February 2002

Watson Rice LLP: A Role Model in Diversity

By William Schechter, Watson Rice LLP

Affirmative action programs as far back as the Carter Administration have helped accounting firms led by talented African-Americans grow and prosper. One of the largest, Watson Rice LLP, in New York City, recently celebrated its 30th anniversary with tributes to four mentors from the Big Five that helped its founders qualify for major federal contracts.

The firm's current managing partner, Raymond P. Jones, and his predecessor, Bennie L. Hadnott (chairman of the firm's executive committee), are engaged in yet another "payback": They're working with the National Association of Black Accountants (NABA) in a program aimed at attracting African-American youth to the profession. Foundations supported by the Big Five are actively seeking to do the same thing. But despite those efforts and unmistakable advancements by minority communities across the United States, the African-American proportion of CPAs nationwide has been stuck at 1-2% for more than 30 years.

One reason for this is that families with first- and second-generation college graduates have had few role models in accounting. Another likely reason is that television has never, it seems, presented CPAs of any background as positive, well-rounded role models.

Allyn R. Adams, a senior partner in Deloitte & Touche's Cleveland office and one of the mentors honored by Watson Rice, supports this notion. Adams says that while "internal efforts to attract qualified African-American candidates by the accounting profession may be comparable to those of the other professions, external influences-such as teachers, relatives, friends, media-may tend to favor law, medicine, teaching, and others."

Watson Rice's Hadnott cites other reasons, including the following:

Bernie Milano, president of the KPMG Foundation, cites another, more subtle, reason. He says that research shows that many African-American and Hispanic young people are conditioned to believe that they cannot excel in quantitative areas, such as finance and accounting, and that family, church, and media influences tend to steer them into other fields, such as teaching and social work.

Milano also says while these first- and second-generation minority college students at integrated universities tend to sit toward the rear of the classrooms and keep to themselves, he recalls a personal experience at George Washington University when students filed in on the first day of class, before their teacher arrived. The black students selected seats in the back rows. "Their jaws dropped when they saw that the teacher was an African-American woman," he says. "By the second session, all seven of them were in the first row, actively raising their hands during question periods."

That anecdote reflects a new strategy to raise the minority presence among CPAs: developing PhDs for careers as college professors and attracting students into degrees in business administration. One program, Lead, exposes 340 minority students to business schools. Another program, Inroads, provides summer internships for thousands of minority students at 11 campuses nationwide, from Dartmouth to Berkeley. These programs are funded by corporations like Chubb, Citibank, and Prudential, and the Big Five are involved in introducing participants to the accounting profession.

William J. Reidy also mentored at Watson Rice and exemplifies individual effort to foster diversity. He devoted much of his 35-year career at Price- waterhouseCoopers, where he was managing partner of the northeast Ohio practice, to diversity issues. Last year, as an executive-in-residence at Cleveland State University, he led an inaugural program to introduce 120 students-115 of them African-Americans-to careers in accounting.

Hadnott recommends that accounting firms create internships at the high school level, provide minority scholarships for accounting majors, and develop mentoring programs at high schools and colleges. For those who complete the 150 hours credit, he calls for a minimum compensation at regional salary levels that are comparable to other professions with similar requirements. Hadnott is also concerned that stringent requirements discourage many students from enrolling in accounting courses. Adams supports scholarships and programs that encourage college faculties to seek qualified African-American students for accountancy programs and to mentor them.

Why should CPAs or their firms care about diversity and invest in such programs? Beyond the obvious, evidence abounds that-as Watson Rice's Raymond Jones suggests-diversity "simply makes good business sense." Adams notes that "our society and clients are diverse and we need to achieve similar diversity."

A persuasive example of this idea came from the Hudson Institute, whose widely circulated study on the effects of changing demographics on the marketplace concluded that, with growing percentages of increasingly affluent African-Americans and Hispanics nationwide, U.S. businesses whose workforces mirror their customers would prevail in the near future over competitors that do not.

Government-generated affirmative action programs have evolved beyond their initial goals. In the accounting field, many projects call for joint participation that includes minority-owned and operated firms. These projects benefit both large and small firms, both directly and indirectly. For example, Watson Rice's long-term association with KPMG on such joint assignments led Raymond Jones to his area of specialization, forensic accounting. He earned his Certified Forensic Examiner (CFE) credential, which qualifies him to work with KPMG on major projects such as the New York City Board of Education's fraud, waste, and mismanagement audit. His expertise recently led to a contract to monitor fraud prevention plans for the New York State Insurance Department. Jones returned the favor by subcontracting a portion of this assignment to KPMG's forensic group.

So if firms such as Watson Rice thrive under minority leadership and benefit from special qualifications based on racial considerations, wouldn't they prefer the status quo? If they do, would that promote so-called reverse discrimination, excluding nonminorities to maintain eligibility under affirmative action clauses?

This has never been a consideration, according to Marjorie Gardner, director of operations for Watson Rice: "When we have an opening, like every other company, we want to hire the best. We advertise in mainstream publications and source our candidates from the AICPA, NABA, Hotjobs.com, employee referrals, and any other channel available to us."

"Watson Rice is proud of its diversity, and though it may discourage some people from working here, we have had success over the years." Gardner notes that while the firm operates under "color blindness," qualified Caucasians who respond to its employment ads tend-for whatever reason-to decline second interviews. She adds that "minority firms offer nonminorities excellent opportunities for professional development, the ability to expand their horizons, and [the chance] to gain insight into people and cultures."

Racially diverse accounting firms are relatively few, but no exclusionary policies or bigotry is in evidence; in fact, well-intentioned government affirmative action programs, combined with cultural circumstances, appear to have limited the advance of diversity in the profession. Nonetheless, the outlook for greater diversity, based on some of the field's best and brightest, is promising.