The recruitment and retention of minority talent is a top priority for most accounting firms. Corporations and their service providers acknowledge that recruiting and retaining the brightest minority talent is a key to having a competitive edge. One Fortune 500 company stated, “Diversity is a business imperative at our company. We look at the representation of all of our suppliers including our auditors.” Partners in accounting firms know that “today’s minorities will be tomorrow’s majorities.” This is a reality that drives firm managers to recruit diverse talent from colleges, universities and other organizations. Firms seem to be getting recruitment right. However with retention, the question still remains, “Why are they not staying?” In a recent study (PDF), the Toigo Foundation finds that minority departures are driven by a lack of formal diversity initiative, a lack of two-way communication and a lack of opportunities for growth & development.
Retention is a problem that translates into a loss of approximately $180,000 in revenue with the loss of every manager. Individuals are more likely to leave organizations that lack diversity. All accounting firms are aware of the need for diversity but this awareness has not led to change in the ranks of managers and partners. When speaking with Deepali Bagati, a senior external advisor for Catalyst, she indicated that there are two primary problems with the retention of qualified minority talent; imperfect execution and exclusionary work environments. This article reveals five best practices for addressing these two retention issues:
- Address Imperfect Execution. Imperfect execution means a plan for minority retention exist, but the plan is improperly or not thoroughly implemented. Firm partners set goals, communicate the message and provide financial support for retention initiatives. However, middle managers seem to either ignore the goals/initiatives or they have limited training on how to manage a diverse workforce. To address the problem of imperfect execution, we recommend that firms offer diversity training to managers and senior managers, distribute responsibility, evaluate managers on diversity and retention goals and develop career advancement programs with minority talent.
- Invest in effective manager-training programs. Diversity training should include an informative enlightenment program (to raise awareness of the continuing existence of workplace bias), a confrontational and interactive program (to increase the likelihood that an individual will feel guilt and take personal responsibility for inequities) and a social identity program (on how a group influences an individual’s thoughts, feelings and behaviors). Managers need diversity training so they will be able to identify inequities and create resolutions before situations affect employee retention. In addition, they need to understand that there is no “one-size-fits-all” managerial style that works with a diverse talent pool. Two effective diversity-training organizations are Diversity Builder, Inc. and National Coalition Building Institute.
- Assign responsibility for retention to middle managers, evaluate managers on their execution of diversity policy and reward or discipline managers accordingly. Many organizations have designated diversity directors or diversity committees to handle recruiting, training and the professional development of minority talent. However, diversity directors do not have as much influence on work assignments and work environment as middle level managers. Kaplan Mobray, diversity programs leader at Deloitte & Touche, says that top management make the commitment and set the tone, while middle managers take action. Businesses have seen immediate and significant success with diversity when they think through the organization’s core philosophy, make the philosophy clear at all levels and make managers responsible for retention by aligning incentive-pay programs with the firm’s strategic retention goals.
- Create and adhere to a written list of critical success factors and skills for advancement in each position. They then give the talent pool opportunities to develop these skills. For all associates, an understanding of the steps and skills necessary to get ahead is important. The AICPA has developed Learning Management Solution, a tool that assesses proficiencies and can be adapted to the needs of individual firms and organizations and will be launched in June 2011. Firms should provide associates with clear career paths and time frames for advancement. Associates have to take responsibility for their skill development and career goals. Diversity leaders should be prepared to challenge the attitudes of managers and associates that counter retention efforts.
- Address Exclusionary Work Environments. The lack of access to informal networks, the existence of stereotyping and double-standards and limited development opportunities create an exclusionary work environment that makes it difficult for minority talent to advance. Exclusionary practices lead to a loss of trust, a lack of teamwork, workplace stress and poor performance. Both the Toigo Foundation and Catalyst have cited the exclusionary work environment as a significant problem by associates who have made lateral moves from one firm to another. We recommend that firms assess the work environment and develop programs to augment networking and coaching opportunities for minority talent.
- Evaluate Their Current Diversity Strategy and Work Environment. There should be measurable goals in addition to having a broad strategy statement. For example, Abbott Laboratories has set and reached the goal that three out four (75%) of new hires be women or minorities. During the recent recession, Abbott increased the number of minorities in management by 85 percent. Firms can use internal surveys, focus groups and interviews to document the current state and to develop a plan to improve the future state of their environments. Many recommendations for diversity retention based on a general market wide survey are included in Retention Returns: Insights for Effective Diversity Initiatives (PDF).
- Encourage Informal and Develop Formal Networking and Coaching Programs. Retaining a minority talent pool requires that firms develop an understanding of minority sub-groups’ unique perspectives, backgrounds and interests. Managers and partners should be encouraged not to fall into old patterns of only socializing with associates who share common backgrounds and experiences. They should seek out minority talent, encourage informal dialogues and learn about associates’ unique experiences and challenges.
Firms have started to develop formal programs for nurturing and coaching minority talent. The key to the success of these programs is one-on-one mentoring with senior leaders, inclusion in high-visibility projects and networking opportunities. For example, Deloitte has launched its Breakthrough Leadership Program (BLP) as a retention tool designed to develop a pipeline of strong and diverse leaders. BLP involves three sessions of skill development workshops with ongoing coaching and 360-degree assessment over an eight-month period. It also provides self-assessments, multi-rater feedback, focused knowledge and skill building on how to enhance the participants' performance and effectiveness.
As the U.S. population becomes more diverse, more pressure will be placed on organizations to provide a diverse talent pool. In many accounting firms, diverse talent leaves before being promoted to a managerial position. They leave to go to other firms and do similar work for two primary reasons: imperfect execution and exclusionary work environments. Firms are losing trained talent, reputational capital and the ability to service clients. Accounting firms should follow the above five best practices to improve retention.
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Lisa A. Owens-Jackson, PhD., MA, is an associate professor of Accounting at North Carolina A&T State University. Diana R. Robinson, CPA, PhD, MBA, is an associate professor of Accounting at North Carolina A&T State University. Gwendolyn Highsmith-Quick, CPA, PhD, MBA, is an associate professor of Accounting at North Carolina A&T State University.