Earmark Podcast | Earn Free Accounting CPE

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Todd Shapiro: [00:00:00] I go around, I do townhall forums throughout the state of Illinois where I talk with members about the state of the profession, state of our people, and I include the state of state diversity as part of that. And we continue to talk about it. I can look at the 47% and get angry or frustrated, or I can say, you know what? We're going to continue to talk about what we think is important to talk about. And progress is not going to be fenced. But all we can do is we can continue to talk about it, continue to talk to leadership about it. Leadership affirms leadership in companies.

Blake Oliver: [00:00:36] If you'd like to earn CPE credit for listening to this episode, visit your Mark CPE dot com. Download the app, take a short quiz and get your CPE certificate. Continuing education has never been so easy. And now on to the episode. Hello, everyone, and welcome back to the show. I am your host, Blake Oliver, CPA, and I am joined today by Todd Shapiro, the president and CEO of the Illinois CPA Society. And Kari Natalie, senior director of planning and governance at the Illinois CPA Society. Todd and Kari, thank you so much for joining me today.

Todd Shapiro: [00:01:18] Thank you for having us.

Kari Natale: [00:01:19] It's nice to meet you. Thanks so much for having us.

Blake Oliver: [00:01:21] So we're talking today about diversity in the accounting profession. The Illinois CPA Society released a report called A Diversity Report Uncovering the Barriers to Success. And I myself witnessed the lack of diversity in accounting when I was in public accounting at a large firm briefly, and I hear about it constantly as a problem in our profession, a challenge that our profession faces a significant one. And there's a lot of tie ins to the recruitment problem we have in our profession and trying to get more people into it. Lack of diversity is one of those barriers that I've heard about. So I'm very eager to talk to you about this today. Who's best to start with, Todd Carey? Tell me about this report. Give me the the big takeaways. What did you do and what did you find out?

Kari Natale: [00:02:14] Blake, I'll start if that's okay with you, and then I'll give you a little bit of background that maybe Todd can start with the takeaways. So first of all, we we did this research with program participants that we were pretty close with. So in the last ten years, we've held an internship preparation program for racially and ethnically diverse students to help them prepare for internships. And over those ten years, they've been very successful in finding internships and becoming placed. In the last few years, we started to hear more challenges that they were having and barriers. And once they transitioned in the workforce. And so in order to improve our own program and resources, we wanted to ask the alumni of our program what was going on, what were they experiencing, how did they feel and learn from their experiences. And so we started with a survey of those 260 program alumni. And then when we got the survey results, we we saw some, you know, kind of troubling comments in the open ended questions. And so we wanted to dig deeper. We did additional surveying and then interviewing to learn from their experiences. And so that's kind of the background for why we did this. The research, you know, obviously isn't reflective of all diverse individuals, but and not even of all of our program alumni. But we did want to focus specifically on some of the challenges that we saw so that we can make sure to address those the best we could. Todd, Do you want to start with talking about some of the themes we found?

Todd Shapiro: [00:03:51] Well, actually, I want to take you to a quick step beyond before that is to sort of why we moved in this path. It was there were twofold. One was hearing feedback from some of our Murray theologians that on the experiences they were having. But I'll take a step back further, a little bit further.

Blake Oliver: [00:04:08] You know, Todd, if you don't mind, tell me a little bit more about the program. So it was it was an intern. What kind of program was it?

Todd Shapiro: [00:04:16] Well, so, yeah, so we have our marriage. Our marriage to Wiley, Walsh, Washington, Wiley and internship preparation programs, a program where we bring in to our indoor what used to be our offices. Now it's virtually 25 to 30 college students a year. They participated in a three day program. It's virtual now. We may go back to life after the pandemic, and in three days we give them a sort of an immersion into the profession. And they may be sophomores, they may be juniors, some may even be seniors. But it depends what year they're at. And we'll talk about resume preparation. We'll talk about what the different parts of the accounting profession are. Some of will be personal development. Some of it will be sort of how to get a job, some of these sort of what to expect when you have a job and how to how to act in a job. They come from schools in Illinois, all different schools in Illinois. You can't have an internship if you can't have an internship and participate. So so let's say you go to the University of Illinois Great Accounting School, heavily recruited by the firms, and you get an internship. You don't get into our program. But let's say you go to either U of I or you go to another state school, another school, state or state or private, and you don't immature. You qualify to to participate. Got it. All the students are of diverse backgrounds black, Hispanic, Asian, Pacific Islander. So we put them through the straight program at the end of the three. What makes it unique? At the end of the three days, the interview with accounting firms or companies for internships or leadership programs or whatever the case may be. And that's what makes firm unique. And the fact that they'll walk out at the end of the three days and in almost all cases with some kind of position in many, many cases internship internships within a firm or a company. But in some cases it may be a leadership program. So it's a great opportunity to late to learn and to get placed into a company.

Blake Oliver: [00:06:13] Okay, Got it. So you've got these college accounting students from diverse backgrounds. You bring a few dozen of them together. You connect them with firms to hopefully get them internships or positions. Okay. And then for this survey, you then surveyed the alumni of this program.

Todd Shapiro: [00:06:30] Yes.

Blake Oliver: [00:06:31] Got it.

Todd Shapiro: [00:06:32] I wanted to take the step back. I wanted to take before that was one. We heard feedback from our students. We also saw a disturbing trend more broadly, and I'm not going to allude to, but things that made us think we need to look into this. We've seen hiring and you talked about the pipeline. You talked about recruitment, which seen hiring of black and African-Americans be very stale, very flat, and not increased at all the last 15 years. We've seen some movement within Asian Pacific Islanders. But pretty much statistically it's pretty flat. Over the last 15 years, we've seen some increase. Good news is we've seen some increase in Hispanic and Latino individuals by accounting firms. Yet while we've seen this for the last 15 years, about 4 to 5% of new hires are black or African-American. But if you look at advancement, only 2% of accounting does. Only four 2% of CPAs are black or African-American firms, and only 2% of partners are. So that kind of got us thinking that in a broad way there there's an issue with advancement. The report really is about barriers to advancement. Very few. Right now there is higher barriers to entry. And that sort of data is thinking we need to look at our own shop. What's going on with our Mary Tyler Longs got us to the point of all the research that Kari talked about.

Blake Oliver: [00:07:57] Yeah, And like you said, this is not just in Illinois. This is broadly in all the data I've seen, all the surveys I've seen, We we could do better with the top of the funnel, meaning getting diverse candidates into firms. But there's a really steep drop off once they're in in getting to the manager director partner level. Like after the first few years, it seems to even drop off a lot. So that's what you dug into in this report.

Todd Shapiro: [00:08:22] Then, Right? And the beautiful part is we had these Demartini alums who have all been through that so we could ask them very direct questions about. Yes. Because their experience is no different than what you're seeing in a broader sense.

Blake Oliver: [00:08:35] Yeah. Okay. So I'd love to dig into the reasons. Like what? And I assume you're seeing the same thing right among this group you saw there was a drop off that that they tend to tend to leave, right?

Todd Shapiro: [00:08:48] Bleed either voluntarily or involuntarily.

Blake Oliver: [00:08:52] And what is that drop off? Is it 50%? Is it 80%? Is it 20%? Like, give me an idea.

Kari Natale: [00:08:59] Yeah. So about 70% of the people who filled out the survey started in public accounting. We don't we didn't track like how many of them left right away or if there were there was a percentage of the drop off in terms of left accounting. Overall, like I said earlier, most of our alumni were successful and have done really well. So we're talking about the pool, who, you know, has been struggling and who has expressed concerns that were race related.

Todd Shapiro: [00:09:27] So.

Blake Oliver: [00:09:28] Okay, so you really focused in on the people who left public accounting and why they left.

Todd Shapiro: [00:09:34] Yes.

Blake Oliver: [00:09:35] Okay. So let's talk about those reasons. Like what? What is the experience?

Todd Shapiro: [00:09:40] Terry, why don't you?

Kari Natale: [00:09:42] Yeah. So, you know, when we we did confidential interviews and we did the surveys. It was pretty. You know, you said something earlier about the pipeline, like, oh, there's this problem of, you know, not enough people joining the profession. But then there's also the problem of what's happening once they enter the profession. I think what we heard from them is this The first thing was really about, you know, the profession isn't diverse, right? That's an obvious answer. They were feeling like that was a barrier to their success at the accounting firm. So when they were in recruiting process or when when they were, you know, hopeful to get into accounting, they thought they were told or they they thought it would be a little bit better than what they saw or the representation that they had. They really struggled with that lack of, you know, belonging and just feeling overlooked. So they expressed a lot of concerns that we were concerned about. You know, some of them said they felt like just a number, like they were just hired because they were of a certain race and that they didn't feel like they were, you know, really part of the team. And so we were concerned by some of them describing that they felt like they were actually excluded, not included. So we talked a lot about culture and what that meant to them. So they felt like their employer may be was doing a lot in terms of diversity and inclusion initiatives, talked about all the initiatives they were doing, and they had this great intent to be a diverse and inclusive environment. But the our program alumni who were giving us this feedback shared that it really didn't feel like that to them. And so they felt isolated, they couldn't be themselves. And that contributed to, in their eyes, part of the reason why they weren't successful or advancing.

Blake Oliver: [00:11:28] And this is a bit of a catch 22 for the profession, isn't it? Because if the profession isn't diverse and that's the number one barrier to diverse people entering the profession, then how do you fix it? Right? And I mean, I feel like that's not a fair excuse to make now.

Kari Natale: [00:11:44] But you're right. When we started this program ten years ago, the employers were a big part of what kind of program content we were going to offer the students. They said, you know, we we just we need more diverse, you know, bring us more diverse students. It'll be great. So what we did was bring more diverse students. And now we're seeing like, wait, are we setting them up for what we had hoped? You know, this pipeline put them into the pipeline and then now what?

Blake Oliver: [00:12:09] So and to put a number on it, it's 58% of your program alumni. 58% who said that the environment, not diverse environment, not being diverse is a barrier. Yeah, and this that's the.

Kari Natale: [00:12:22] Biggest barrier of the ten options we presented.

Blake Oliver: [00:12:27] And then 18% this is this is kind of the part that's painful is 18% of the survey respondents cited discrimination, microaggressions and general lack of equity compared to other entry level professions as being prevalent barriers. So that's that's more like they experienced, you know, negative actions from other people in the firm.

Kari Natale: [00:12:49] Yeah, it's very concerning.

Blake Oliver: [00:12:51] Yeah, well, it it doesn't surprise me though, because, you know, there was another report recently that accounting today. Did I want to get back to the this diversity report that you did. But but this kind of relates to what a parent did, which is the parent company of accounting. Today. They did a survey on diversity across all professions and they found basically that. A lot of the accounting profession isn't interested in diversity and doesn't see it as being a problem.

Todd Shapiro: [00:13:21] Then that's I can tell I experienced that yesterday and today and yesterday with with with somebody who literally walked out of a session I was to where I was talking about this report, and somebody walked out of the session and made a comment that, well, that's what I want to talk about. She could she could just leave. I think the one thing I wanted to you know, and I and I know Kari talked about the number one reason being a lack of a B, an organization's not diverse. And, Blake, you talked about, you know, it becomes like the cat chasing its tail, you know, which how do you get diverse if you if people won't stay? And I think the important part of this, what I took out of the report and there's things that we can there's things that that I think people are trying to be conscious about. So there is a lot of talk about microaggression, how we can reduce the level of microaggression, how we become more aware of our level of microaggression. There's a lot of things listen to the firms have done a lot to try to create an inclusive environment. Have they have they accomplished what they need to accomplish? In in many cases, sometimes. If you read some of their comments about forming Briggs business research groups or ERGs employee resource groups, it's sometimes that works. And some of the some of the people responded said, you know, you feel like they did that sort of you get stuck to having to do that because people have to do that.

Todd Shapiro: [00:14:45] So there's things the profession is doing. We should celebrate with the professionals try to do. I will tell you one thing that caught my eye, and we had heard this and Gary knows exactly where I'm going with this is what was the surprise and what was was a surprise when they said environment, not the first note was a surprise when they said inclusivity, Probably not. I was probably a little surprised when I read the comment about feedback, not getting feedback. I've talked to some people now and I've talked to people in firms and they and they say, well, yeah, that does happen. And and then the question is, what can we do about things that we're not? So why is it why aren't people getting good feedback? Well, because in many cases, your white supervisor may be uncomfortable giving you feedback because it's because of the because of the racial or ethnic issues. Well, that's fine. But then you go and you let the person go or the person doesn't get the right assignments. And yeah, for a long time it was always, well, we just got to give people better assignments. Well, well, let's realize that it's not just that I think we're equally surprised about the my education didn't adequately prepare me, and that was one that we kind of dove pretty hard. That was sort of new. That was new learning.

Blake Oliver: [00:16:00] So is that you're talking about point number two here in the summary. The stat is that 49% of alumni indicated that past experiences did not adequately prepare you or somewhat adequately prepared you for working in a professional environment. So they'd be referring to mainly their education at that point, right?

Todd Shapiro: [00:16:19] Yeah.

Blake Oliver: [00:16:20] So half, half of the alumni of this program don't feel that their education.

Todd Shapiro: [00:16:25] Set.

Kari Natale: [00:16:26] In time goes in this, because I know this is where he wants to dig in. I believe after the interviews, everything digging a little deeper in that they attributed this knowledge gap compared to their white peers based on their academic preparation, like you mentioned, but also the their past jobs, their past, like their just upbringing in general. And so, yeah, academic preparation is a huge part of it. And I know Todd wants to talk more about it, but there's more. Yeah, well, it was just kind of like they felt their background in general was different from their peers, and academic was a big part of that.

Todd Shapiro: [00:16:59] Well, but I think it goes into all of those things. And I think the interesting part is that if you think about the large firms where most of our most of our alums are going to larger firms, those are the firms that are producing their program, the big four, the, you know, the top ten for most of the top ten firms are participating. If you think about where they recruit, where most of their recruiting occurs, of their of their white employees, they go to the top schools. I use U of I and I'm not saying anything negative about but some of these educational background. But I'm trying to be honest. Yeah. If you if you go to the university to get into the university, you have to be at the top of your high school class to get hired by an accounting firm from the university. Usually you have to have a GPA that is pretty high, 3 to 5, three, five. It's going to be pretty strong GPA at a pretty rigorous accounting school. And I'm going to guess it's gonna be the same for Texas or for Notre Dame or for a lot of the top to top accounting school. Those programs are rigorous and they're ranked the way they're ranked for a reason. I'm not criticizing other schools. And don't take it this way. But are Mary T's students come for schools all across the state. All across the state. Do we have a do we have a 3.0 GPA that you have to get into it? I have 3.5. No. It's more like a 3.0 GPA. We looked at the entire background of the student. They come from very different backgrounds. The challenge is you get hired by an accounting firm. And now look for your competition. Yeah. Look for your peer group.

Blake Oliver: [00:18:48] Well, and is it fair to say that most accounting firms, the attitude is we're going to hire you. And it's trial by fire. It's sink or swim. What I hear from most folks is you get in there and you've got to figure things out on your own. And the lack of. Feedback and development is sort of across everybody, right? That's that's just a fact of the way a lot of firms operate. And they expect that a certain percentage will not be able to keep up and will fail.

Kari Natale: [00:19:20] Yeah, I think a lot of our alumni talked to me about, you know, that feeling of they felt like they were recruited differently and then they were treated the same when they started, when they felt like if they had additional support, they might have been more successful. They just didn't know enough. They felt like people were treating them like they weren't good enough and they thought their peers had an advantage over them. And so we all know what it's like to start a new job. There's a lot to learn, You know, it's hard. You're you know, everybody's got these things. Imagine adding all these extra barriers and feeling like you're already so far behind. Some of their peers had multiple internships before them. So they just if you're putting all that effort in to recruit the talent, you know, they were hoping to have a little bit more support when they started.

Todd Shapiro: [00:20:08] Well, you know, I'll give you I'll give you another quick example. So not only do they do employers and firms and companies recruit students out of a very cheap program, the university and I recruit students out of our merit program for their master's in accounting down at UVI. And interestingly, a fair number of our scholars are admitted to the Airbrush Salon Ice Masters accounting program. But they did this and we really enjoy we love their program. Before you enter the year, before you enter University, Illinois as Master of Accounting Science, I think about it. You had a kid was going down and they're now going to be sitting in a class with all with with a lot of students who graduated from U of I in the master's accounting program. Right. So what the university Illinois does is they do an assessment of these individuals. And if they see an area where you need further education or development, they'll give you that individualized development. To help to ensure your success when you enter their program. Now, UVI, does that is that done broadly when you get into the workplace? And I mean, you know, outside of, you know, presentation skills or something like some technical training, do we do that broadly or to your point? Yes, it's a sink or swim. Good luck. Yeah. And everyone everyone's treated everyone is treated more the same as you know.

Kari Natale: [00:21:36] Yeah. What I was explaining is you guys kind of figured out that, like, transition into their master's program and said they work with people on their individual needs and assess where they're at with coursework. And should you test, you know, should you try another course before you start the master's program so that you're successful when you're in our master's program? And kind of comparing that to when you're entering the workplace, like, are there areas we need to help you with before you enter so you're successful?

Blake Oliver: [00:22:03] So here's my takeaway from this conversation is we've got firms trying to do better by diversifying their incoming class, right? They're new hires and they're participating in this program to do that with you.

Todd Shapiro: [00:22:19] Yes.

Blake Oliver: [00:22:20] But they are not providing enough support once those folks are in. And specifically, we're talking about inadequate feedback and development. So so not providing the training, that's not getting enough training in the minds of, you know, the folks who are coming in. And then also, you know, not creating a welcoming enough environment. That's what we're hearing from these people.

Todd Shapiro: [00:22:47] Yeah, that would summarize that. Would that That would summarize, Yes. Yes. I think there's a great effort to try to bring people the pipeline, the questions, how do we help to ensure their success when they get there? One of the things that we're talking about is we're talking about launching. I thought we refer to our marriage program as our empty, empty WWE program, and Kari is going to be helping to launch our marriage 2.0 program next year.

Kari Natale: [00:23:10] That's not our official title. It's Todd's internal title. It's 2.0.

Todd Shapiro: [00:23:14] Internal. It's the internal working title. But it's really going to try to work with our alums and others if need be. How do we provide if you're not getting that development that you need that individual on a development, you need to be successful, and how do we help you? How do we help you get those those skills? How do we help you develop if the firm are your employers not doing it well, we'll work with you to help because our goal for these individuals is to help them be successful. Yeah, we don't want to just plain shoot.

Kari Natale: [00:23:45] We want you to be. And I'm assuming that's the employers intent as well. And I don't think and like you said earlier, they're doing a lot of great there's a lot of great initiatives happening, but this is how still employees are feeling. And so that's what we wanted to share it, because even though sometimes we put together great programs, sometimes the recipients of that program feel differently than what we think they're feeling. And Sara, just kind of hearing somebody else's perception is important in terms of like, what are we doing? If we if you ask these employees yourself, what are you feeling valued and respected? Do you feel comfortable? You know, do you feel like you're getting feedback? You know, will they feel safe enough and comfortable enough to have that, you know, that conversation? Or will they want to leave because something's happened that they they just can't get beyond? Yeah, So.

Blake Oliver: [00:24:36] Well, I would say this is this is a problem like just broadly in the profession is the lack of development, the lack of feedback, the lack of training. I mean, the way our profession is set up, especially at big firms, is it's up or out. You know, the pyramid shape of firms is designed to push people out. And so what do you think is going to happen if you bring in people who have not had all the advantages? You know that that.

Todd Shapiro: [00:25:06] Yes, I have a I had a conversation with them a week off, but I had a conversation with a senior person at a large firm. And he said, we're seeing the same kind of issues with with people who have diverse backgrounds. You did go to Year Rochelle in Iowa, who did go to Texas or whatever the case may be. Yeah. And then I sort of said, but what happens for individuals who don't have that background or don't have that experience? They said, well, it's just it's it's accentuated. Yeah. So, yeah, you're right. It is a general. It's Yes, it's a there's a general. If you're going to hire. Curious point. How do we how do we bring individuals into these environments and then provide them with the individualized support that's going to help them be successful.

Kari Natale: [00:25:52] One more point I wanted to make on what you were just saying, Blake, is it is it's a broader issue and it's not the employees issue. So if there's a gap and as much as we need to train our employees and provide feedback to our employees, there also needs to be more, you know, racially sensitive manager training and how to work with staff that are different than you. And I know a lot of organizations are offering great training like that, but holding people accountable for that as well, because it's not just the employee who needs to do the work.

Blake Oliver: [00:26:22] And to that point, like I want to get back to that survey I mentioned by cesarean, because this had one of the most troubling stats I've ever seen about diversity in our profession. I've got this up on the screen for you so you can see it. Now. The question is, how important is it that your firm address, a lack of D in your workplace? This was a very broad survey. Many, many accountants took this survey. And the good news is that 29% said very or extremely important and 16% said somewhat important. So if we add those together, we get 45%. A little less than half the profession thinks that D-I or diversity and inclusion is important. Here's the part that's troubling. 36% said very or completely unimportant. So over a third of the accounting profession does not think that D is important, that diversity is important, and they think it's even unimportant. How do you respond to that? How does this how do you overcome that? I mean, when we talk about 20% or so of candidates experiencing microaggressions, I mean, it's probably this pool of people who think that diversity doesn't matter. That would be doing that well, right?

Todd Shapiro: [00:27:36] Yeah, I wouldn't necessarily go as far as to say the microaggressions are coming from the and actually, I don't look at 36 47% cause 47% of people think it's either very completely or somewhat unimportant.

Blake Oliver: [00:27:49] It's half and a.

Todd Shapiro: [00:27:50] Half right now. Yeah, it's pretty much half and half. And I don't necessarily think that you can make the broad generalization that people who are committing microaggressions live in that 47%. I don't know. I think that's a that's a that's a broad generalization. I think the reality is we have a very broad profession and and we live in very interesting time. And it is an issue. And so your your question was, what do you do about that? What's your reaction? And I will tell you what we have done. And I go around. I do I do townhall forums throughout the state of Illinois where I talk with members about the state of the profession, state of our people, and I include the state of state diversity as part of that and in what we do and we continue to talk about it. I can look at the 47% and get angry or frustrated or I can say, you know what? We're going to continue to talk about what we think is important to talk about. And and progress is progress is not going to be fast. But all we can do is we can continue to talk about it, continue to talk to leadership about it. Leadership affirms leadership in companies and and hopefully over time that Gary and I both know this is a long game. When I took over the role of CEO ten years ago, I had various goals and objectives. And I I'll be honest, I didn't realize this was going to be as challenging to move this needle, but you can push in it.

Kari Natale: [00:29:22] Yeah, well, here's a stat. I saw that. Sorry. When I saw that chart you had showed initially, I was upset as well, but I wasn't surprised because that's what we're hearing. That's what our respondents are feeling. That's what they're seeing. And like, if you are a large firm and you're hiring these employees and your employees don't feel like denying your workplace is important, it's a trickle down effect. You know, and Tad said, we're talking to leaders in organizations really trying to help people understand and change that mindset. But yeah, it's it's, you know, being what what I'm trying to do with the students that were placing into these employers is being really transparent about that. As you know. Listen, these employers are trying they've got good initiatives. It's not going to be very diverse when you get there. This is, you know, to not kind of just put this like, oh, it's great. We're doing all these great things, but be very transparent that there's still challenges that you're going to face.

Blake Oliver: [00:30:17] So here's a step that might help change people's minds. I would hope so. The question here is do organizations make better decisions when there is employee diversity? And a range of studies that I have seen say, yes, when organizations are more diverse, when corporate boards have, you know, more women on them, for instance, or organizations have just more diversity in general, they have more diversity of thought and they make better decisions. They are they're more profitable. And this has been proven. And anyone who disputes this who's listening, like, please send me an email, Blake, and earmark, and I will direct you to those studies. But the accounting profession doesn't seem to believe that as much as it should. So the answer to this question is, you know, do organizations make better decisions when there's in play Diversity? A third of the accounting profession only says maybe 32%, 10% say probably not, and 10% say definitely not.

Kari Natale: [00:31:15] So this is when we talk to the alumni about this in the interviews, because they're saying, I may be there, but if I'm not brought to the table, I can't help you make better decisions. I can't participate. I can't contribute to innovation. I can't you know, if I'm not confident in my workplace, if I'm if the door isn't open for me to go beyond just sitting at that table, you know, So not fully convinced because there's very few people who are diverse right now in the organizations. And then a lot of them are having not all, but many of the people we talked to have been hard time even contributing and showing value.

Blake Oliver: [00:31:54] So we have we have half of the profession that doesn't believe diversity is important. And we have half of the profession that doesn't think that their organization makes better decisions when it's diverse. That diversity adds value. And I think those there's probably 100% overlap between those two groups, like the reason that accountants don't believe diversity in diversity and don't want it is because they don't see the value in it.

Todd Shapiro: [00:32:23] And you know, again. We live in a very complex time. Our profession, when you think about who an accountant did or CPA is. They were in big firms and small firms and big towns. In the small towns. They're geographically dispersed around the country in every part of the country. You know, finance case, I guess I'm not happy with with the information, the numbers as they are. That's where I get back to. You're right. It's, you know, and I don't know what this number will look like ten years ago. I would hope that it's improved over the last ten years. And this is something that I'd love to see. Arrogant, you know, kind of do an a benchmark study every couple, two or three years to see, are we making progress? I will tell you, I think we are making progress. I have reason to I based upon what I've heard from people, I'm not surprised by the information. I want to stick with the 48 that say it definitely probably makes better decision with the 45% who would say it's very important. And and again, you know, I was at I was talking to an accounting firm once and they said they said and they were in a predominantly white Geographic region and they said, why should we care about diversity? Somebody made the comment about, you know, I mean, first well, if you look at new.

Blake Oliver: [00:33:50] Business, if I just stop you there one second, Todd, it's like diversity can be as simple as like men and women. And we've got men and women everywhere in the country. And, you know, 80% of Big four accounting firm partners are white men. 80, 80% of the leadership of these large firms is white men. So we don't even have diversity like among males and females. And that has been stagnant.

Todd Shapiro: [00:34:18] For well, actually, there's been some I'm not going to say it's dramatic because you because you call me on it If I said, but I will tell you this. So what I so what do I tell a firm when I talk to a firm leadership and say, why should I care? I tell them this when it's accounting for the verses versus the company. When I talked to him, tell me for I don't care what your clients look like, you're going to eat. Most clients, if you walk in with a diverse team, they're going to think you're more forward thinking in today's world. So it's not important just from, you know, your your you're going to whether or not you're going even if you're going after a predominantly white client, it may help you. I think that the client's going to look at and say, listen, this firm's a little more progressive because because they're taking this stuff seriously. So I'm going to be positive and have hope that you want to keep talking about. We got to keep Hammer. We can't. And again, sometimes you stop talking because you get frustrated or you stop talking about it because people give you negative feedback. Can't do that. Get out of the stomach to keep going.

Blake Oliver: [00:35:20] We like numbers, so tying it to results is a good thing to do. Like you will have a more profitable accounting firm if your firm is more diverse and if your partner class is more diverse, you will start to win more business, like you said, Todd, Because when you go in to to win those audits or get those clients, the people buying these days, the corporate clients are by and large, I don't know the numbers, but like especially in, you know, Fortune 500, they're all about diversity now. Like that has become a real priority among big corporations in this country. So regardless of your personal feelings, it's a good business decision to have a diverse firm. It is, right? It is. And yes, and I don't know, maybe maybe take the I think the moral and ethical obligation is important to talk about. But how do you get results in the world? It's often by helping people figure out how they can make money from it. And maybe that's.

Todd Shapiro: [00:36:16] The hard part is be I tell you, the hard part is being is being willing to talk openly and honestly. Yeah. In the face of people who may not want to hear it. And that's, you know, that's I think that's what we have tried to do, this report. We know that some people read this report and, you know, they may put it aside and say, I don't care. We thought it was important why we issued this report. We felt it was important issue this report, because we we try to always speak truth and honesty. Yeah. And and that's why we did the report. And I think you just have to keep doing that.

Blake Oliver: [00:36:50] And there's another stat in here. Does diversity improve decision making in accounting? Only about half of accountants believe that. But across all industries, it's 73% believe that. So.

Todd Shapiro: [00:37:04] So yeah.

Kari Natale: [00:37:05] Part of that too, is they don't experience it. So the lack of diversity again, in the profession is showing in those results. To me when I say that, I see when you have an experienced it, you don't even know how much it could benefit your firm.

Todd Shapiro: [00:37:20] And I will say one of the challenge you hear is, well, yeah, we try to recruit people, but they don't stay.

Blake Oliver: [00:37:25] But then you've pointed out why they don't stay.

Todd Shapiro: [00:37:28] And that brings us back to the Murray, to the where we have.

Blake Oliver: [00:37:31] Yes. I think that's an incredibly valuable piece of information for our profession. Todd and Kerry, thank you for putting together this report. I've worked for a few years in marketing roles and companies, and anyone who knows anything about marketing knows we're all obsessed about funnels, customer funnels, right, and getting people into a pipeline. And so that's why I love this idea of the CPA pipeline and the diversity pipeline, because when you can identify where people are falling out of the pipeline, then you can fix the leak. And and we have we have done a good job as a profession of getting more diverse people into the pipeline. We just lose them. We got leaks in our pipeline, right.

Todd Shapiro: [00:38:08] We are everyone is very focused right now on growing the pipeline. Yeah. And in my opinion is we need to focus more on it across diverse people, across all people. Keeping people. Yeah. Versus growing The pipeline is important. Growing the pipeline, I will tell you, growing the pipeline to diverse people, it is still work. It is critical because you're going to have it's never 100% translation. But but but you know, I said very simple terms. Look, it's an algebraic equation. The numerator does not matter. Right? It's not in your pipeline numerator number, people will say, how do we focus on the numerator. Yeah.

Blake Oliver: [00:38:46] Well, and those are the people you're already talking to. Right. They're already in the pipeline. They're already committed.

Todd Shapiro: [00:38:51] Right.

Blake Oliver: [00:38:51] Yeah. We just got to not.

Kari Natale: [00:38:53] Turn them off. What we're hearing from them and what we wanted to get across, it's like there's just a huge opportunity to be stepping so quick to replace these individuals and really invest in them differently and hear from them differently and be honest about what's happening differently. And and if you're you know, if you are invest in the pipeline and, you know, recruitment also work on that retention side a little differently.

Blake Oliver: [00:39:18] Yeah. So so we talked about just one more thing before we wrap things up, but because we talked a lot about the need to support, you know, staff when they're in the firm, train them more. I mean, I think anybody who's worked in a large firm as experienced that we need more support. What about the schools? What can universities and colleges do in their curriculum to prepare diverse candidates, but all candidates better for life and public accounting? Because I think that's actually, you know, in my experience, a significant barrier to keeping people in the pipeline is they study accounting and then they get into working at an accounting firm and they're trying to pass the CPA exam. And like what they learned isn't helping them nearly as much as it should. Yeah. How does the curriculum need to change?

Todd Shapiro: [00:40:11] Well, if I. If I. You know, that's a that's a whole nother conversation. Our curriculum needs to change, I think. I do think you're seeing. And. And for. For a multitude of reasons. I think you're going to see some change in curriculum with the new CPA exam. I think that it's going to be focusing on teaching some skills that I think are going to help people be more successful. Because some of those some of those new skills are being incorporated into the new CPA exam, no matter what discipline you take. Let alone if you take fa or fa fa or or TCP. So I, I think that's going to help. But let me.

Blake Oliver: [00:40:53] Let me phrase it another way, if I could. So like, what is what is the gap in like, did you hear from these alumni what it is that they felt unprepared to do in the firms?

Kari Natale: [00:41:06] Yeah. So I think in general, people said that the CPA exam prep helped level their playing field, and so taking that content sooner could help. We want to dig deeper, deeper before we develop our Mary 2.0 to talk about what is it, what is the specific where are there things with the gap? Because it is it was pretty different depending on who the person was we talked to. So some of them needed to take courses over and when they reread that material, then they were fine on the job, some of them. So it really was individualized, you know, gaps. But there was it seem, you know, when we talked to the students who did do the master's program at U of, I said, you know, how was that transition when you did one internship at your undergrad here and you felt this way? How did you feel once you had this training? And they it was just, you know, we have to be honest, it was a different experience. They felt different, better prepared. And so we need to address it. We need to talk to educators about that. And we we have to we have to figure it out. There's no you know, there's no one class that needs to be improved across the board, all schools. And it was really dependent on the school and the.

Todd Shapiro: [00:42:21] And I think there's no question listen, there's there's there's hundreds there's thousands of of schools, colleges and universities preparing individuals for and and the huge successful people come out of all of those various institutions. On the other hand, there's thousands of institutions and you know who prepare people to be accountants. It's there's you know, there's there is an accreditation process that tries to to to create as much consistency as possible, but to assume everything's going to be the same. It's crazy because you have different admissions staff, you have different people and different there's there's so many differences in different backgrounds, different backgrounds. What what if if you're the schools, if I'm school and I'm looking at what we said in a mary T program, I would try to look at my curriculum. But I think the schools are doing a school to do on, I think, an amazing job today in helping to give people opportunity even to have a chance.

Blake Oliver: [00:43:17] Well, what about soft skills? Like I see that word mentioned here in the summary, There's a soft and technical skills gap. And thinking back to what I had to do that was challenging in public accounting, like like talking to clients. All right. That was not something I learned in school or managing clients or managing workload like. We didn't learn that at all. We didn't learn how to do that. We learned the rules, but we didn't learn how to do the job.

Kari Natale: [00:43:43] Even navigating corporate politics, it's like, how do you work in a corporate environment?

Blake Oliver: [00:43:49] Yeah, you know.

Todd Shapiro: [00:43:50] And I think you are seeing some schools try to create some soft steel training. I mean, I said I sit in the advisory board for the Illinois Accounting Department and to prepare somebody to be able to become a CPA. Over over the period of time they have that student there is challenging. You know, it's challenging. And now with the new exam, it's going to be equal, if not more challenging. Can you fully prepare somebody for everything, whether it's a soft skills and the techniques? I really think the way it's worked now, and I'm not saying it works well, is the schools are really focused on on getting you ready for the technical skills. Yeah.

Blake Oliver: [00:44:28] So they've always been right. It's always been. And that's been necessary in the past because, hey, we couldn't Google stuff, Right, Right. 20 years ago. You couldn't Google anything. You had to know it, especially tax or audit or gap like you had to just or you had to go look in a book and you didn't have time to go down to the library every time you need to look something up. So you had to know it. But these days you don't. But the schools are still teaching you. Like you got to memorize all this stuff. And I just don't understand. Like, like far more important would be I'm sure I'm sure if we surveyed farm owners and asked them what's more important that your CPAs in your firm know every tax rule or that they know how to explain a tax rule to a client like what would be more important? And everybody would say, translate it into like, you know, layman's speak, right? Yeah. But we don't teach that in any of our classes. I've never heard of anyone talking about that as like a as a class, but that's probably the hardest thing to do and one of the most valuable.

Todd Shapiro: [00:45:28] I think you're going to see schools try to do that more. But I also think he, you know. Correct. But but we hope we our whole is that students become go to major in accounting. We were on site and we hope they sit for the CPA exam. Cpa exam, as you know, is a rigorous, tough exam. And, you know, I always tell people when, you know, you don't even have to. No, you don't. To your point, you don't have know everyone. You don't have to know every rule or standard or tax or tax law when you take a CPA exam. You only have to know the ones they ask you.

Blake Oliver: [00:46:08] Right.

Todd Shapiro: [00:46:09] Which means you have to know, you know, if it's a funnel, right. You have to study this large to be able to hopefully become a CPA. And we want people to become CPAs, right? So the question is, how do you balance that with trying to get people the soft skills they need and what do you balance then?

Blake Oliver: [00:46:26] It's a rigorous exam, but I feel like it's rigorous in the wrong way, like just based on my personal experience. It's a lot of memorization and I've always been good at that, right? I could sit and read the manuals and memorize the rules and regulations and spit them back out. But like, that's why it's difficult. Not not because it requires like logic or critical thinking or writing or anything like that. So I mean. I don't know. I feel like this is a whole nother topic. And, you know, obviously, I'm going to have to we're going to have to come back and talk more. But, you know, these changes to the CPA exam, they aren't addressing any of these soft skills issues, are they? It's all it's still all technical. It feels like I.

Todd Shapiro: [00:47:11] Think there's some you know, if you read the blueprints or some of this in the yeah, we're a little bit off. There are some areas where they're talking about thinking skills or analytical skills and different than they have in the past in some of the disciplines. If you look at the bar specifically, they talk a little bit about different skill sets that that I think are welcome addition to that. But you know, as you said, it's a it's a whole subject unto itself.

Kari Natale: [00:47:39] Yeah. Blake I'd love to think the state societies like ours have a good opportunity there to help with student and young professional training in those areas. But the students are professionals that I've worked with, don't know what they don't know. So we have to kind of identify which areas are most common and help them, you know, get where they need to be.

Blake Oliver: [00:48:00] That's a good point. I would love to figure out how could we create podcast episodes that teach people the soft skills they're not.

Kari Natale: [00:48:06] Learning.

Blake Oliver: [00:48:06] In school?

Kari Natale: [00:48:07] Let's talk offline.

Blake Oliver: [00:48:09] Yeah, I would be. I mean, that's my my mission. You know, part of my mission is how do we plug that gap? Yeah, I would love to help.

Todd Shapiro: [00:48:17] Well, and I'll tell you, that's really what I take out of our our goal. Why do we do the math? Why do we do the report we just did? It was a to bring green light to the issue to start it's that there's all this talk that noise to talk about pipeline and pipeline and pipeline which I'm sure you hear all the time it was to bring different conversation to the table. Yeah. Financement and success versus just the pipeline. But it wasn't just to bring it wasn't just to to create a conversation about that. It's what you just said and what Kari just said. It's really about now what do we do now? How do we take this information and whether or not it's work with educational institutions, whether that's not important, whether or not whether it's employers who think maybe we have start thinking about assessing the needs of our staff, all of our staff, especially our diverse staff who come from different backgrounds, what do we need to assess the needs of those individuals, specifically separately versus group? It's really how do you take what we what we heard and now what do you do about it? What do you do to try to help move the needle forward to to help people become more successful?

Blake Oliver: [00:49:26] I love that. Todd and Kari, thank you so much for joining me. I've been speaking with Todd Shapiro, president and CEO at the Illinois CPA Society, and Kari Natali, senior director of planning and governance at the Illinois CPA Society. Thank you for these insights. I think, you know, I'm feeling actually this is a glass half full situation. I know where this half and a half point. Right. We've got half the profession on board with this. We've got half that are saying, I don't see it yet, but I think we have an opportunity here in the next years to change minds. Right. And get over that 50% hump and really reach that tipping point like this, as I can get very frustrated like many people with the lack of diversity and movement in this stuff. But I think I think things are going to change and I hope they are. And thank you for everything you've done to to move the profession forward.

Todd Shapiro: [00:50:14] Thank you.

Kari Natale: [00:50:15] Thanks, Blake.

Blake Oliver: [00:50:20] Thanks for listening. I hope you enjoyed this episode and that you learn something new. And if you did, wouldn't it be nice to get some CPE credit for it? Well, I've got great news. My new app, Earmark CPE, offers free Naspa approved CPE credits for listening to podcasts, including this one. Visit earmark CPE to download the app. Take a short quiz and get your CPE certificate. That's earmark CPE.