Investing in the future: The case for increasing diversity in finance

In the seven years I’ve worked for Accenture, I have never seen such momentum to increase diversity, both inside Accenture and across our clients. Companies are pledging to be actively anti-racist and to make diversity a fundamental building block of their organizations, a cornerstone and strength.  
 
As someone who partners closely with chief financial officers (CFOs) and finance, it’s clearer than ever to me that we need to refocus on increasing diversity in the finance function. In my own experience, the lack of diversity has been startling. I’ve far too often been the only woman (or one of very few) in meetings with CFOs and their leadership teams, and I am even more often the only person of color. 
 
As companies are setting their action plans to respond to social injustice around the world, I’d like to add to the discussion by sharing some thoughts on how the finance function has a particularly strong mandate to be more inclusive: not only is it the right thing to do–it’s vital to future success.  

CFOs should diversify more than just portfolios

Since finance has so much room for growth on Inclusion and Diversity (I&D) measures, even small improvements will constitute big strides forward. According to Accenture analysis from May 2020, only three of the Fortune 100 companies have a racially diverse CFO and only twelve have a woman CFO.  
 
But improvements must go beyond naming a Black, Indigenous, People of Color (BIPOC) or female CFO—finance organizations must focus on creating diverse talent across levels. True diversity includes diversity of thought and experience across race/ethnicity, gender, sexual orientation, age, educational background, socioeconomic status, veteran and military experience.  

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We know from Accenture research on workplace cultures of equality that bold leadership is critical to building an environment where everyone can be their authentic, whole selves and thrive—and CFOs have a special opportunity to be those bold leaders.  
 
CFOs are in the unique position of directly owning a function within the organization while also having a powerful external presence (board, investors) and an increasingly close partnership with the CEO. CFOs must leverage this platform to drive meaningful internal and external change. 
 

Creating a more inclusive workforce creates more value

Diversity is a tangible value creator for shareholders: Companies with high diversity (on measures of gender, age, and ethnic representation) have stronger profit margins and share gains. The 20 most diverse  firms according to a Wall Street Journal analysis have an average operating profit margin of 12%, compared with 8% for the lowest-ranking companies. So, what drives these financial results?

I&D matters to consumers—both because their loyalty is increasingly driven by belief in a company’s purpose and because a more diverse company is poised to create the products and services that a diverse consumer base needs and wants. Recent I&D research conducted by our 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. Recent events are likely to further accelerate this trend. 

I&D is also a key factor for winning the war on talent. A culture of inclusivity and a diverse employee base are magnets for top talent and result in higher retention and employee satisfaction. In fact, the annual estimated cost of losing and replacing the more than 2 million American workers who leave their jobs each year due to unfairness and discrimination is $64 billion. On the flip side, a study by the Harvard Business Review found that diverse teams out-innovate and outperform the competition: They are 45% more likely to improve market share. 

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The future of finance is diverse

If the prospect of societal change and value of diversity were not reason enough, consider how the finance function and its talent needs are evolving. Finance work requires a more diverse skillset than ever before—companies that proactively design their workforce for the future will be ahead of the game.  
 
With the increased use of digital technology, finance is changing from a focus on data organization and modeling to a focus on insight generation, business partnering and strategic enablement. 
 
This transformation requires fundamentally different and more diverse skills across teams. For instance, people with accounting skills will be joined by those with analytics and influencing skills. 
 
Employees with a range of perspectives and experiences, including those from various socioeconomic, educational and vocational backgrounds, will be needed to fill these new roles. While traditional diversity measures like gender and race are not direct measurements of diversity of thought, they are its strongest proxy. 

Where to start

Organizational change is daunting, but even just implementing a few policies can get your organization on a better path:  

• Set quantitative and qualitative inclusion and diversity targets (such as diversity vision statements and overall composition by level) and tie these measures to finance leadership compensation.
• Rethink your recruiting strategy – where you source talent, the skills you prioritize, the process you use (striving to remove explicit and unconscious bias), and who is involved in decision making.  
• Develop sponsorship programs for your underrepresented diverse talent that ensure they have a clear and achievable progression path in your organization.  
• Leverage data and technology - one such way could be to use AI to detect patterns of bias in promotion or compensation that can then be addressed to increase diversity and create accountability. 

Historically, Finance is all about the numbers. But moving forward, embracing humanity more fully will be its formula for success.