The numbers don’t look so good: Only 11 of the Fortune 100 companies in the U.S. have an African American, Black, Asian, Asian American, Hispanic, or Latinx CEO. Just seven have a woman at the helm. (Latinx is a gender-neutral neologism, sometimes used to refer to people of Latin American cultural or ethnic identity in the United States.)
Diversity among finance leaders is similarly lacking: Only four of the Fortune 100 companies in the U.S. have an Asian, African American, or Black CFO, while 11 have a female CFO. There are no Hispanic Americans or Latinx representatives in the group at all. Representation of these groups is drastically lower than the broader U.S. population, and it reflects less progress made for CFOs than we see for Fortune 100 CEOs.
And the Forbes Global 100 list isn’t nearly as diverse as the real world. Sixty-three of those companies’ CFOs are Caucasian, and just 12 are female.
Whether it’s flat-out prejudice or unconscious bias at work, people generally expect stability and competence from a white male finance professional, and so that is who they put in charge of their organization’s money. But the finance function is rapidly transforming. CFOs are now the CEO’s right hand — and are expected to be the chief growth officer. They’re not counting beans; they’re heading up digital transformations and finding new value streams. These changes open up the possibilities of who can be a CFO, and who can be perceived as congruent with this evolved role.
Especially now that demand for social justice reform from employees, consumers, and society-at-large is stronger than ever, it’s time to create a culture of equality in the finance function. Not only to get the numbers balanced on paper but to survive and thrive as an organization. While the classic CFO might seem like a solid bet, only a steady stream of new perspectives, ideas, and connections will propel companies safely through disruption and into an increasingly unpredictable business environment.
Diversity Drives Growth
It’s clear that inclusion and diversity (I&D) is a value creator for shareholders: Companies with high diversity (on measures of age, ability, ethnicity, gender, gender identity or expression, religion, or sexual orientation, and whether or not they have diversity programs in place) have stronger profit margins and share gains. The 20 most diverse firms according to this Wall Street Journal ranking have an average operating profit margin of 12%, compared with 8% for the lowest-ranking companies.
Why might inclusion and diversity drive success in the finance function in particular? The CFO has to pull insights out of data in order to make decisions about where to take the business. Facility with math and statistics is important, of course, but a deep understanding of the market and the consumer is also needed to contextualize and extrapolate from the numbers.
If a finance team is made up of people with different beliefs, backgrounds, and knowledge bases, they will come to more interesting and relevant conclusions — and develop smarter strategies — than they would if they were of the same mindset as every competitor looking at similar facts and figures.
Diverse talent is critical because no company is selling to one type of individual anymore. Customers expect I&D from companies and will spend their money accordingly: Recent I&D research conducted by Accenture’s retail industry practice found that 41% of shoppers have shifted at least 10% of their business away from a retailer that does not reflect their I&D values. Each business has to get much closer to its customers by aligning with their principles, focusing on their experiences, and showing humanity. Decisions can no longer be based solely on ROI.
The Nuts and Bolts
CFOs typically arrive at their position after moving up methodically within the organization. That limits the selection pool, but because companies can point to things like the diverse makeup of their board, or of management in less male-dominated fields like human resources, they can “get away” with a homogenous finance leadership team.
When it comes to gender at least, the pipeline is improving: The percentage of women in MBA programs in the U.S. has risen from 32% in 2011 to 39% in 2019. But a variety of factors seem to keep women from rising to the highest echelons in finance: They are not given high-profile assignments as often and sometimes see their ambitions derailed by family and childcare responsibilities.
Women of color, of course, face racism on top of sexism. A 2018 study found that only 13% of African American and Black female Harvard Business School graduates over the past 40 years had reached the senior-most executive ranks (whereas 40% of non-African American and Black Harvard MBA degree holders were in the executive suite).
Finance will have to take proactive measures to truly win the “war for talent.” Setting targets — and declaring them loudly and clearly — is a great way to hold people accountable and see results. Our company serves as a case in point: Accenture has a female CEO, CFO, CHRO, CMO, and CIO right now. That’s because we’ve made “getting to equal” a priority, underscored by public pronouncements, for the entire company.
Leaders who express a goal to diversify and who communicate the “why” behind their initiatives will go a long way toward creating an inclusive atmosphere — one that is good for all types of employees. Accenture research on workplace cultures of equality has shown that bold leadership is key to building an environment where everyone can be their authentic, whole selves, and thrive. Given their recently elevated roles within organizations, CFOs have a special opportunity to be those bold leaders.
We’ve noticed that a typical source of hesitancy around efforts to diversify is a false belief that it’s a zero-sum game. But companies don’t have to fire a white man for every Black woman they hire. They don’t have to lose the benefits of a 20-year veteran’s perspective; they can simply layer in other, equally valuable perspectives. Diversifying should be additive.
Raising those diversity numbers — and making your culture more inclusive — takes work. Here are 10 ways to build a finance function that is ready for the future.
- You get what you measure. Set quantitative and qualitative inclusion and diversity targets now and begin to measure them. Tie them to leadership compensation and promotion eligibility.
- Leverage data and technology. For example, use AI to analyze promotion, compensation, and termination analysis to detect discrimination or unconscious bias.
- Build the talent pipeline. Start partnering with high schools and colleges to encourage interest in finance; recruit heavily (and flexibly) when filling junior-level positions.
- Tweak the trajectory. Let talent move across functions, or even set up rotational programs to help all employees gain skills and experience.
- Let them stretch. Give younger talent higher-profile and more challenging assignments as a show of faith as well as an opportunity to grow.
- Give feedback. The most common refrain we hear from our fellow professionals of color is that they are not getting the feedback they need to improve and advance in their organizations. Managers must take the time to offer constructive criticism, or they’ll risk losing top talent.
- Expand the team. Don’t think in terms of a zero-sum game where a diverse hire replaces a non-diverse hire. Instead, think about how to create a broader circle of voices.
- Expect — and embrace — dissension. Diversity brings more disagreement, which can make some people uncomfortable. But it’s ultimately healthy since it is a rich source of innovation. If everyone on your team is nodding along, you can bet an opportunity is getting overlooked.
- Build personal relationships at work. Both conflict and feedback are more easily navigated among people who know and respect each other. Leaders should make an effort to build bonds with high-potential employees. Just as being diverse on paper isn’t enough to reap the benefits of various perspectives, being a sponsor in name only isn’t enough to advance worthy candidates to the top of the finance function.
- Encourage soft networking. Informal internal events can connect talent with higher-ups who can act as connectors and perhaps even mentors and sponsors.
The bottom line? The next billion dollars of revenue or the next decade of growth for your organization is going to come from a team that can question longstanding beliefs about who should run finance and how finance should be run.
Tiffany Brown and Aneel Delawalla are Accenture strategy managing directors in the CFO & enterprise value practice.