TEI Roundtable No. 19: Diversity and Inclusion in the Tax Space
A panel offers compelling perspectives on this important issue

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There’s no doubt that diversity and inclusion are major topics of discussion in the tax industry. Although the industry has shown some significant progress, the work is far from complete. We convened a panel of tax practitioners and diversity and inclusion experts to discuss this issue, including Cassandra Calvert, senior manager, global tax planning/mergers and acquisitions at Fortive; Wayne Hamilton, senior director, global tax controversy, at Walmart; Yvonne Metcalfe, partner, Ernst & Young LLP, and member of EY’s Americas Inclusiveness Advisory Council; Don Rath, vice president, corporate tax, Synopsys Inc.; and Jacqueline Welch, senior vice president of human resources, diversity and inclusion, and chief diversity officer at Freddie Mac. Michael Levin-Epstein, Tax Executive’s senior editor, moderated the discussion.

Michael Levin-Epstein: How do you think the tax community is doing on the issue of diversity and inclusion?

Jacqueline Welch: I’ll start, only because I’ll have the least to say, not actually being in the industry. I do have an observation that, to the extent you can extrapolate, when I look at the diversity representation of our tax team internal to Freddie Mac, it’s not as diverse as I would like, even though our tax team has made some good strides in bringing in diverse talent over the last few years. This leads me to the assumption that perhaps the industry isn’t as diverse as it could be, just assuming the logical feeder pool relationship.

Don Rath: I’ll chime in. I think, first of all, the diversity and inclusiveness of the tax profession is definitely a work in process and evolving. I think there is growing recognition that, similar to other professions, diversity and inclusion adds a lot of value to organizations, because it ultimately results in diversity of thought. That improves decisions and outcomes. But I think as a profession we really need to be candid with ourselves. As an example, in TEI, women are underrepresented in leadership roles, even though they are well represented in membership. In the profession as a whole, there is what I view as a startling absence of black and brown people in professional services and industry. I think that as a profession and in our organizations, we continue to limit the contributions of LGBT individuals because we are often not motivated to bring our authentic selves into the workplace. So, we have many challenges ahead of us in order to improve diversity and inclusiveness within the profession.

“Campus recruiting remains one of our biggest sources of new talent, and our campus recruiters are fully integrated with our D&I programs and aspirations.”
—Yvonne Metcalfe

Yvonne Metcalfe: My perspective is from the standpoint of a Big Four professional services firm. Our demographics are different from the corporate environment, because tax is one of our four service lines, meaning that we have a significant number of tax professionals spread across multiple locations in the Americas and globally. When I look at how that translates, through our diversity and inclusiveness (D&I) programs and culture, into the success of women and underrepresented minorities at EY, I am proud of how far we have come. For example, in 2017 women represented thirty percent of our newly promoted Americas partners, principals, and executive directors. Our outgoing Americas vice chair of tax is female, and her successor is also a woman. That’s not to say that we cannot continue to raise the bar, but our focus in recent years has shifted towards inclusion of our diverse population in the workplace and expands beyond gender.

Wayne Hamilton: I would say there is a heightened recognition in the tax profession—companies, accounting firms, law firms, etc.—that there is a visible absence of diversity at all levels throughout the enterprise. The question for me is whether the profession has acknowledged that the absence of diversity is an issue. Until there is acknowledgment that the absence of diversity is a concern, any efforts to solve it won’t be sufficient or effective.

Cassandra Calvert: I certainly think there is room for improvement here. I do believe that there is a lack of awareness about the importance of diversity, and the benefits to an organization if they proactively prioritize cultivating a diverse workforce. Looking at hiring practices is an important first step; however, if people don’t feel like they have a voice or are valued, and aren’t given an equitable chance to advance within an organization, you’re not going to fully realize the benefits of diversity. I think there has been improvement in the first step (hiring diversity), but work needs to be done to encourage diversity in leadership roles.

Levin-Epstein: Please talk about your organizations and their initiatives in diversity and inclusion.

Welch: Freddie Mac was chartered by Congress in 1970 to—at its roots—make renting and buying a home more accessible and affordable to a wider, broader swath of the domestic population. The decade prior to Freddie Mac’s creation was tumultuous, and coming out of the sixties, the federal government realized that in order to create an economically level playing field, they needed to focus on making housing more broadly accessible. It’s important to provide that quick overview of history, because it speaks to the fact that, at its core, Freddie Mac to an extent is built on the idea of diversity. Jump to 2018, and the natural question is, “Are the people who are running the enterprise reflective of the diversity we’re saying we’re trying to drive in society at large, with home ownership as a proxy to that?” At Freddie Mac, we talk about diversity in three discrete but related buckets. First, there is workforce diversity—driven primarily by our employee resource groups (ERGs). Like many other employee resource groups, our nine ERGs are designed to create an affinity through which employees can positively impact the quality of their work life and have a meaningful impact on the business. Next is supplier diversity, another top priority for the company. In fact, last year Freddie Mac spent a quarter of a billion dollars on engaging with diverse suppliers. Our third area of focus is related to financial transactions—which gets into the degree to which we use diverse organizations in the large transactional business of the organization: sellers, servicers, etc. So, Freddie takes a broad view of diversity both in terms of people and representation, which I think is the traditional model, and the business practices where we can bake diversity in. Examples of tactical things we’ve done in terms of diversity, I’ve two examples. As you may know, New York City recently made it illegal to ask for past salary history when you’re interviewing candidates for your open positions. Freddie Mac does maintain an office in New York City, so obviously, we have to comply with the law. But we took it a step further and asked, “Do we believe the data that suggests women and minorities may be disadvantaged by having to report salary history?” We agree with the data. Consequently, we’ve done away with the practice of asking for salary history not only in New York, but across the enterprise, wherever we do business: New York City, northern Virginia, Dallas, Chicago, Atlanta, and Los Angeles. We also don’t ask our internal candidates for past salary history. Now, obviously HR knows what our internal candidates make, but we don’t make that information available to the hiring manager. The intent is to focus on the merit of the person’s candidacy in terms of their ability to fulfill the technical, functional, and subjective requirements of the job. The second example of action I’ll hold up for consideration is this year we will conduct a representation study. We’ll look at each geography within which we do business to identify our opportunity set. Wherever we feel representation is low, we will be able to identify if “low” makes sense relative to the talent available for the jobs we are trying to fill. This will force the issue of defining with data what’s real and practical for Freddie Mac in terms of representation, as opposed to this broad, generic observation that “We’re not as diverse as we think we should be.” We’re very excited to get that work underway and to see what the data says, because once you know, you have to act. I’m looking at this as a huge step in the direction of us holding ourselves accountable relative to what’s possible.

“I think that there is certainly a place for more presence in recruiting for entry-level positions at colleges and universities where, historically, either the Big Four firms or in-house tax departments have not traditionally recruited for interns or entry-level hires.”
—Don Rath

Rath: I think first of all, with respect to my company, the focus in the realm of diversity and inclusion has been primarily gender. There are certainly efforts to improve the representation of women in technology, and in particular women in technology leadership roles. But I think we have barely, if at all, scratched the surface in terms of diversity based on race or other characteristics. Certainly there isn’t the push and the accountability that we see in other companies. I think it has become a particular challenge for us only because of the changing nature of our work and our roles. I’ve seen countless times people think through what are the particular experiences and competencies that are needed, and yet we always seem to default to hiring two specifications. One is technical skill, and the other is something I would call “fit.” And I think both can become excuses not to challenge ourselves in terms of broader thinking on what it takes to solve some of the more complex business problems we have. I’ll point to tax as a particular example of that. There is obviously a lot going on in the tax world, with significant legislative changes, and increased attention by boards of directors with respect to tax risk. We are hitting the reset button in terms of evolving our traditional tax structures in many of our companies. You need a different skill set other than pure technical to address those challenges. You need people that are good at analyzing data. You need people that can judge the broader parameters around risk. You need people that are capable of interacting with the business and assessing the operational impacts of changes we may be composing. I think, you know, if we limit ourselves to our traditional specs, we really are shortchanging, ultimately, the value we can add. I think one way you broaden those specs and bring in those additional skill sets is to consider a broader diversity of candidates in terms of hiring, in terms of promotion, and in terms of the decisions you make as to who’s going to fill particular leadership roles.

Metcalfe: “Diversity” is about differences. Each of us is different, and at EY we value and respect individual differences. We think broadly about differences; they include background, education, gender, ethnicity, nationality, generation, age, working and thinking styles, religious background, nonreligious background, sexual orientation, ability, and technical skills. We know that D&I is a “must-have” versus a “nice-to-have”—our clients demand this in the teams that serve them. Our Americas Inclusiveness Advisory Council (IAC) is the catalyst for advancing our D&I goals. We have approximately forty partners representing the four service lines, co-led by our Americas Chairman and Global Diversity & Inclusiveness Officer. I am one of the ten tax partners who serves on the IAC. Through in-person and remote meetings we identify and frame actionable goals for the Americas that align with our global D&I objectives. This guidance and accountability cascades to subcommittees representing our subservice lines and geographic regions. The IAC also monitors our progress at the organization and personal levels against a standard of highest performing teams. Yesterday, our efforts were primarily focused on women, as we had a retention gap at the partner level. We wanted to improve women’s representation in partnership (only six percent of partners were women, but we had long been hiring women staff at fifty percent). Additionally, we also began to focus our recruiting efforts on minorities, because we needed to expand the talent pool specifically at the entry level. Over time, we expanded the focus on minorities beyond recruiting—to retention, development, and, most importantly, advancement. At the same time, we took a hard look at our definition of “diversity.” We broadened it to include others, like the LGBTQ community and people with disabilities. At that time, our emphasis was mostly on programs for the targeted populations, but a few years ago, we moved to a focus on diversity and inclusion. While we had great programs, we needed to widen our focus. We recognized that diversity in itself is not enough and also that we were excluding many people who didn’t think diversity was about them with this narrower definition. Over the years, we have evolved to look at both the expanded definition of diversity that I mentioned before as well as inclusiveness, while continuing our programs for targeted populations and cultural hotspots. As the journey continues, our goals are to embed core principles of inclusiveness in all of our processes and across our entire organization, so that D&I is a part of everything we do.

“Jump to 2018, and the natural question is, ‘Are the people who are running the enterprise reflective of the diversity we’re saying we’re trying to drive in society at large, with homeownership as a proxy to that?’”
—Jacqueline Welch

Calvert: I’m honored to work for a team and a company that values diversity. Fortive is a relatively new company and has recently demonstrated that diversity is a high priority with the creation of a VP position for diversity and inclusion. In addition to creating this formal role, diversity is evident in that there are women and people of color in leadership roles. The culture also cultivates diversity of thought and allows people to express their opinions openly. I strongly believe that having a team that is diverse in terms of culture, race, gender, and thought allows us to deliver the best possible results.


Levin-Epstein: What are some ways that organizations can recruit minorities and women more effectively?

Metcalfe: We have a pretty well-oiled recruitment machine as you would imagine given the size of our tax population and intake needs. Campus recruiting remains one of our biggest sources of new talent, and our campus recruiters are fully integrated with our D&I programs and aspirations. But we also start the search process much earlier than college, particularly with underrepresented minorities. There are multiple programs where EY sponsors individuals earlier in their college journey or even in high school through mentoring, allyship, and internships. Typically our interns join us during the summer before their senior year, but certain groups have the opportunity to accelerate that to the junior year. We also have developed relationships with many city schools—for example, in New York City people will volunteer as buddies in their communities, so that students begin to understand and receive coaching on what it means and what it takes to work in our environment. There is emphasis beyond the academics on the “soft skills” and how to build your network. We invite college students with disabilities to participate in career-readiness workshops and to attend open “office hours” with EY recruiters. An example of a newer area of focus for us, with unique recruiting requirements, is neurodiversity, meaning individuals on the autism spectrum. I just came back from the Autism at Work Summit in Seattle, where a significant and growing number of U.S. companies meet to discuss how we can best leverage the technical and analytics skills individuals on the autism spectrum can often bring to the workplace. Though there’s steep competition for this kind of talent, people with autism tend not to interview well by traditional standards—they may not make eye contact or they lack the “executive presence” that we tend to hold dear. EY’s Neurodiversity Centers of Excellence recruit differently through a weeklong experience of problem solving with others. Our Centers of Excellence fuel innovation and profitability in tax as well as our other service lines.

Rath: With respect to the recruitment process, I think first of all, most of us in industry have a dependency on the success of the efforts of the Big Four accounting firms, because that’s where we draw a lot of our talent from. So, certainly as clients of those firms, there is a role for us to play in ensuring that our key service providers are, in fact, successful in having a diverse workforce, and that we see those people in our day-to-day engagements and really hold the firms accountable for those efforts. As a company, I think that there is certainly a place for more presence in recruiting for entry-level positions at colleges and universities where, historically, either the Big Four firms or in-house tax departments have not traditionally recruited for interns or entry-level hires. I think there’s a process we need to go through to really question the efficacy of traditional qualifications and ask ourselves, “Are the things we look for in candidates really good predictors of success?” That’s an occasion to broaden the conversation to include more people who may not have fit the traditional bill, and that is a way of expanding your candidacy pool simply because you’re thinking differently about what skill sets are required for folks to be successful. With that, there’s a broadening of the notion of relevant competencies, which I think needs to happen in tax. You may not see a lot of black and brown people in the tax profession, but you may see them in other areas of finance, more highly represented, where there are skills that are transferrable into tax. Maybe it’s economics, maybe it’s general finance, maybe it’s people who are playing business partnering roles, maybe it’s government. But I think as we think more broadly about what are the skills we need for the future, we have a higher likelihood of tapping into those folks and using that strategy to have a more diverse workforce. The last thing I would mention, and it sounds kind of, you know, simple and tactical, is we need to do a better job at making sure we have diverse individuals on our selection teams. The more people we bring into the recruitment process as assessors of candidates, the more diverse view we will get of what really is ultimately a good candidate for a particular role.

“Mentorships are critical and important, especially in organizations that are highly relational.”
—Wayne Hamilton

Welch: I’d like to echo and put a fine point on Don’s comment about the efficacy of qualifications and requirements. When you’re dealing with technically specific roles, for example, accounting roles, there are unilateral requirements—you have to be a CPA. Most other roles, however, are more fungible, and you can more fluidly move in the direction of preference. My general observation is that most organizations do not have a challenge with representation at the entry level. At Freddie Mac, at the entry level, we are the veritable United Nations. When you get to the senior-most levels of the organization, we struggle a bit more, not so much in female representation but certainly in representation of brown and black people, to borrow Don’s phraseology. So, the question becomes a) what are we doing to pull people in at the mid-career level so that they have more viability with regard to the upward trajectory, and then b) what are we doing to retain the folks that we have in that middle—again, to improve their odds of getting to the top of the pyramid? I make this observation to frame our challenges. Here are three examples of how we’re approaching these challenges. Our organization has really done a handsome job of looking for those mid-career professionals who are diverse, either by race or ethnicity or gender. We partner with all the usual suspects from a search partner perspective and we put a lot of emphasis on ensuring the candidate slate is diverse. This doesn’t guarantee that we will hire a diverse candidate, but it does increase the odds of us doing so. This is a proven tactic that has worked over time. When we recruit on campus, we do two things. First, we have a partnership with the Hispanic Scholarship Fund, and they do a really good job of getting their top-performing Hispanic college students in touch with organizations interested in hiring that talent. We have branding opportunities to meet the students in the early years of their education. We offer internships and create opportunities for them to get to know us and for us to get to know them. It’s a really good partnership, because it gets us exposure to candidates we otherwise would be oblivious to. We’re also looking to recreate the same kind of relationship model with organizations that focus on African-American students. One of the best examples I’ve seen is the partnership between Google and Morehouse College, where Google has literally created a Morehouse campus at Google, bringing in Morehouse students to teach them how to code and to socialize them to the Google way of doing things. We’re never going to have that scale, we don’t have the need for it nor the capacity, but the model is one that we can scale down in a way that makes sense. The third effort I would share here is a budding partnership with an organization called iRelaunch. iRelaunch focuses very specifically on helping women who have off-ramped their career to take care of loved ones, raise children or the like. The data suggests that in the traditional family structure, it’s often the female spouse who will off-ramp her career for other family considerations. iRelaunch works very specifically with these women who have already worked, have an established and deep expertise, and already understand how to navigate organizations. They’ve just paused for a while. iRelaunch helps them think about how they want to package their experiences and get back into the marketplace. We’re working with them as a feeder pool for us to, again, improve the representation of female talent at more senior levels in the company.

Hamilton: This is an interesting question. By the way it’s worded, one could surmise that somehow effectively recruiting minorities and women should be different than how we recruit others. In my opinion, there is a direct correlation between recruiting and how previous hires were developed, advanced, and included in the organization’s everyday culture. If an organization has a strong reputation for developing and advancing minorities, and ensuring there is a high degree of inclusion in the organization’s culture, then recruiting becomes easier, because the word will get out and potential candidates will seek you out. Programs, recruiting at diverse campuses or organizations such as NABA [National Association of Black Accountants], all serve a purpose. But if there is no systemic plan to develop and advance, these types of investments will have a low return in the long run.

Calvert: I couldn’t agree more with the prior comments around the importance of having a reputation for valuing, developing, and allowing opportunities for advancement. It’s one thing to get diversity in the door. It’s another thing to include women and people of color into the culture in terms of decision-making and leadership, among other factors. In terms of recruiting, I expect diversity will become increasingly critical for attracting young talent. The Brookings Institution recently published a report showing that forty-four percent of millennials belong to a minority group. Given that millennials now constitute the largest portion of the workforce and continue to grow in numbers, my personal opinion is that companies without a good reputation for diversity and inclusion will find it challenging to recruit and retain talented young professionals. I believe this will be true regardless of whether a candidate belongs to a minority group.


Levin-Epstein: How important is mentorship in terms of diversity and inclusion?

Metcalfe: We place a significant emphasis on not just mentorship, but advancing that to the level of allyship or to individual sponsorship. When we look at our track record for women, underrepresented minorities, those with diverse abilities—the ones that have successfully progressed through their careers have had appropriate coaching, mentoring, and sponsorship. Everyone at EY is assigned a counselor from day one. In addition we have multiple targeted buddy and career mentor programs. We have also developed a toolkit to support our emphasis on sponsorship—a sponsor being an advocate throughout your career. We also have allyships for our internal organizations representing diverse-belonging groups such as Unity. To Jacqui’s point—it’s not just about recruiting people and getting them through the door, it’s about inclusion, advancement, and retention, a large component of which is ensuring that they get the right guidance in their career to make good decisions, get on the right projects, get the right experiences, have the confidence to ask for what they want, so that they can move forward and optimize their full potential as individuals and to the benefit of the teams they work on.

Rath: I will just simply echo Yvonne’s main point, that mentorship is valuable in all circumstances. It’s probably something that our company and many other companies should be doing more of and better. But I think it is particularly critical in terms of retaining diverse talent. It’s one of the tools you can use to address the inclusion side of diversity and inclusion. We may need to rethink what mentorship means in the context of helping to guide careers and retain diverse talent, because their needs may be different. That requires organizations to really think what those mentorship roles are and who the best people are to play those roles.

“[I]f you are a female or belong to a minority group, what a tremendous opportunity it is to have a mentor who has broken through some of the same barriers that you are facing and can help you gracefully navigate those challenges.”
—Cassandra Calvert

Welch: I will round out the comments by saying that from my view—that’s informed by the body of research available—there are three critical relationships you must have in your career, and those are coach, mentor, and sponsor. They’re often conflated, but they are three different things. As briefly as I can, think of coaching: If you’re a tennis player and you want to improve your swing, you hire a tennis coach to improve your swing and that’s the end of the relationship. Very transactional, very focused, and has defined parameters. Data suggests that underrepresented groups tend to not feel comfortable in these relationships because of the transactional nature. Consequently, they waste a lot of time skilling up without leveraging coaches, which is an established and valuable platform from which to skill up. Mentoring is more about the individual who speaks to you and walks alongside you. Generally, that person has a more comprehensive view of who you are on and off the job. As an example, not because it’s perfect but because I’m familiar with the details, when I was evaluating the offer from Freddie Mac I consulted with a former boss with whom I’ve maintained a relationship for two decades plus. He was able to help me think through the offer, not just for the content of the role and all those kinds of things, but also nuanced things like, “Do you want to live in northern Virginia? How will that choice impact your family?” So, he had a more holistic view of my investigative process for thinking through this offer. The research shows that women and underrepresented groups tend to over-mentor. Sometimes it helps to move the needle on their career and sometimes it doesn’t, but we feel more comfortable in that type of relationship because of the nature of it. It’s longer-lasting, it’s more based on the “I like you, you like me” simpatico cadence. Sponsorship, on the other hand, is really about having a senior person, most generally a cis-gendered middle-aged white man—just because that’s the way the world works right now—putting his reputational equity behind you. This is the person who’s in those proverbial closed-door meetings who says, “You know what? I think Don really is the next person for this promotion or for this client or should get this raise.” It’s the person that even when you’re not in the room can speak favorably of your capability and put steam in the engine of your career mobility. I think organizations must determine from a programmatic perspective which one of those relationship structures they’re going to most invest in, and I think you choose different ones depending on your objective. It’s my soapbox question, so I’m glad you went with it last, or else we’d be here all afternoon.

Hamilton: Mentorships are critical and important, especially in organizations that are highly relational. Equally important to me are advisors and champions. Mentors because the time investment can help you navigate the organization’s landscape. Advisors can help you make a decision. However, it is the champions that will invest time and energy in advocating for you to get that next assignment or job or to the next level. We need to have all three.

Calvert: Mentorships, particularly early in someone’s career, can be extremely impactful on development and progression. While I don’t believe the mentor/mentee relationships should be limited to people with similar backgrounds, if you are a female or belong to a minority group, what a tremendous opportunity it is to have a mentor who has broken through some of the same barriers that you are facing and can help you gracefully navigate those challenges.

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