Diversity, family issues and the Big 6.

Can CPA firms continue to manage their staffs according to long-standing traditions? The leaders of the largest international firms don't think so.

Clients expect the personnel on professional service teams to reflect the demographics of their own workforces or their clientele. As career paths go, up-or-out is out. And creating flexible programs that help retain talented people is a business issue, not a women's issue. These are some of the observations made by the leaders of the six largest international CPA firms--the Big 6. In wide-ranging interviews, they addressed questions that are pertinent to all CPAs: How can businesses respond to changing employee and client expectations on diversity and lifestyle issues? How can they overcome barriers to women's advancement? Are family-friendly policies good for business? Their thoughts on these issues are collected in tills article.

EMBRACING DIVERSITY

The Big 6 leaders believe that supporting women and diversity initiatives can enhance the quality of professional contributions and minimize costs.

James J. Schiro, Price Waterhouse LLP:

"When you make a genuine commitment to diversity, you bring a greater range of ideas, approaches, experiences and abilities that can be applied to client problems. After all, 6 people with different perspectives have a better shot at solving a complex problem than 60 people who all think alike."

Philip A. Laskaway, Ernst & Young LLP: "Management and communication styles traditionally attributed to women are important ingredients for a team's success in meeting the needs of our clients."

Of equal importance, the executives all believe clients expect them to take action on diversity issues.

Jon Madonna, KPMG Peat Marwick LLP: "Our clients want women on their teams. We learned this the hard way a number of years ago. Our all-male client service team met with its client's leaders, including the chairman of the client company. The meeting did not go well. In fact, the next day, the chairman called me to discuss the composition of our client service team. The problem wasn't whether our team could do the job but, rather, their perception that we didn't know who their ultimate customers were--almost all women. Apparently we had missed the mark with our team. So we acted fast, changed the team to meet their expectations and kept the business of a valued and significant client."

J. Michael Cook, Deloitte & Touche LLP: "Our clients and their boards are increasingly concerned about gender and diversity issues. Many expect their service providers to be thought leaders on these issues."

In addition to creative and client service contributions, the chief executives think that retaining women will maximize their firms' value received for resources invested in personnel.

Lawrence A. Weinbach, Andersen Worldwide: "In order to ensure that our most talented people are admitted to the partnership, we have to keep our best women and our best men. The issue for our partnership is not numbers but, rather, quality of new admissions. Many of our top performers are women."

Nicholas G. Moore, Coopers & Lybrand LLP: "Our profession has always had high turnover and we have lived with that. We simply hired a lot of talent at the entry level, let turnover take its toll and we still had more than enough talent to satisfy partner needs. As we move to a new staffing model, one in which we hire fewer people in accordance with reduced needs, we obviously need to do a much better job hiring and retaining the best people. If we assume that turnover will always exist, then our challenge is to manage who stays and who leaves."

Cook: "It is a business imperative to address the retention and advancement of women. If we are unable to retain our high-talent women, we are wasting the experience and talent of half the population. We invest significant time and money in recruiting and training, and when high-talent professionals leave, the firm suffers a reduction in productivity and client-service continuity."

CHANGING THE PARADIGM

Many different strategies are being used to retain women and provide opportunities to support their advancement. In one major shift to make the environment more appealing to talented CPAs with family responsibilities, the firms no longer focus on a career path that requires moving up toward partnership or out of the firm.

Schiro: "The public accounting environment is a demanding one and we can't change that. But we can provide our people with more flexibility at various points during their careers to help balance parental and other personal demands. Traditionally, the up-or-out career track followed by most large professional service firms has been a serious barrier to achieving that level of flexibility. By removing the focus on tenure and emphasizing the development and achievement of skill sets, individuals can progress at their own pace. This change will not eliminate the demands and pressures of the profession, but it will provide all of our people, including working mothers, more options without moving off track."

Weinbach: "The new paradigm includes innovative career development models, compensation structures and opportunities for professionals to have long-term careers with our firm without necessarily becoming equity owners."

Madonna: "We are moving toward a new competency model focusing on the value of contributions made. Individuals will no longer progress through designated steps-- they will be promoted based on the value of' their contributions. The 'time in grade' promotion criteria are no longer valid. Our changing business has led to the development of a new multiple career path model that will make it possible for people to continue at their optimum levels and remain with the firm for as long as they continue to contribute. Up or out is out?

Another goal is to ensure that women receive career opportunities that will position them to excel and advance.

Moore: "We are looking at the engagement leadership for our most prominent clients. If we find that women are not getting a fair chance to lead significant engagements, we will make changes. Our desire is to create a level playing field and changes in our culture to allow people to succeed based solely on their individual ability and initiative."

THE BARRIERS

Even though the CEOs believe client and public expectations make it critical to support the retention and career progression of women and minorities, they recognize challenges. One issue is the well-entrenched "culture" of public accounting. But they are generally optimistic that things are changing.

Moore: "Our firm, like the other large firms, was founded by males and throughout its existence has been managed and heavily populated by males. In the past 10 years, however, there has been a significant influx of females. Through our diversity strategy, we are creating a culture that is supportive of everyone and that allows all professionals to achieve their fullest potential. We have a lot of work to do but recognize the business necessity of making this change"

Schiro: "The male culture issue is real, and it remains a barrier for the advancement of women throughout most of American business today. When I meet with CEOs, they all comment about their lack of satisfaction with the number of women in senior management or executive roles or the need for more women on boards of directors. CPA firms face the same issues."

Although institutional support is important, support from individuals, including firm leaders, is highlighted as critical for changing the disproportionately higher female turnover rate.

Weinbach: "If we are to make any real progress over the next 10 years, male partners, in particular those in leadership positions, need to understand and respect the differences associated with being a woman professional. It is the leadership partners' responsibility to hold managing partners at the local office level accountable for supporting our work and family programs. Their contributions have to be taken into account in evaluating their overall performance." Comments on the importance of role models are pervasive.

Moore: "One way to improve the retention of women is to have female role models in significant positions within the firm. We have appointed two women to vice-chairman positions. We also have women as office managing partners and have women in leadership positions in our lines of business management?'

Firms offer gender awareness, diversity and sexual harassment training--and clearly stood behind these programs' intended goals. For example, the opinions on sexual harassment are very strong.

Weinbach: "It is a cop-out to say that concerns about sexual harassment allegations have caused men to become so sensitive to the issues that they create barriers to normal and productive business relationships. Men and women need to clearly understand what constitutes sexual harassment so that professional and personal interaction, including mentoring, can take place without misunderstandings."

Laskawy: "To improve awareness, we conducted a sexual harassment awareness program in 1994 for all personnel nationwide. We state that we want a culture based on deep mutual respect in all our dealings with each other. In such a culture, personal and professional relationships can thrive without fear of harassment or concern about potential allegations."

FAMILY-FRIENDLY PROGRAMS

Details differ, but the types of work-life balance and family-friendly programs offered by all these firms are relatively similar. Programs cover regular and emergency resource and referral services for children's needs (including child care), resource and referral for elder care, adoption assistance, family needs-related leaves of absence and flexible work arrangements. The importance of these programs was summed up in the firms' comments.

Weinbach: "More women professionals shoulder the parenting responsibilities than their male peers.

This is at the heart of the retention issue."

Laskawy: "We hope the availability of flexible work arrangements and the freedom to discuss and consider them, plus services such as child-care referral service or Saturday day-care; the acceptability of tailoring one's career and family roles; and the role models of successful professionals who have progressed in their careers at different rates and in different ways will all play a part in helping men and women to have appropriate expectations and to make the right choice at the right time?'

Firms also understood that family-friendly programs benefited their entire staffs.

Shiro: "While women may initiate much of the discussion about balancing work and family demands, men benefit just as much from the resulting programs and initiatives."

All of the firms offer flexible work arrangements, but their approaches vary. Differences can be noted in the language of availability. One end of the spectrum suggests firmwide negotiation processes and relatively widespread availability.

Cook: "Expectations of the firm and the professional are detailed and uniform. Though arrangements may vary in some specifics (days to be worked, client assignments, etc.), all other aspects are uniform for each professional and need not be negotiated. They are understood. As long as each meets the needs of the other, as defined in the guidelines, and unless there is a compelling business reason why the arrangement would not work, the proposal is accepted."

In other firms, arrangements are negotiated in order to fit different circumstances.

Moore: "We believe the philosophy of 'flexibility' itself precludes hard-and-fast eligibility rules. Because not every arrangement is suitable for every individual, every role or every practice area, approval is on a case-by-case basis. However, we are concerned that approval criteria and consideration are applied equitably. Most of our operating units have committees to review and approve flexible work arrangement requests."

Weinbach: "We've learned that we must use a very personalized approach because 'one size fits all' can lead to failure."

Several firms emphasize that there are opportunities to offer more in terms of flexibility.

Schiro: "Bottom line: We need to be more creative and innovative about ways of working and the wide range of possibilities. I am convinced there are far more opportunities than we are taking advantage of. And we need to do a better job of looking at them as win-win opportunities. Clients want the best service. They want results. They don't necessarily care when or where the work is done as long as they're satisfied in the end. What works is what's best for them."

Various policies and practices are stressed as critical to the success of flexible work arrangements. Primary is that client service must come first.

Madonna: "All people involved-- the client, leadership and the participant's peer group--must feel satisfied with the arrangement. The transition for the client must be seamless and transparent. Clients must never feel they are being served part-time."

Schiro: "Our focus needs to be on our clients. And let's face it, in a client service firm, if we have more than one client, we are all working part-time on each of our clients anyway"

One consistent comment among the firm leaders is that flexible work arrangements are most appropriately and successfully used by experienced personnel who have developed strong track records.

Cook: "The professional requesting such an arrangement must be highly rated and experienced with the firm and in his or her position. He or she must submit a proposal detailing the projected work load and how it will be accomplished. There are fewer surprises and a greater chance for a successful experience for the professional and for the firm."

Moore: "To be successful, an arrangement should be considered only for individuals who are strong performers and have records of meeting commitments. The individual must demonstrate responsibility, reliability, commitment, adaptability and maturity. These characteristics are necessary for the success of a flexible work arrangement, particularly a reduced-hours arrangement."

The firms believe that written guidelines play a key role in negotiations by communicating what is acceptable and what seems to work.

Laskawy: "We have a flexible work arrangements manual of best practices that is a virtual how-to-do-it tool. All of the arrangements suggested have been field-tested, which helps reduce any uncertainty and tentativeness in implementation."

They also perceive a need to provide guidance for managers faced with new ways of working.

Cook: "We plan to develop a training module on how to successfully manage a professional on a flexible work arrangement. Many professionals are not yet comfortable managing m this situation."

Firms are frank in sharing their problems and solutions. A basic problem can be attempting to create solutions without fully understanding the needs.

Moore: "One example is the Saturday day-care program instituted in an office in which there were not many individuals with young children and those who had them were reluctant to bring them in because they had lengthy commutes. Ira needs assessment had been done up front, it would have been clear that there would be little use of a Saturday babysitting service made available in that location."

A problem that is not as easily solved is nurturing acceptance of the programs and dispelling perceptions that taking advantage of them can be harmful to one's career.

Cook: "We have not been completely successful in communicating the message that it is okay to take advantage of our flexible programs. There is still skepticism about whether an individual can really advance while on such an arrangement."

Madonna: "Others would like to participate but are concerned that their partners would not support them, their teams would resent it or their career commitments would be questioned. We will continue our education, communication and counseling efforts designed to deal directly with these issues."

Communication within the firms, highlighting the availability and successes of flexible work arrangements, is seen as a component of widespread acceptance and use.

Schiro: "We cannot be satisfied simply to develop and offer work-life balance programs. Offering them goes hand-in-hand with supporting them. That means constantly communicating the programs' availability, so people are highly aware of their existence; embracing them so people feel comfortable taking advantage of them when they need to; sharing real successes wherever possible--it brings the programs to life and helps create a supportive environment."

Moore: "We provide frequent national communications on how flexible work arrangements can and do work. We want to portray it as a normal part of the way we do business, so that all staff will recognize that these are viable options."

Madonna: "As I have told our people, participation in a flexible work program is a totally acceptable career choice."

Further, candid communication among those directly involved in the negotiation and work process is seen as important to success.

Laskawy: "The most important factor for success is frank and honest communications to ensure that the arrangement is set up right, that the expectations of the individual and the firm are clearly articulated and that modifications are made as needed."

Monitoring techniques to gauge effectiveness and success vary, but firmwide employee surveys are uniformly integral to understanding perceptions of work-life balance programs in all of the Big 6 firms. In addition, the firms track actual usages. Regardless of the method of collecting information, firms are looking for results.

Cooke: "We will be implementing an additional accountability framework. We will be developing practice office targets for flexible work arrangements--based on the percentage of client service professionals--and will measure each practice on what progress it has made in attaining its goals."

Laskawy: "We formally track retention on a national basis and review trends in the representation of women in promotion groups, which gives us some general indication about the effectiveness of our programs."

SHARED WISDOM

When asked about their advice to other firms or businesses, the leaders' recommendations were based on the premise that change need not be too costly or too complicated.

Cook: "We recommend developing strategies for improved mentoring and networking, flexible work arrangements and increased career planning. These programs can be developed internally with minimal out-of-pocket cost, although they will require an investment of senior management time. These strategies are critical to the retention and advancement of women and men. Diversity or gender awareness training, while more expensive, can have a significant impact on the culture or environment of a firm and, from that viewpoint, may be an important first step."

Laskawy: "It is important for firms to be open to change if they are to prosper. But plans and programs need not be rigid and, in a small firm, case-by-case management of situations as they occur may be feasible and preferable. Successful flexible work arrangements can be documented and precedents established. Open communications and sensitivity to client needs and diversity on the teams that serve them is applicable in a firm of any size. A firm can benefit from providing a forum for men and women representing all levels and backgrounds to discuss these issues and do so with clear support of top management."

Madonna: "My recommendation is ask your people what they want, listen to what they say' and do something about it."

A WORTHWHILE INVESTMENT

The firms admitted that addressing women's advancement and the needs of families is not easy, but they agreed that it was necessary for a business' continued success and vitality.

Laskawy: "The effort required to create an environment in which people with family responsibilities can grow and succeed does cost money and does take creativity. We don't see these efforts in terms of extra cost but in terms of a necessary investment to provide the best possible client service with the best people."

Schiro: "Changing demographics, the changing organizational structure of professional service firms and increasing specialization are all driving forces that contribute to the need to retain and promote highly qualified women. These factors reinforce the fact that we are talking about business issues, not women's issues."

"I'm probably one of the first people who stayed in public accounting because of quality-of-life advantages" says Eileen Garvey, an audit partner at Ernst & Young in New York. As an early participant in the world of flexible scheduling, she has spent six years working a three-day-aweek schedule. A financial services specialist, Garvey had accepted a job in industry about eight years ago but was convinced by people in the firm that E&Y could make accommodations for her if she stayed and chose to have children. Now the mother of two girls who are 6 and 2, she was promoted to the partnership as a part-timer and attributes the success of her arrangement to her willingness to work up to seven days a week when called for, to the flexibility of her colleagues and staff and to the acceptability of arrangements such as hers throughout the firm. Garvey also stresses the benefits of programs such as a weekly firm-sponsored parenting lunch meeting--with a child psychologist in attendance-that enables firm members to better understand and address the problems of juggling work and family.

I'm tremendously satisfied; I wouldn't give up this position for the world," says Diana Huntress Deem, a senior manager in Price Waterhouse's Washington Liaison office, the firm's government relations arm. The primary benefit of a reduced schedule is the chance to spend more time with her husband and children, says the mother of two young boys, who has been working Mondays through Thursdays for six years and was promoted to senior manager while on this schedule. "In terms of my job, it's fantastic because Congress often isn't in town on Fridays, so there are many times when not a lot happens that day," she says. Deem describes a change in her own attitude over the years that is not uncommon among younger staff members. "When I started out with the firm, partnership was my number-one goal; even when I got married, career remained important, but children change your priorities. I want to have a balance between what I do at home and what I do at the office."

EXECUTIVE SUMMARY

* IN WIDE-RANGING INTERVIEWS, the leaders of the six largest international CPA firms addressed questions about women's advancement and family-friendly programs that are pertinent to all CPAs.

* THE CEOs RECOGNIZE THE CHALLENGES involved. To address them, they are holding firm leaders accountable for implementing change and offering gender awareness, diversity and sexual harassment training.

* IN ONE MAJOR SHIFT DESIGNED TO retain women, the firms no longer focus on a career path that requires moving up toward partnership or out of the firm.

* THE FIRMS' WORK-LIFE BALANCE and family-friendly programs include regular and emergency referral services for children, resource and referral for elder care, adoption assistance, leaves of absence and flexible work arrangements.

* THE FIRMS LEADERS ADMITTED that addressing women's advancement and the needs of families is not easy, but they agreed that it was necessary for a business' continued success and vitality.

KAREN L. HOOKS, CPA, PhD, the Price Waterhouse Practice Issues Research Professor at the School of Accounting, Florida Atlantic University, Fort Lauderdale, is the chair of the American Institute of CPAs women and family issues executive committee.

Laura L. Burks, a tax manager in the Houston office of KPMG Peat Marwick, reminds employers about the advantages of work-life balance programs. "Think about what you're accomplishing," she says. "You're keeping people in your workforce who are willing to work for you when you're busy and willing not to show up--or be paid--when you're not. You're keeping a qualified person available to you." A mother of two, she was promoted from tax specialist while on the program and works full-time plus overtime during busy season and three days a week the rest of the year. Because she does a lot of trust work and generally does not need to have frequent client contact, many of Burks' clients are not even aware of her schedule, although she explains it to anyone who asks. "I've had the opportunity to have a career and to get the satisfaction of working as well as the satisfaction of being with my children," she says. "It's offered me a great balance in my life."

The tone

"The tone set by [Deloitte & Touche Chairman] Mike Cook

at the top of our firm certainly has helped out my career," says Ann Marie Whalen, a senior audit manager in the firm's Hartford, Connecticut, office. Whalen, a partner candidate for 1997 who serves the largest client in the Hartford office, originally tried to come back full-time after her first child was born in 1991 but found the arrangement wasn't working. When she became one of the first to use her firm's flexible schedule program, "O was able to satisfy my need to be with my children as well as my need to be at work. If I had been unable to do this, I probably would no longer be with the firm." While on the program, Whalen worked three or four days in the slow season and five days during busy season. She has since returned to a full-time schedule but continued flexibility allows her to participate in important activities with her children.

"I've had one client tell me she certainly didn't consider me part-time because she could always reach me when she needed me," says Mary Jepperson, an audit partner of Coopers & Lybrand in Minneapolis. The firm's first--but no longer the only--part-time partner has a reduced client load, so she considers herself no less accessible to clients than a partner juggling more clients in a longer workweek. Jepperson, who has children and whose husband travels extensively for his job, negotiated an alternative arrangement when she was a manager, before the firm had a formal policy. "If you're doing your job, you're not in your office very often anyway, because you spend a lot of time with clients," she says. She believes such arrangements send an important message about the firm's attitude. "Companywide support means that the issue of balance has value in our culture," she says.

As an employee on a reduced schedule, "you have to be flexible and willing to go the extra mile to switch your schedule around if that's what's called for to serve a client," says Julie Kitchen, an audit manager for Arthur Andersen in Richmond, Virginia. "I also try to stay involved in training, recruiting and other aspects of the business. Plus, I have a good assistant who can be the office contact and knows clients and when it's important to track me down." Kitchen has worked three days a week plus overtime for three and a half years, since the birth of the first of her children, who are now 2 and 4. She was promoted to audit manager near the end of her first pregnancy, so she started out as manager with a reduced client load, making the transition easier. She believes the opportunity to work part-time has been crucial to remaining on her career path. "I don't feel that I could have done what I've wanted to do at home with my children if I'd had to work full-time."

For more information...

To find out more about the firms' programs, call: Kathy Gallo, Arthur Andersen: [phone] Jim Hayes, Coopers & Lybrand: [phone] Amy Ray, Deloitte & Touche: [phone] Rosemarie Meschi, Ernst & Young: [phone] KPMG Peat Marwick: [phone]

Michael V. Littlejohn, Price Waterhouse: [phone] In addition, to receive an extended text of the interviews with the leaders of the Big 6, call (201) 9383787 from any fax machine, follow the voice cues and select document no. 580.