Deloitte’s U.S. firm is making progress on its diversity goals, welcoming the most diverse incoming class of partners, principals and managing directors in its 177-year history.
More than 35% of this year’s high-ranking executives identify as racially and ethnically diverse, and more than 42% identify as female, according to Deloitte’s 2022 DEI Transparency Report.
The progress comes a year after Deloitte released its 13 U.S. diversity, equity and inclusion goals. The firm is now promoting more Black, Hispanic/Latinx, non-binary and LGBTQIA+ professionals, while giving all employees new self-ID options that allowed 7.6% of U.S. professionals to change descriptions of themselves. As part of the overall DEI effort, Deloitte also enhanced its mental health services to provide culturally relevant support.
The progress comes at a time when not only the Big Four, but smaller accounting firms and their corporate clients have made commitments to improving diversity in their ranks, especially after the killings of George Floyd, Breonna Taylor and other high-profile victims of police shootings sparked a wave of Black Lives Matter protests in 2020. But diversity at the higher ranks has been especially difficult to achieve at many companies, and the so-called Great Resignation made recruitment and retention even harder in recent years.
Deloitte has been making efforts to step up its diversity efforts since issuing its first DEI transparency report last year. “This has definitely been quite the journey for us,” said Kavitha Prabhakar, chief diversity, equity and inclusion officer at Deloitte. “Like pretty much all of corporate America, it was definitely a moment for action. We spent a good amount of time thinking through just where we were and acknowledging the state of the state.”
The second transparency report measures progress against the firm’s goals for 2025. “You have to really work on creating a pipeline for the future,” said Prabhakar, who emigrated to the U.S. from India when she was 17. “That’s what our focus has been, looking three to five years out in the pipeline.”
The firm has already come close to achieving several of the goals it set last year. One of them was to increase the number of Black and Hispanic/Latinx professionals in Deloitte’s U.S. workforce by 50%. The report shows a 43.8% increase since fiscal year 2020. Another goal was to increase the overall racial and ethnic diversity of Deloitte’s U.S. workforce to 48%, and the report shows a 46.8% overall percentage of racial and ethnic diversity in the workforce. Another goal was to increase female representation to 45% of the U.S. workforce, and latest figures indicate 44.1% female representation.
In terms of senior management, the goal was to increase the representation of racially and ethnically diverse U.S. partners, principals and managing directors to 25%. The latest report indicates that 23% are racially and ethnically diverse. Deloitte also wanted to increase the number of female U.S. PPMDs by 25%, and the report points to a 9.3% increase since 2020.
“It doesn’t end with them making partners, principals and managing directors,” said Prabhakar. “We have to invest in this cohort for continued growth and the ability to have a trajectory when they’re part of the team. As we think about future roles, how are we continuing to develop this cohort and give them opportunities as they progress?”
To be sure, some employees may grow concerned about the firm setting quotas, with the danger of provoking a backlash from those who don’t see themselves advancing and begin blaming those who are, attributing their success to meeting diversity goals. Deloitte has polled its employees about how they feel about its DEI efforts and uncovered a range of reactions.
“One-third are very aligned with this mission and completely get the journey,” said Prabhakar. “There’s one third that is aligned but not participating enough, and we continue to work on how to engage them better, how to get comfortable with the uncomfortable, giving them tools and platforms for recognizing how they can engage. And then there’s one third that’s skeptical, who think of this as a zero sum game — if there is more for others, there’s less for me.”
The firm hopes to reassure employees that the opportunities are growing for everyone. “You can simply say the representation is shifting or you can look at true headcount growth and see that there is true change for all,” said Prabhakar. “That was an important lens to help them deal with the zero sum mindset, helping them recognize that the pie is growing. … But I would be remiss to say that there’s no pushback on the focus here. Within our organization, there’s not been significant discussion of quotas because we have set goals for improvement versus an exact percentage we will be at. The representation keeps moving, but we’re trying to bring that mindset of this is not a zero sum game.”
DEI commitments falling short
Many companies and firms haven’t been following up on their DEI commitments. Less than 1% of the estimated $67 billion worth of DEI spending pledges made by 261 U.S. companies in 2020 has actually been allocated, according to a study by Creative Investment Research.
“Certain organizations are doing a better job than others in recruiting diverse individuals,” said Darryl Jackson, director of DE&I for the Institute of Management Accountants. “Where the gap lies is that after they get into the organization, we’re seeing a lot of them resigning for a variety of reasons.”
He recently participated in a roundtable with HR professionals from Fortune 500 organizations where they talked about their mentorship programs. “These are very important, but I think they’re being devalued now because they’re not good mentorship programs,” said Jackson. “They create them and just expect people to come. They have to be managed correctly. It doesn’t necessarily need to be a mentorship program. It can just be a program with some kind of advisory capacity where they have individuals these people can go talk to and be vulnerable with and really ask questions. Some organizations do it well, and some don’t.”
A separate Deloitte study found that DEI programs can be a source of value creation for many organizations.
“I see them actually doubling down on the multicultural talent that they already have because they realize it’s easier to focus on retaining and developing talent rather than constantly trying to backfill a revolving door of resignations,” said Jackson. “Organizations are starting to realize that they need to re-recruit their talent. The recruitment process doesn’t end when they hire the talent. The recruitment process is continuous. In these times of recession, employees need to upskill, and organizations need to check in with their employees to see what development and upskilling they’re looking for.”
He believes companies need to be more creative in how they recruit diverse talent. “They no longer just go to a career fair at a college or university because that’s not where the talent is anymore,” said Jackson. “They’re looking at people with Amazon Web Services and Google training certifications because they have turned out to be more suitable for the roles they were looking for than the college graduates. The war being waged on talent is still out there.”
The IMA has conducted DEI research with the California Society of CPAs and other organizations including the National Association of Black Accountants, the Association of Latino Professionals for America, the National Society of Black CPAs, the International Federation of Accountants, and others, and saw some common themes.
“There needs to be some sort of collective action,” said Jackson. “A lot of organizations are doing things individually, and that’s just not moving the needle. When you have collective action, all of the burden of the spending doesn’t rely on one organization. It’s a group of organizations working for the common good. They get to utilize the different resources of the different organizations. With collective action, they can lessen the spending because there are more organizations involved in the common good.”
He believes DEI initiatives need to address exposure, access, development and recognition to achieve gains. “As a DEI professional creating DEI initiatives programs, we really have to be cognizant of what they’re accomplishing,” said Jackson. “What we really don’t want to do is spend resources on something that’s not moving the needle or not impacting the organization or the profession. At the IMA and several other organizations we work with, we’re really being deliberate about what impacts we are promoting with our DEI programs and initiatives. We want to be sure that we don’t waste resources on things that don’t move the needle. Collective action is key and I really am proud of the work we do in partnering with other organizations that have impacted other stakeholders in the profession so that we can move the needle in the future.”
The overall DEI effort could be helping with retaining younger employees who are worried about their opportunities for advancement, especially during the era of the Great Resignation, and Deloitte has been tracking employee attrition and retention among specific demographic groups.
“With the degree of movement between organizations that they have experienced in the last couple of years, the focus has been to understand where there is parity versus where there’s not parity,” said Prabhakar. “In the proportional attrition numbers that we have published, we are looking to see where there is parity and where there isn’t. Our Black attrition would be more than overall attrition, but our Hispanic/Latinx attrition is higher. Recognizing that element has been important. Instead of just saying there is no attrition, how much is the pattern similar or different for each of these cohorts? And that speaks to experience. What is the experience these individuals are having with the organization?”
The firm has also been tracking the numbers in different practice areas and seen the most movement in the consulting field, especially in technology.
To retain diverse professionals, the self-ID option can help them feel more included at the firm. “Not only do people have to see themselves in the options, but they have to feel that they can trust their employer to share that data,” said Prabhakar. “When you look back in time, a lot of companies simply use what the federal government requires as options. We’re getting ready to roll out self-ID 3.0. We really are trying to be practitioner led to understand how people feel with these options.”
The self-ID option has been refined to be more inclusive when it comes to gender identity, sexual orientation as well as race and ethnic origin. When the firm added “Middle Eastern, North African” as a category under race in an earlier version, over 1,000 practitioners chose that option.
“We have a pretty significant Asian population,” said Prabhakar. “I think it’s close to 25%. We are now disaggregating that data to better understand East Asian, South Asian, Southeast Asian, because it’s super important to recognize when the cohort becomes larger. We say our identities have extraordinary value, and nothing should stop us from expressing them.”
In addition to diversifying its employees and upper management, Deloitte has also been looking at diversifying its list of suppliers when it puts out a request for proposals.
That kind of information can also help Deloitte advise its clients on improving their own DEI efforts. Over 350 clients have asked to meet with the firm to better understand how it reports DEI progress against its goals.
“For every business process, from compensation to performance management, we’re bringing an equity lens,” said Prabhakar. “That’s what creates sustainable change and makes it part of the DNA of the organization versus just a point in time focus by the leadership team to change numbers.”