring success should be counterintuitive, to say the least. Setting and measuring DE&I goals is a way to at least begin translating sympathetic words into meaningful actions. These goals will differ from company to company and from industry to industry, but CFOs should put them into place and ensure that they reflect not mere quotas – which only address the “D” in “DE&I” – but efforts toward creating a corporate culture that values equity and inclusion. They should consider not just the data showing lack of representation but the troubling signs of discontent with the way senior executives and department leaders are handling these issues, a looming threat to companies’ vital human capital and talent pools.

Finally, CFOs and all other business leaders must acknowledge that all this is only the beginning of the journey, not an immediate fix. It’s easy to backslide on these initiatives once some progress (or the appearance of progress) has been made. But for our organizations and our profession to have a future in an increasingly diverse nation rightfully impatient with inequity, we cannot falter in our commitment to making the accounting and finance profession a truly inclusive, diverse and equitable one.

 

Jeffrey C. Thomson

CMA, CSCA, CAE, IMA President and CEO

Jeffrey C. Thomson is president and CEO of IMA® (Institute of Management Accountants). Since assuming this position in 2008, Thomson led the development of a strategy resulting in IMA becoming one of the fastest growing accounting associations in the world, with double-digit growth in its CMA (Certified Management Accountant) program for the past five years. Prior to joining IMA, Thomson worked at AT&T for more than two decades where he served in various financial, strategic, and operational roles, including CFO of an $18 billion dollar business unit. Thomson served as COSO board member from 2006 to December, 2011, during a period when COSO experienced growth in influential thought leader pieces and launched the internal controls refresh initiative.  See more by Jeffrey C. Thomson

 
 

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