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1996 Competitive Advantage Optimas Award Profile Deloitte & Touche LLP

April 1, 1996
Related Topics: Corporate Culture, Competitive Advantage, Diversity, Featured Article
It's not as if Deloitte & Touche hadn't started out with the best intentions. Back in the mid-70s, the Big Six accounting firm acknowledged the women's issue—basically, that it pretty much had no women. So it began hiring more women and dutifully placing them in the pipeline toward partnership, a journey that takes a decade or more. By the mid-80s, 50% of its new hires at the professional level were women.

The firm then kicked back and waited for women to spill out at the other end of the pipeline, making bids for partnership. It knew 1991 was going to see a big increase.

Instead, it saw a decline. Apparently, Deloitte & Touche LLP had a leaky pipeline. "We're pretty good at numbers, being an accounting organization, and the numbers here were inescapable," says J. Michael "Mike" Cook, chairman and CEO. "Our biggest investment as a firm is our people. You can't employ half your population and have them leave prematurely and not have a very bad business result." For a company that invests more than $1 billion a year in its people, this was bad news. Deloitte & Touche was staring at a big financial loss. But just as importantly, it was in danger of losing its competitive advantage—high-talent accountants.

The problem is all too common these days. Women currently make up almost half the U.S. workforce. Fifty-four percent of college-degree holders are women. Yet we continually see women thwarted in their advancement attempts: According to New York City-based Catalyst, a nonprofit organization dedicated to the advancement of women in the workplace, women make up less than 5% of senior managers at Fortune 500 companies.

What isn't so common these days is the intense attack that Deloitte & Touche launched against the problem. The firm ferreted out the issues, set up its goals and lit a fire underneath everyone's seats. It devoted money, time and the company's best people to patching up its pipeline. By the end of 1995, the company had numbers to back up its zeal: 23% of its senior managers were women, and its percentage of women admitted as partners rose from 8% in 1991 to 21% last year.

These numbers reflect a lot of effort and struggle. The numbers represent nothing less than a metamorphosis of Deloitte & Touche—one that continues today, but began back in 1991 with the simple question: Why are women leaving us?

A task force uncovers some unsettling news.
The accounting business in general tends to weigh heavy on the testosterone. For decades upon decades, it has celebrated its successes in male-dominated clubs, settled its deals on the links and stayed safely in its old-boys networks. So, when the issue of female turnover was first slapped on the discussion table, a lot of the men at Deloitte & Touche assumed it was a genetic thing: Women must be leaving to start up families. Cook himself even admits to this first assumption. His own wife chose to be a stay-at-home mom for the couple's three children.

Still, the firm was determined to find out for sure. In early 1992, a group of 20 employees—mostly partners—assembled to form the Task Force for the Retention and Advancement of Women, which would study the company for the next year. "The main objective was quite simple," recalls Ellen Gabriel, partner and task-force member. "It appeared that women were leaving the firm at a faster rate than men, and we were just trying to understand why that was."

The task force first looked up personnel records—poring over promotion rates, compensation comparisons and assignment equability. Where were they losing the women? Upon studying turnover numbers, the group soon realized that the higher women rose in the company, the more likely they were to drop out. Few women were staying the 10 to 12 years necessary to become a partner. Some of the highest turnover rates were at the senior manager level—the last stop before partner.

The figures showed where the problem was, but not why the problem was. For that answer, Deloitte & Touche looked to Catalyst. In small focus groups of all men or all women, Deloitte & Touche employees disclosed what was on their minds without fear of reprisal. Women spoke of the frustrations in getting ahead, the discouragement of continually being passed over for high-profile assignments, and the disappointment at a lack of mentoring and networking opportunities.

Both men and women expressed concerns about the work-life balance at the firm. They felt long hours on the job and frequent weekend travel stole too much of their personal lives. To further refine the point, Boston-based Charles Rodgers & Associates, the research arm of Work/ Family Directions, came on board to survey employees. The results reaffirmed the focus-group comments: 60% of respondents reported the firm was failing them in balancing their work and personal lives.

Perhaps most illuminating were the conversations Catalyst had with 40 high-potential women who had left the firm. More than 70% were working full time—elsewhere. Almost 20% had part-time or reduced-work arrangements at other companies. Only a handful were caring for their children full time (contrary to the original assumption about the high turnover), and many of these reported they planned to rejoin the workforce before long. "We told [the outside groups] to take a hard and critical look at us and let us know what they thought," says Jim Wall, national director of HR. "And they did. We didn't necessarily like what we heard. But it clearly signaled to us that we needed to do some major, major work. I think it gave us the understanding and knowledge that ultimately translated into the commitment to get some things done."

Problems identified, plans formed.
By the end of 1992, the task force had gathered enough information to highlight Deloitte & Touche's three problem areas:

  • A male-dominated culture, particularly in senior leadership and partner positions, which perpetuated stereotypes and assumptions about women
  • Limited perceived advancement opportunity for women, due to a lack of mentoring, role modeling, development and networking chances
  • A companywide need for a more balanced work-life approach.

When all the smoke had cleared, it wasn't just the men on the task force who had gone through an eye opening. Gabriel, who had risen to partnership during what other women employees considered a difficult time, remembers being a bit surprised. "Coming up in the firm, I'd had great mentors, and I'd had great assignments. Obviously, I've succeeded and stayed, so I think I might have been one of the, 'lucky ones.' Our research indicated that for a lot of women all those things didn't come together."

Another surprising discovery was how wary most women were of assuming a leadership role in forwarding the concerns roused by the task force. Although the firm needed its women partners to take a stand, many were a little gun-shy. They'd been trying to blend in—to not make their gender an issue—for so long, they weren't exactly ready to jump into the spotlight. "Many were reluctant," says Cook. "They were philosophically and emotionally committed, but professionally, they were concerned.... We have lots of those flavor-of-the-month kind of initiatives, and people were looking to us to see if we were really serious about this."

Maybe it was Cook's and top management's forceful platforming of the program that convinced the doubtful. Karen Graci, director of HR for the "Carolinas cluster" in Charlotte, North Carolina, says she's continually impressed by the CEO's passion for the issue: "When you have a person like Mike Cook who's completely supportive of an initiative like this, people listen; people pay attention. He demonstrates his [commitment] every day in everything he does. We don't just have the [sign-off] initials of the chairman and CEO; we have his ongoing, very visible and highly vocal commitment."

Whatever made the difference, the Initiative for the Retention and Advancement of Women was launched in April 1993, with a mission to make recommendations and guard their outcomes. Gabriel ascended to a position as national director for the initiative; Graci took on a full-time job as "chief of staff" for national HR, a liaison between the women's initiative and human resources. "For me, personally, it was the type of opportunity, to use a clich... , that comes around once in a lifetime," Graci says. "It was the opportunity not just to impact our firm, not just to impact the profession, but to impact all professional women."

To provide further support, the Partner Implementation Network provided an internal group of partners, at a variety of geographical locations, to take responsibility for their area-office goal implementation. In addition, former U.S. Secretary of Labor Lynn Martin was enlisted to offer some outside objectivity by chairing the Council on the Advancement of Women. The council's mission: to advise the firm along the way in fulfilling the initiative's recommendations, as well as to offer new goals (see "Would You Invite the Creator of the Glass Ceiling Commission to Inspect Your Company?").

Some of the initiative's recommendations included:

  • Develop programs to enhance working relationships between men and women
  • Enhance career opportunities for women with mentoring, networking and career-planning programs
  • Support the balance of multiple commitments
  • Communicate change
  • Develop business planning and HR goals with definable criteria to measure progress.

Although the "communicating change" goal was intended to focus internally, Deloitte & Touche raised the stakes a bit by launching an aggressive external campaign. It was one of the first firms ever, for instance, to publish a formal policy detailing its plans to retain and promote women to senior management. "We were willing, from the beginning, to expose ourselves externally, to make our statements of what we were going to do public," says Wall. "Strategically, we did that to hold ourselves accountable internally. The view was, if we told the world what we wanted to do, we couldn't back down. We had to deliver."

The first agenda item to deliver was a shift in Deloitte & Touche's cultural mindset. Within one year, the company pledged to have all management professionals educated on gender dynamics in the workplace. For a 16,000-employee company, this was no simple task.

Deloitte & Touche makes good on its commitment.
Everyone involved in the initiative agreed that the first step to change was to open a dialogue in which men and women could freely exchange views and feelings. The group set up a series of conferences called "Men and Women as Colleagues," to be offered throughout the year (at a price to the company of approximately $3 million). Attendance at one of these two-day sessions was mandatory for all 5,000 managers and partners.

During the two days, attendees explored gender differences and assumptions, how these assumptions could hurt women and the company as a whole—and what to do about them. For instance, one of the issues addressed was the diffusion of high-profile assignments and why these assignments so often went to men. The assumption many men admitted to was that women wouldn't want the traveling and extra work linked to this kind of trophy assignment. Obviously, this type of generalization kept women from getting the skills they needed to advance in the organization. But it also hurt the firm itself by limiting the pool from which top clients could pick. The solution? "When we got into it, women told us directly that they didn't want someone else making career decisions for them based on perceptions," says Cook. "They said, 'Don't make those judgments for me.' That was a pretty good lesson for us."

Another problem was drilled home less directly. Each workshop had 24 people attending, and the task force had aimed to have 30% of each session's participants be comprised of women. Unfortunately, the firm didn't have enough women managers, so many had to attend twice. "That, in and of itself, highlighted the fact that there was an issue here," says Graci.

But most important was the general discussion, just getting an exchange going. Gabriel says the sessions provided insight unlike any the firm had before. With 90% of Deloitte & Touche's training focused on either technical or management education, offering a forum in which to just air an issue was a welcome—and much needed—change. Cook, who attended several workshops during the year, remembers the atmosphere surrounding the conferences as bittersweet. It was good to hear such frank reflections, but the stories many women told were disturbing. "Most of what I learned was that in many respects, we were a very difficult place for women to work—uncaring and not very sensitive. I've had my whole life in this organization, as most of our people at senior levels have, and to hear that this is the kind of place you have is not good news. On the contrary, it makes you feel pretty bad."

The conference, of course, was just one of the tools used to change the environment. But it was a powerful one. Many men, for instance, realized for the first time that they unconsciously had mentored only men. Many women realized that they hadn't assisted lower-rung women with enough development assignments. Most participants were eager to take on the next steps. "Did we have 100% behavior change coming out of it?" asks Graci. "Absolutely not. But significant behavior change? Yes."

With a more informed eye, Deloitte & Touche was now ready to move on to address women's opportunity issues. To assist with mentoring and networking, both internally and externally, Deloitte & Touche partnered with AT&T to set up a series of Executive Women's Breakfast Forums in key cities in the eastern region, with local practice offices replicating the idea across the country.

Succession and formal career planning for women also received extra attention. In 1993 and 1994, the company conducted annual assignment reviews to make sure women were receiving an equitable share of high-profile engagements. Deloitte & Touche began seeing women management groups sprout up, in which women would assemble to identify issues in their own offices, as well as to provide another opportunity for networking.

In addition, the company has made a commitment to actively and consciously consider women for higher-echelon openings. "Any time there's a leadership position that comes open or a committee assignment that's an important development opportunity, we make a concerted effort to have women on the list," says Gabriel. "They might not get the positions, but we've forced the issue that women at least have to be considered. Frankly, that's resulted in a lot more women in leadership positions today."

Graci feels that her move into the HR directorship was largely due to the new attitude at Deloitte & Touche. The company assisted her spouse in his job search in Charlotte, and the position gave her more work-life flexibility—the third area reported in need of improvement, from both men and women.

To assist with the balance, Deloitte & Touche was offering or added adoption assistance, elder-care consultation and referral, child-care resource and referral, back-up child care and flexible work arrangements—including reduced hours, flextime and parental leave. But that didn't really solve the problem. Despite this abundance of flex arrangements, there were few takers. "We had what we thought were some pretty great programs," says Cook. "They looked good on paper. We found we had basically the right programs, but not the right culture to support them." The problem? Those who accepted reduced work hours—usually women—soon discovered they were trapped in stalled careers.

To jump-start the program, the task force tinkered with the concept of flexible work, opening it wider to include almost any arrangement that would give an employee more control over his or her time. Propositions included reduced workloads, compressed workweeks and telecommuting ventures. The new environment hinted that these were acceptable arrangements. "It's OK now to say, 'It's 2:00, I'm going to my child's baseball game,'" says Wall. "It used to not be OK to say that. Hours worked is not as important as value added now." The firm backed this up by closely monitoring employees who accepted flexible arrangements—men as well as women—to ensure their careers stayed on track.

Progress report: Now and 10 years from now.
When the Task Force released its recommendations in 1993, it hoped to meet two major goals by 1996: First, that Deloitte & Touche would have quantifiable improvements in the retention and advancement of women; second, that high-talent women will have successfully made use of flexible work arrangements. How did they do? They should be proud.

First of all, the cultural change needed to make the company more woman-friendly has occurred firm-wide. "Whenever we make an assignment or think about a leadership position, we don't have to tell people to make sure women are represented," says Gabriel. "People automatically are asking themselves if they have a good balance, whereas in the past you could put together [a candidate list of] 10 white males and no one would have thought anything of that."

The gap in managerial turnover in the past three years has decreased significantly—by 3.4% for managers and 8.6% for senior managers (the last position before partner). The firm is now targeting senior levels (in which turnover has lowered by 1.4%) to make further gains. In addition, more women are advancing: In 1995, 21% of partners admitted were women, compared with 8% in 1991.

"We've been able to retain more of our high-talent women," says Wall. "That's the bottom line. It's nice to see those women who may have given up and gone someplace else stay here and help us make the change and be part of the solution. To see them advance and prosper is pretty rewarding to me, given that I'm an HR guy." One less-planned by-product of the initiative is that the firm actually is attracting women—it's right at the top of the Big Six. Graci recently surveyed a group of candidates who'd been extended an offer of employment at the firm. Of the 750 people surveyed who'd accepted or declined the offer, 98% of women and 88% of men commented that the initiative had a positive influence on their decision. This attitude has spread to the university level also. Notes Council Chair Lynn Martin: "When our folks go on college campuses, the say it's a real advantage in trying to lure the top talent. We thought it would affect young women, but the recruiters say it equally affects young men. They want to be with a firm that's progressive and growing, and that's the kind of image surrounding Deloitte & Touche."

As far as the firm's retention efforts go, it may be the flexible work arrangements that have had the most impact. From just three years ago, when literally almost no one at the firm used flex schedules, the company has seen the rate explode to 800 employees (100 of whom are men) taking advantage of the offering. In 1995, two women were admitted to partnerships on reduced-work arrangements—a practice formally verboten. Graci now speaks of a recurring conversation theme: Women continually tell her that they would have left the firm if not for the flexible arrangements. At a meeting this past summer, a new partner approached Cook to talk of her appreciation of the firm's shift in attitude. She was one of the 40 women interviewed by Catalyst after leaving the firm. She had been so impressed she returned on a flexible-work arrangement.

Now almost everyone concerned agrees continued success depends on continued momentum. Communication plays its part: The company fervently shares success stories—improved statistics, individual profiles, anything to keep enthusiasm up. This isn't always easy, particularly now that the company has passed the more programmatic stage.

One current strategy to keep the issue alive is the development of accountability measures to hold people at local levels responsible for progress—judged by the numbers of women in leadership positions, turnover rates and promotion rates. Individual's evaluations will reflect success in this area, and compensation will be meted out accordingly. The firm deliberately avoided instituting such measurements in the beginning because it was afraid people would be more obsessed with numbers than actual change. "Accountants are very good at measuring things and seeing that things come out as measured," says Cook. "We thought that was the wrong answer, that if at the start we set out percentages, we'd get there, but for the wrong reasons. We'd be making it happen instead of it happening because we were doing the right things. Now we're ready."

Where does Deloitte & Touche want to be in the future? It has three goals set to meet by the year 2000:

  • Women will be represented at all levels in close proportion to their representation in the labor pool
  • The firm will have the opportunity to choose between several qualified men and women for leadership positions
  • The firm's ability to develop and maintain women professionals will have enhanced the productivity and quality of its client service.

Beyond 2000, however, is there a future for this initiative? The firm hopes that in the long run, there will be no need. "I know it has got to go another 10 years before we really bake [the message] in, and society bakes it in, because you can't disconnect the two," says Gabriel. "We may be getting to the point in which we're really leaders in this thing, but without societal change, we'll constantly have that tug of the rest of the world behind us. That's hard."

Cook also hopes the program renders itself unnecessary, that one day soon, no one will need an initiative to remind them—that equality and advancement of women in the firm would just be a part of doing business. "I think that would be the ultimate success," he says.

Now, the overriding atmosphere at the firm is that of pride. Deloitte & Touche blazed a trail for its women several years before the other Big Six firms instituted similar programs. Professionals at the company are pleased to wield the many calls received from other organizations, asking for guidance in starting their own initiatives.

"I'm constantly amazed that we haven't missed anything," says Gabriel. "Could we have executed better? Sure. There are some things we might have done slightly differently. But by and large, we got it. We got it pretty right, and that amazes me."

No, the leaders at Deloitte & Touche aren't going to kick back again any time soon. But you may catch them pausing for a moment to enjoy their victory.

Personnel Journal, April 1996, Vol. 75, No. 4, pp. 56-68.

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