Racism in public accounting , especially in Big 4 firms

[SOCALS]

A friend of mine has been trying to get a job at one of Big 4 public accounting firms (KPMG, Ernst & Young, PwC, and Deloitte) for 2 years now and has confirmed what I knew all along.
These firms, and public accounting in general, have discriminatory hiring practices. He said that he saw a very small number of minorities among associates at these firms while minorities make almost half of Southern California population and accounting students. For instance, Asians make 25-30% of all accounting students here in Southern California, but less than 5% of Big 4 employees are Asians.

And if you look at the demographics of partners at these firms, you will be schocked! 95% of partners are white, probably Anglo Saxon people! It is like the Civil Rights movement never happened!

Is there a way to raise awareness of this type of discrimination? How can we contact Jesse Jackson or Al Sharpton or La Raza with regard to these issues? My friend said that in the whole PwC office of 1200 people there were literally 3-5 African American employees!

[county worker]

1. Not to argue with you but I have a question.

I use to work in public accounting. (I quit because I hated it)

Very few accounting students make it to the Big 4 accounting firms. I don't know the ratio but you almost had to have a perfect GPA at the college I went to for them to even offer an interview to you.

My question is this, given what I said above, how can you use the diversity ratios of the general population to determine who would get grades enough to be hired by a Big 4 firm?

[KamaAina]

2. Even if that's the case, the question becomes "Why are white students getting better grades?"

since it's been established to the satisfaction of everyone except Charles Murray that no racial or ethnic group is inherently smarter than another.

[SOCALS]

3. In my class, Asian students

always had the highest GPA of all students
and I know that many of those who were interviewed by Big 4 were minorities.
However, they never got hired. In the most diverse region in the country, LA and Orange counties, these Big 4 firms manage to have a very homogenous, 90% white personnel. Just look inside their offices to see it yourself!

And it boggles my mind that Jesse Jackson and La Raza are silent on this matter. Public accounting employs 10,000s of people in California and it has the least diverse personnel and management.

[county worker]

27. Back when I was in public accounting I learned that you had to be a real a..-hole to make it to the

top.

I had to crush my co-workers so that they would not move up the pyramid and I could. I had to be willing screw people out of their money for the partners and owners if I wanted to move up.

So I can see that there is room for them to also be racists and not give a shit.

[AllentownJake]

23. I'm white

I had near perfect grades, there were plenty of other ethnic groups that had just as good of grades as I did.

[Xithras]

4. You're friend is wrong. It's not racism, it's a lack of social connections.

When you're talking about firms like the Big 4, social connections are more important than your resume. Every opening they have will net 500 resumes, and half of them will be from people who earned perfect grades at university, were top of their class in high school, etc., etc. You can be a real shark, but if you're trying to impress your way into a tank full of sharks, your sharkiness alone isn't going to do the job. You need something that makes you stand out.

For the vast majority of people, it's social connections that make the difference. You have to know someone and get a recommendation on the inside. You need to be an old college buddy of someone who works there, or a member of a social club that others attend.

One of my ex-bosses worked at Deloitte for a while. You want to know how he got the job? He found out that one of his old college classmates worked there and discovered that the guy regularly golfed at a course close to his home. He bought a membership and started playing several times a week for MONTHS until he finally "accidentally" ran into the guy. They connected, ended up playing a few rounds of golf together, and he had his dream job within a couple of months. His social connections to a respected employee were enough to get him in the door.

I should also mention that he quit after only two years. Deloitte is apparently an extremely high pressure environment. What you did last week is irrelevant. What you did yesterday is unimportant. People only care about what you are doing RIGHT NOW to make the company money. Long days, working on holidays, cancelled vacations, backstabbing, and constantly being on the defensive are the norm. Once two years passed and he had enough "Deloitte experience" on his resume to be helpful, he ran out of there as fast as he could.

[racaulk]

6. +1

I should also mention that he quit after only two years. Deloitte is apparently an extremely high pressure environment. What you did last week is irrelevant. What you did yesterday is unimportant. People only care about what you are doing RIGHT NOW to make the company money. Long days, working on holidays, cancelled vacations, backstabbing, and constantly being on the defensive are the norm. Once two years passed and he had enough "Deloitte experience" on his resume to be helpful, he ran out of there as fast as he could.

You would not believe how true this is. But I think this is characteristic of public accounting in general, not just Deloitte. That industry will absolutely chew you up and spit you out, and only the very few that thrive in that type of environment will survive. A tank of sharks is right.

My advice is to get in, get the work experience you need for your CPA certification, and get the hell out!

[SOCALS]

7. Still, how can one explain lack of minorities at Big 4 firms?

Smaller firms may be more diverse, but Big 4 is just outrageously bad at hiring minorities. If not racism, then what is it?

In the office of 1200, African Americans were in single digits! And please do not hint that minorities are too stupid or socially awkward!

[racaulk]

9. I would NEVER recommend that "minorities are too stupid or socially awkward."

Becuase I do not believe that to be true. Please do not attempt to paint me as a racist.

In DiversityInc's list, The DiversityInc Top Global Diversity Companies, PWC ranked:

#4 in overall diversity
#10 in recruitment and retention
#6 in companies for Asian Americans
#8 in companies for LGBT employees

Link: http://diversityinc.com/content/1757/article/3624/

I'm not sure what you're looking for here, but I do think your experience of lack of African American employees in one of PWC's hundreds of offices may be clouding your judgment.

[SOCALS]

12. I would not trust these rankings at all.

The most diverse place to work in California is usually the government. You have to look very very hard to find a black Big 4 auditor or tax associate!

[racaulk]

20. I work in private industry now.

Right now we have four auditors from Deloitte working in our office doing some interim testing in preparation for our year-end audits. And guess what? Two of them are Caucasian, and two are African American. Would it be safe for me to assume that, based on this single observation, that minorities are well represented in Deloitte's workforce?

No, that would be a faulty conclusion to draw based on such a small amount of evidence. I recognize that a small sample such as this (one audit team of four people) is hardly indicative of the population at large (the total auditors that work for Big 4 firms). I think the same can possibly be said for the one office of PWC that you observed.

Like I said in my original post in this thread, I don't have all of the answers. I can only lend my voice of experience from working in this industry. I fully recognize that just because my personal experience doesn't show that racism in their hiring practices exists doesn't mean that such racism does not exist. I only ask that you consider that the opposite could be said of your experiences.

Best of luck with whatever it is you're looking to find. :hi:

[SOCALS]

25. They may have African Americans but

the number is incredibly small. And you can bet that it would be students from a top school. A black student from a state school doesn't stand a chance versus his non-black peers.

[Xithras]

10. Social stratification.

Again, it's all about the social connections. How many white accountants does your friend know who actually work at Big 4 firms? Not "nod as you pass in the hall" know, but "have a beer or play a round of golf" know?

The answer to your question can be found in the answer to that question. It's not an accounting thing either. Many studies have shown that for most of us, the majority of our friends tend to be from the same economic, racial, sexual, and/or religious groups that we are from. It's sort of a self-imposed stratification. Gay people tend to have more gay friends than straight friends. Hispanics tend to have more hispanic friends than white friends. White people tend to have more white friends than black friends. Poor people tend to have more poor friends than middle class friends. It's a generalization, but numerous studies have shown that the general idea is applicable to most of the population. We tend to surround ourselves with the people who are most like ourselves, because those are the people that we are generally the most comfortable with. That's not saying that people DON'T have friends from other racial/sexual/economic/religious groups, but for the vast majority of people, those friends tend to be the exception.

This becomes a real problem when you're talking about employment in fields where social networking is key.

The problem isn't racism, per se, but a more general issue with the way humans form social groups.

[Raineyb]

13. And how does that negate the role racism plays?

How many of these clubs exclude people of color? How many people got their connections through Greek letter organizations which are widely segregated? The social connection explanation is often a result of racism not an explanation in lieu of racism.

[SOCALS]

14. Exactly!

I bet country clubs are more diverse nowadays than Big 4 offices! The very few minorities my friend saw at PwC and Deloitte were from UCLA and USC,
whereas virtually all new hires from state schools (and Big 4 hire hundreds of students every year here) were exclusively white.

[Xithras]

15. You're moving the goalposts.

As I explained in another post, there are certainly racially motivated factors influencing our social circles, and those factors are generally true of all races. I don't think anyone can question that. What the OP was questioning was whether the hiring policies of the Big 4 are racist in and of themselves. Whether the HR departments of these companies are actively discriminating against minorities. I think the answer to that question is "no".

It's really a simple problem. What do you do if you have one job opening, and five completely equal and perfect candidates who want it? Roll a D10? Now what do you do if one of those candidates includes, with their perfect resume, a letter of personal reference from one of your top employees? Are you going to roll that random die and hope things work out, or are you going to favor the resume belonging to someone recommended by a valued company employee? Most HR managers, in that position, would choose the latter.

That, on a massive scale, is how these firms handle their hiring. They never question how that employee came to know the applicant, or the history of their relationship, or the racial policies of the place they met. They simply know that Employee X has recommended Applicant Y because they're friends.

[SOCALS]

16. In this case

no wonder we had Enron and other financial scandals. The whole external audit system is rotten!

[racaulk]

21. Enron and other financial scandals are usually concealed by a small number of people at the top.

Thousands of people at Arthur Anderson lost their jobs due to the Enron fallout -- good, hardworking, honest and ethical people that had nothing to do with the Enron engagement. That catastrophe was not their fault, it was the fault of a corrupt few at the top.

Once again, you're trying to paint with a very broad brush. The actions of a few people are not indicative of the population as a whole.

[Raineyb]

19. You act as though the friend of a friend being generally one of the same color is an accident

and it's not. The segregation which generally dictates that friends tend to be of the same race is no accident. It's still a byproduct of racism. And the truth of the matter is when it comes to hiring that it is harder for black and brown people to even get their foot in the door. There was an article posted not too long ago about how people whose names sounded too black wouldn't even get an interview which is blatant racism.

It seems to me that BOTH forms of exclusion are at work and it makes no sense to push the social contact line of reasoning as though the racism line has nothing to do with it when that simply isn't the case.

[Doremus]

17. When I worked at AA&Co. resignations were rare.

Most were pushed out by the old "Up or out" rule.

After landing a plum 1st year auditor spot, few if any voluntarily gave it up. I may have seen one in my 8 years.

[racaulk]

5. Some thoughts

I don't have any answers regarding big 4 firms and its hiring practices, but I did spend a total of five years working at two different top 100 firms. I think your charge that public accounting firms, in general, have discriminiatory hiring practices is not accurate, at least based on my experience.

The second firm that I worked for, Reznick Group, was always highly ethnically diverse. I worked in my office's tax department, which had 25-30 people during my tenure. Being a white guy in this department, I found myself being part of a racial minority -- we had lots of Asian American, African American, and Hispanic associates. And the associates were not all Americans - during my time, I remember working with associates and interns from Hong Kong, Lithuania, Nigeria, Vietnam, Cuba, and Taiwan.

I would also argue that your charge of "95% white partners" may have more to do with their retention policies, as opposed to their hiring policies, as partners are typically brought up through the ranks and not hired directly. I will concede that it seemed that the majority of the folks in the upper echelons of management were typically white, in my experience. However, I think a lot of firms are at a place where a female partner is still a novelty, so even though the partner level may not be as ethnically diverse as society at large, I think the trend toward diversity is there and getting better over time.

I do want to echo a point made upthread by another poster -- public accounting sucks the life out of you. I faced total burn out after five years of that madness, and I don't think I could ever do it again! No more time sheets for this guy!

:hi:

[SOCALS]

26. It is a well known fact that public accounting

has very few minorities, probably around 8-10%, while they make around 30% of the US population. And please do not say that minorities are not interested in public accounting or they have not the aptitude. I have heard it many times before and it is nor true!

I am appalled that Big 4 have an even lower share of minorities than the profession as the whole.

[Doremus]

8. I worked for one for 8 years.

Lily white with a token person of color or two. At our office, an African American auditor did progress up the chain to management but didn't make partner. Surprise. :eyes:

[SOCALS]

11. That's what my friend saw,

and I saw it too at a firm tour! It is like you were in Denmark or Sweden: lots of blond people, who I am sure are capable individuals, but still you would expect more color at least here in California!

[Doremus]

18. Forgot to mention...

If your friend graduated 2 years ago s/he may as well hang it up.

Even scarcer than minority auditors were OLDER auditors, i.e. those who weren't offered employment following their graduating year.

It's all about cookie cutters, not rocking the boat and so forth. Tell your friend to be glad s/he escaped the pressure cooker den of hypocrites.

[SOCALS]

24. He is still in school, finishing his program

He is aware of the fact that new hires come mostly from on campus interviews and he was at 4-5 interviews with them in the past 2 years. And it is very frustrating for him to be ignored by the Big 4 just because he is not white.

[W_HAMILTON]

28. Does this mean if you were a non-traditional student, you're screwed?

If you complete your MPA and CPA at around age 30, will the Big 4 firms not look at you?

[SOCALS]

29. If you are not going through on campus interviews,

it will take a reference by a partner or manager to get in a Big 4 firm, at an entry level. Their hiring policies need a good shake up

[AllentownJake]

22. These firms should have all been shut down years ago

As a person who has conducted auditing for 7 years and was hired out of college for the 5th firm that is no longer there.

They are the purest evil. At one time they provided a service and use to society. They don't anymore. A clean opinion from one of these firms isn't worth the paper it was printed on.