Leadership in Public Accounting Firms: Why So Few Women?

On March 13, I participated in the Eighth Annual Washington Women Speak conference, entitled, "How Women Leaders Succeed in the Washington, DC Ecosystem." I was honored to join U.S. Congresswoman Linda Sánchez, D-CA, and other highly accomplished women in business and government as a speaker at the event.^[1]

The conference, sponsored by the Association of Government Accountants and Grant Thornton LLP, was designed to highlight and promote women's leadership in government, business, and the accounting profession. It also provides an opportunity for current and future women leaders to interact, share their experiences, and learn from one another.

I discussed my perspective on service in both government and the accounting profession, given my background as a former Managing Director at the U.S. Government Accountability Office (GAO) and my current position as Board member of the Public Company Accounting Oversight Board (PCAOB). This summary of my remarks includes some key trends and issues for women in the accounting profession.

The views expressed are my own, and do not necessarily reflect those of the PCAOB, other Board members, or staff.

Representation of Women within Accounting Firm Leadership is Too Low

Despite the fact that women have represented about 50 percent of new certified public accountants (CPAs) in the accounting profession for the past 20 years, women account for only 19 percent of partners in CPA firms nationwide.^[2]

In CPA firms with 50 staff or more, women make up only 17 percent of partners.^[3] This is actually an improvement since 2010, when women accounted for 15 percent of partners at firms of that size.^[4]

The Accounting Women's Society of Certified Public Accountants' (AWSCPA) "MOVE Project" found that "[r]ising women evaporate from accounting firms' partnership pipeline" (emphasis added).^[5] In fact, many women leave public accounting firms at the senior staff and manager level for careers in industry or entrepreneurship.

I've been engaging firm leaders about their efforts to advance women and ethnic diversity in the partnership and leadership ranks of the firms. On a positive note, the firms are paying attention to this issue and have various initiatives and programs in place to attempt to deal with the loss of talented professionals.

With women comprising 51 percent of managers within the firms, there are many highly qualified women in the pipeline who are positioned to move into top leadership positions. ^[6]

Yet we need to see more progress and firms must demonstrate results in the near term.

Retaining and Developing Top Talent in Accounting Firms

The lack of gender diversity is a concern throughout corporate America. But I draw specific attention to accounting firms because, in the exercise of their assurance mission, they fall under the regulatory oversight of the PCAOB, and they play a significant role in the financial markets.

Firms have been entrusted with the audit function for publicly traded companies and securities broker-dealers. They provide assurance over financial reporting and disclosures to protect investors and promote confidence in our capital markets. Firms' ability to retain and develop top talent is essential to this mandate.

The issue is much larger than retaining women. Diagnosing the reasons that women leave accounting firms in such high numbers will accomplish several things, including helping firms to (1) better address the barriers and problems faced by women in their organizations; (2) take stock of their diversity and human capital practices more generally; and (3) better understand the connection between effective talent management and their specialized "gatekeeper" role in the capital markets.

Lately, we've heard lots of advice about "leaning in."^[7] Clearly, individuals need to take charge of developing their skills and pursuing opportunities. But I do not accept the notion that the current lack of women as partners and top leaders in accounting firms is due to women not "leaning in." With the low percentages of women in top leadership positions, it is fair to conclude that structural and organizational problems in the firms, often combined with other economic and societal pressures, have led to this outcome.

Along with the "leaning in" debate is another view that women are "selecting out" of pursuing top management positions at the firms. In reality, we need to drill down to the root causes of these choices and analyze why such decisions may be the most rational under current circumstances.

For instance, if women and other talented professionals are leaving public accounting because of conditions such as excessive hours, uncontrollable schedules, unwieldy travel schedules, and lack of viable career paths that are compatible with other life activities, then the solutions to these problems need to be structural and organizational.

Significant progress won't occur without addressing those core problems, which requires innovative thinking and changes in how firms have traditionally conducted business and managed their people.

I was happy to see one firm leader publicly state that "business leaders have a responsibility to lean in as well." He also went on to include minorities in the discussion and acknowledged that women and minorities cannot solve the leadership gap by themselves.

This gets to the heart of how firms manage their most valuable resources — all of their people. If the profession can address the organizational and structural problems that are causing women to leave accounting firms, then the firms' ability to retain top talent will improve vastly.

Moving Forward: The Business Case is Compelling

The business case for public accounting firms to invest in and focus on the retention and development of its female leaders is very clear. And the benefits to the firms also extend to retaining talented professionals of diverse racial and ethnic backgrounds, as well. Research shows that organizations with diverse leadership teams outperform those with homogeneous leadership teams.^[8]

The ability to retain and develop top talent and achieve diversity in leadership ranks today is imperative to better positioning firms for the future. Firms that deal seriously with these issues also will have the advantage of increased access to larger talent pools. The complexity of auditing — and the vast responsibilities of firms in providing assurance over financial reporting for the benefit of investors and the markets -- requires harnessing the talents and energies of a diverse workforce.

I look forward to working constructively with the firms and the profession, as a whole, on advancing progress in this area.