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Minorities in U.S. Security Firms

How leading CPA firms can attract and retain a diverse workforce.

March 19, 2009
by Catalyst

Professional services firms are distinguished by a client-service focus and firmly entrenched "old boys" networks, which make inclusion of outsider groups such as women of color extremely difficult. To study the experiences of women of color at these firms, Catalyst launched the Women of Color in Professional Services series. After focusing on accounting firms, Catalyst surveyed women in finance and released Women of Color in U.S. Securities Firms in late 2008.

Although the securities industry has changed drastically since the data was gathered in 2007, Catalyst believes that the survey results continue to be relevant as financial institutions reorganize and reassess their talent.

Diversity Is Necessary at Securities Firms

With changing demographics, talent is no longer just white men, aged 25 to 40. In fact, white men represent only 17 percent of the global talent pool of people with graduate education. Despite significant diversity efforts, firms have not leveraged diverse talent effectively. Compared to white men, women and minorities have few chances to advance to management levels within a firm.

To ensure CPA firms attract and leverage the full range of talent needed to maintain a competitive advantage in a global marketplace, it has become a business imperative for them to effectively develop and advance diverse talent by better understanding the hidden biases women of color face.

Women of Color Face Challenges

In Women of Color in U.S. Securities Firms, Catalyst benchmarked the experiences of women of color against other demographic groups in the workforce. This examination let us understand better the "inter-sectionality" that women of color experience: i.e., how a person's attributes and characteristics interact with one another and inform personal and professional identities, experiences and expectations about privilege and disadvantage in the workplace.

The study's findings are based on interviews with senior executives (managing directors) in securities firms and survey data from a sample of employees at the top 10 largest (by revenue) financial services firms in the United States.

Our analyses found that women of color risk experiencing a deceleration in their career trajectories as a result of the combined effects of race/ethnicity, gender and birth country. Women of color face striking disadvantages compared with that of white women, men of color and white men. These start with an exclusionary workplace, lead to difficulties forging connections with others — including managers, mentors and in informal relationships — and result in fewer business-development opportunities. With fewer connections and chances to shine, women of color advance at a slower rate than others and, ultimately, many are faced with a "concrete" ceiling.

In particular, U.S.-born women of color perceived a greater level of exclusion, especially when it came to relationships with other employees, than foreign-born women of color did. They also perceived diversity efforts at their firms to be ineffective in addressing subtle racial biases and providing adequate manager training. These women were more likely to have lower organizational commitment and to be disadvantaged by inequitable distribution of important client engagements.

Firms Can Take Action

Steps firms can take to create a platform for inclusion that attracts and retains diverse talent and builds an environment in which all talent can thrive, include:

  1. Build awareness of the inter-sectionality women of color experience. Efforts should educate employees on the hidden biases and subtle discrimination felt by women of color that lead to their exclusion from informal networks and relationships.
  2. Dismantle the "old boys' club". Examine exclusionary practices and subtle messages in the work culture that reinforce the existence of an "old boys' club" and perpetuate hidden biases toward traditionally marginalized groups.
  3. Equip managers and senior leaders to "walk the talk". Give managers the tools and platforms to build authentic relationships with the women of color who report to them; hold managers accountable for their retention and development.
  4. Connect women of color with people and opportunities. Provide women of color with mandatory touch-points with influential managers in the firm through formal mentoring programs, speed networking and other strategic opportunities.
  5. Make work-life a priority. Dismantle the face-time culture and create a culture that fosters flexibility through easily accessible resources and programs.
  6. Re-examine the impact of diversity and inclusion efforts. Ensure diversity efforts address the distinctive experiences of women color and the challenges they face by analyzing data by race/ethnicity and gender and developing programs that address women of color specifically.
  7. Emphasize accountability for diversity objectives. Develop diversity objectives, tracking mechanisms and accountability such as metrics, scorecards and links between diversity performance and compensation or promotion.

Conclusion

By using the above seven strategies, CPA firms will come out on the top with a diverse talent force that succeeds in an ever-changing and smaller global marketplace.

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Founded in 1962, Catalyst is the leading nonprofit membership organization working globally with businesses and the professions to build inclusive workplaces and expand opportunities for women and business. Visit Research & Knowledge at www.catalyst.org to download free copies of this and other Catalyst reports. While there, visit the Catalyst E-News sign-up page found under Newsroom to begin receiving our monthly email updates.