A recent survey by Willis Towers Watson found that 70% of employers are placing a broader emphasis on diversity, equity, and inclusion (DE&I) strategies as a recruitment and retention tool, but there’s more work to do. A report on DE&I in the accounting and finance profession by IMA® (Institute of Management Accountants), California Society of CPAs (CalCPA), and the International Federation of Accountants (IFAC), which surveyed more than 8,500 finance and accounting professionals globally, found some startling statistics: Fewer than 60% of respondents of all genders found the profession to be either equitable or inclusive, and 42% of female respondents have left a company due to a perceived lack of equitable treatment or inclusion.
In a conversation with Strategic Finance, Bonnie Chan, CFO, COO, and board of directors member at H+K International, and Deidra “Dee” Merriwether, senior vice president and CFO of W.W. Grainger, Inc., talk about the benefits of prioritizing DE&I initiatives and the perils of giving them short shrift.
SF: How can accounting/finance professionals contribute to their organization’s DE&I initiatives and culture?
Merriwether: It’s important for the finance profession. Like many, we have opportunities in the DE&I space. Fewer than one in five CFOs in the S&P 500 and Fortune 500 are female. As a profession, we’ve doubled that number over the last 10 years—that’s good progress—but when you count CFOs with racial and ethnic diversity, the number turns to one in 10. Black CFOs increased from 12 to 20 from 2020 to 2021. That’s 2.9% of 678 sitting CFOs. Meanwhile, Black Americans represent about 12% of the [U.S.] population.
I’m one of the few Black female CFOs in the Fortune 500 today. Mathematically, we can’t turn those statistics around unless everyone in the profession plays a role—men and women of every race and ethnicity. Every organization needs to make more meaningful progress to embrace inclusion.
SF: How can finance leaders promote advancement in the profession by women, people of color, and LBGTQIA populations?
Chan: At my company, I’ve been charged with the responsibility of driving the progress of our DE&I program. Some of our customers are well-known household names and therefore aligning our goals with our customers’ goals on DE&I is very natural. As a result, not only does the senior leadership stand behind the initiatives, but our board of directors also looks for a clear plan to ensure success and periodic reporting to monitor the progress of our people strategy.
While buy-in and support from the top are there, our challenges rest with data collection due to decentralized operations across the globe, a lack of a single human resources information system, and inconsistent data definitions in various repositories. This is where finance professionals are well poised to bridge the gap and can truly add value. Unbiased objectivity and a methodical predisposition are ingredients of success when carrying out managerial accounting or similar work.
Additionally, corporate performance management doesn’t need to stop with financial data. In fact, it’s a competitive advantage when HR and governance [personnel] are served and supported by finance to measure status as an initial assessment; analyze the data to uncover insights, patterns, and trends; compare performance with benchmarks such as Equal Employment Opportunity Commission guidance or industry statistics; and present findings to senior management to drive actions. We have to have objective, unbiased measures to get into the plan-do-check-act cycle to drive continuous improvement if we want to see successful outcomes from our DE&I program.
Merriwether: The finance profession isn’t where it needs to be. So often we approach DE&I issues like other business issues and wait for the business case before we take action. We don’t need a business case for this work. It’s clear there are opportunities—the population in the U.S. is more than 50% females, but the majority of our profession and the vast majority of senior roles are held by nondiverse males. As a profession, we should be willing to spend time investing in and developing all populations.
One area of focus for Grainger is addressing unconscious bias. In 2018, Grainger’s Women’s Business Resource Group launched unconscious bias training for the top female leaders at Grainger, and in 2019, we invited top male leaders to join the training and the conversation. Last year, all Grainger leaders and team members participated in a learning course about “Managing Unconscious Bias.” The course helped us as individuals learn what unconscious bias is and how and why most people experience it in our day-to-day work and identify behaviors to better manage it. By the end of the year, people reported having more awareness of their biases and motivation to take action to reduce bias in the workplace. I’m confident this program’s outcomes will help us on our journey to hire, retain, and develop the best talent.
SF: How important is it for young people of diverse backgrounds to gain early exposure to what an accounting career is all about?
Chan: Progress has been made, yet more can be done. Foundational success has to start when young people are still in school. While on an advisory board for a university’s business school, I witness how senior finance leaders can make a difference by bringing the younger generation along through speaker bureaus for classrooms, career days, work shadowing at offices by students, internship programs, career fairs, and mentoring.
SF: Do you see implementation of DE&I strategies as a way to combat the talent crisis?
Merriwether: DE&I initiatives can help companies tap into a wider pool of talent by intentionally recruiting from diverse sources and removing barriers that prevent certain groups from applying or being selected for jobs. For example, we focused on partnering with universities outside of the Midwest where we’d typically recruit from. I’m an alumnus of North Carolina A&T State University, where we continue to strengthen our employer brand and attract talent in a challenging market.
Chan: Most definitely! The framework of talent retention at my company consists of training, recognition, and rewards. When these three components are working hand in hand with each other, the circle becomes stronger and more difficult to break, hence creating a culture of success and inspiration.
We also have a culture club in each location that’s sponsored by a senior executive but entirely run by employees. The club members have almost 100% discretion in determining and organizing related activities at a local level. This self-driven type of association gains more credibility than [mandates] pushed from the top.
SF: What are essential elements of a corporate DE&I program?
Merriwether: At Grainger, we think about DE&I at every stage of the team member—from recruiting to retaining to exiting. Many times, companies only think about when diverse candidates join the organization. If those candidates don’t feel comfortable in the work environment, then they end up leaving. That isn’t sustainable. You need a strong sense of psychological safety, trust, and respect, and an invitation to be authentic. This is why our DE&I strategy is intentionally connected with our talent strategy. We have core programs for every part of our talent strategy that cater to diverse talent. We still have more work to do, but I feel we’re on the right track.
SF: How can professionals at companies faced with pressure to cut costs make the case to maintain the organization’s financial commitment to DE&I even during tough times?
Chan: Instead of considering the spend on DE&I as a pure cost or burden to the organization, I see the smart spend as a competitive advantage and an investment. We all know happy employees are more productive and are less prone to burnout or job hopping. This is where financial accounting may not present the whole truth of opportunity cost. We simply can’t underestimate the soft cost of recruiting and onboarding new employees, disruption to operations, and loss of continuity.
Merriwether: Leaders make key business decisions every day to achieve their objectives. I don’t typically see business cases for all of those non-DE&I decisions and investments, so the call to question just the DE&I investments during tough times is odd to me. To be bold, the focus on improving DE&I in our workplaces and with our supplier partners is to ensure that our workplaces and relationships reflect society and to be more inclusive in our thinking, practices, actions, and how we invest.
To be inclusive doesn’t necessarily mean that people need to spend more money but rather be more intentional about improving on their biases. Ask yourself when you’re looking to hire for a role whether you’ve considered all available talent or are you just looking in the talent pools you have traditionally looked to? If you’re about to award a contract to a supplier, have you been inclusive with building relationships with diverse and nondiverse potential suppliers? Build relationships early, because if you wait until the last step to look for diversity, it’ll be too late—you may not know anyone, or they won’t know you or enough about the opportunity to apply. So to answer your question plainly, no, I don’t feel like tough times are a reason to diminish our focus on DE&I.
SF: What’s the best way to measure the success of an organization’s DE&I efforts?
Merriwether: Our DE&I efforts are tied directly to our talent strategy, which is measured through a series of people analytics, such as performance management, turnover, talent acquisition and compensation data, and engagement results. We have a strong set of leading indicators that help us understand our progress vs. only focusing on lagging indicators such as representation.
SF: How can accounting/finance leaders become advocates for better reporting of DE&I metrics and benchmarks?
Chan: A few metrics can be helpful measuring the long-term success of DE&I initiatives—staff turnover, tenure retention, time gaps between leavers and new hires—but they need to be measured over a long period of time to remove outliers and to observe the trend. The efforts can be cumbersome, yet finance professionals are capable of streamlining the data collection, analysis, and reporting process for longer-term success.
How Finance Leaders Can Help Their Organization Achieve DE&I Objectives
Grainger’s Merriwether says, “CFOs and finance leaders should sponsor DE&I initiatives and get involved. Participate in your business resource groups. Be active in the recruitment, development, and sponsorship processes. Communicate with the organization constantly about the importance of achieving long-term objectives that support inclusion. And seek and listen to multiple points of view. Work with your organization’s management team to ensure diverse voices are heard at all levels of the organization, including the board room.
“In early 2020, we began a program at Grainger called BeBrave conversations to support our inclusion journey and set us up to be more prepared during the social unrest that followed that year. BeBrave conversations create a safe space between leaders and their teams to have real conversations about identity and equality, with an initial focus on race, gender, age, and sexual orientation. We’ve heard positive feedback from team members who can share their own perspectives and backgrounds and seek different points of view.”
Qualitative responses gathered from exit interviews can oftentimes offer insight, but there may not be a systematic way of cataloging the data. The partnership between CFO and CHRO [chief human resources officer] is important to create ongoing communication channels so that the insights and learnings are laddered up and shared. Particularly at budget time, the investments in people need to be reviewed with spend mix such as training, recognition, employee relations, etc., adjusted accordingly to enhance spend effectiveness.
Merriwether: Data transparency is crucial. Our DE&I data transparency journey has been ongoing, and we continue to make progress. In 2022, we focused on streamlining access to our data, and many of our teams are building relationships with diverse and nondiverse talent pipelines in the communities they reside in and that we serve.
SF: What are the risks to an organization’s reputation of not prioritizing DE&I or not thoroughly disclosing its DE&I data/metrics?
Chan: We frequently hear “people are our assets,” but actions speak louder than words. Both organizations and leaders are being judged on being authentic. Continuous improvement is fundamental to the long-term success of DE&I strategy.
Merriwether: There are long-term risks and costs to consider—reputational risk is a big one. The workforce of today is very focused on a company’s mission, including all areas of ESG [environmental, social, and governance]. Those that aren’t intentional about creating an inclusive environment for talent open themselves up to above-market people costs related to higher turnover and lower morale.