As a result, these topics will become part of the normal course of business discourse in 2023. More specifically, here are five ESG themes that will be on the horizon this coming year:

1. ESG takes two steps closer in becoming just “business”

At its core, sustainability is about using fewer resources — natural, financial, and human — to generate increased efficiency and effectiveness in business performance, while reducing risk and identifying leveraging opportunities. John Friedman, Managing Director of ESG at Grant Thornton, advocates for the idea of calling sustainability “business” and reframing it in that way, because “no matter what you call it, it is just smart business to understand and manage those things that are levers for attracting more customers and investments [and] engaging your workforce, which all drive profitability.”

To underscore that point, a recent Deloitte study found that more than half of executives said they anticipate benefits from enhanced ESG reporting, including increased employee retention (with 52% of survey respondents citing this as a benefit), improved return on investment (52%), stronger stakeholder trust (51%), elevated brand reputation (49%), and reduction in risk (48%). Indeed, Infosys research found a strong correction between ESG and financial returns and realized financial benefits, including the lower weighted average cost of capital, according to McKinsey & Co.

2. Return to office is so 2022

Hybrid work is here to stay, and employees continue to crave flexibility. In addition, there is emerging evidence that remote working does not automatically mean a lack of engagement based on recent research of metadata gathered from virtual meeting platforms from 10 large global organizations, spoiling one of the major arguments for bringing employees back to the workplace immediately.

3. Employees still maintain an advantage over employers in major markets, albeit a smaller one

The tight labor market is likely to continue in major markets, despite the expectations of a recession in the U.S. and Europe in 2023. A key factor behind this is that labor force participation rates in the U.S. and in Europe continue to shrink over the long term. Further, attracting retirees back into the work force and shrinking net migration rates in the U.S. and the European Union are unlikely to fill in the gaps.

Moreover, one-third of European workers surveyed in mid-2022 said they were expecting to “quit their jobs, even amid the destabilizing conflict in Ukraine, rising inflation, and [as] growing fears of hiring freezes and job losses have created a difficult set of conditions for companies.” Against this backdrop, the European Commission is seeking to attract and retain foreign talent in the region through the Skills and Talents Package, a set of operational and legislative proposals to attract highly skilled foreign individuals, that was established last year.

4. Power skills get the attention of corporate boards

There is a growing need in the nation’s workplaces to rebrand so-called soft skills and instead refer to them as power skills, which can be key to motivating and engaging high-performing teams consistently, especially in the aftermath of the pandemic. In fact, “executives and shareholders are now crystal clear on the value of the human side of leadership, meaning the capability to connect with others, show empathy and compassion, be inclusive and resilient, and excel even in uncertainty.” As a result, boards of directors now want even more involvement in workforce issues.

5. The “S” rising in importance

The momentum of the human side of business has been building since early 2020. In addition, elements of the “S”  are quickly becoming a key success indicator of an ESG strategy. These include workers’ well-being, executive pay increasingly being tied to diversity, equity & inclusion goals, and pay equity and transparency, according to Brian Bueno, ESG Leader at Farient Advisors.

Jenn Ramirez Robson, Vice President of Employment Services at disability inclusion nonprofit Northwest Center, and Gayatri Joshi, former Executive Director of the Law Firm Sustainability Network and Partner at Vorgate Legal ESG Impact, both say that pay transparency and equity are emerging as issues of increasing importance, even as jurisdictions enact additional laws.

In fact, concentrating on the individual well-being aspect of ESG highlights other areas of ESG, such as a critical focus on the environment, Joshi explains. “When we can give respect and equity to all people, the S paradigm will often shift to support E.”

One aspect of how society gains greater awareness of environmental sustainability is through its impact on people, she adds. “When we don’t have equity, we don’t have equal power and choices, and it can translate to whether you can afford to live in a place free of pollution and climate risks or affording healthy food. It’s one of the reasons why the S is so important — we need all those stakeholders to have power and have a say.”

As we enter 2023, business will continue to become increasingly human-centered, and as a result, ESG and workers will keep moving to the forefront, gaining critical attention and importance throughout the coming year.

We spoke to Marsha Huber, Director of Research at the Institute of Management Accountants (IMA), and a pioneer in this emerging area of study since 2014, about the key findings from her neuroaccounting research.

Understanding the brain & how accounting expertise is developed

In the beginning, a novice learner, such as an accounting student, has a lot of technical knowledge and neurons in the brain that contain bits of knowledge. However, these neurons have not yet developed into neural networks that enable learners to connect the dots and weave concepts together. “A novice auditor can follow checklists, but it takes a few years for the neurons in the brain to form networks to fully grasp the knowledge to the point where they can tie concepts together that they could not have done as a novice,” says Huber.

As accountants build their expertise after 10 years in the profession, the neural pathways expand and grow together. This is why an audit partner has the ability to forecast potential problems and determine mitigating plans and actions before they occur.

Huber’s electroencephalogram (EEG) studies of the brain with accounting students and their ability to identify relevant and irrelevant financial accounting terms provides proof. The novices’ brains did not recognize accounting terms that did not fit within a particular financial accounting schema. The more experienced students’ brains, however, did identify the irrelevant terms despite not being asked to do so.

Key takeaways for team managers & accounting employers

By using the insights from neuroaccounting, accounting team managers and accounting industry employers could maximize team performance and engagement among their professional workers. Some of these key concepts include:

Understand learning is nonlinear and grows in spurts — The basics of learning are irregular and vary among learners. Indeed, it takes time to learn, and the brain also learns in context. A novice may not be able to apply learning to different contexts, whereas an expert can. In addition, a learner’s knowledge grows in spurts. Learners often forget what they initially learned, but as time goes by and the brain makes better sense of things, the learner will level up.

Learning can occur during a class for one person, when working in a group for another, and still, working independently for someone else, according to Huber. As knowledge develops in learners, accountants can experience mini a-ha moments when new knowledge breaks through to the conscious mind from the subconscious mind. Insights tend to come when not actively working on the problem.

Increase the creation of “flow” time — Huber recommends that accounting employers create opportunities for employees to experience flow. “Because of neuroscience, we understand that being ‘in the zone’ or ‘flow’ can produce exceptional output,” Huber explains, adding that this practice and bring amazing feelings of energy and focus to work.

Activities that enable flow are having no-meeting days and taking breaks, such as siestas, in the afternoon. Employers should allow employees to block off uninterrupted time to create time for flow.

Investing in time for rest allows for incubation, where neurons can figure out better solutions and develop the neural networks of expertise. In a study that Huber conducted, she found that accounting students napped more than professionals (and other students), hypothesizing that they needed to replenish the energy they expended while learning complex content.

Learning on the job is a recipe for success for accounting professionals, of course, yet it also makes sense to remove the stigma of napping and allow for incubation and the neural networks in the brain to build expertise from the learned experiences during the day.

Understand the brain science of manipulation on accountants’ ethics and decision-making — Finally, understanding the implications of neuroscience indicates that some accountants are more prone to being manipulated than others. “Mirror neurons” in the brain unconsciously will cause some to mirror or imitate the actions of others.

This has implications for the accounting profession. Researchers studied this phenomenon in controllers. In essence, because of the way the brain thinks and functions, friendlier controllers could be manipulated more easily than unfriendly controllers. Controllers that mirrored other people were more likely to make questionable ethical decisions when pressured by others.

Managers of accountants also benefit from neuroaccounting in team assignments — Huber highlights the key takeaway of her work: That managers need to understand better how their teams are wired and play to each team member’s strengths and preferences through four profiles, which are:

1. 1. 1. Clarifiers ask a lot of good questions to get the group moving in the right direction from the start;
      2. Ideators like to brainstorm and explore new ideas;
      3. Developers identify pros and cons and enjoy developing mitigation plans; and
      4. Implementers prefer to focus on execution.

To put this into practice, managers could give new problems to clarifiers to clarify challenges, then, hand the challenge to ideators to brainstorm solutions, who send potential solutions to developers to analyze pros and cons and recommend a way forward to address the problem, and finally, hand it off to the implementers to execute the plan.

As an advocate and researcher in neuroaccounting, Huber says she hopes that an increased understanding of how the brain learns will enable more efficient training practices and help to close the talent gap in finding employees for current entry-level roles in the tax & accounting profession.

“We aren’t using neuroscience to train our people at all,” Huber says. “And if we used neuroscience and understood it, people would learn better, and we would teach better.”

These preferences can be attributed to generational or gender differences, personal style or cultural preferences, individual reluctance to stray from their comfort zone, or feeling for better work/life balance.

If it was not clear before, the conditions and restriction placed upon workplaces during the global pandemic exposed the truth that the mindset of only one way — no options — is neither fair nor ultimately workable. Leaders need the ability to manage people with unique identities and from different generations and holding different performance capabilities. Then, leaders need to customize their interactions to each person’s uniqueness.

In the past, workplace norms were changed most quickly when clients demanded it, such as having women in firms on client teams and in leadership roles, or more recently, for flexible work arrangements. In general, with notable exceptions, clients have tended to be more open to flexibility on how and where professionals work and to diversity and inclusion factors, including generational preferences, than have their outside firms.

Carefully thought out approaches by practice leaders, managers, and the direct supervisors of matter and engagement teams within law and tax & accounting firms can help fuel the feeling that each individual belongs in the organization.

Working through the hybrid challenges

Not surprisingly, hybrid work adds complexity to internal relationships, especially those meant to serve and build connections with clients. Physical limitations — such as not being seen in the room and less opportunity for casual and spontaneous conversations — will decrease some professionals’ opportunities if not proactively dealt with by management. In particular, limits on physical proximity can lead to “familiarity bias” and “proximity bias,” which can lead to an out-of-sight, out-of-mind attitude from firm leadership when assigning work.

Those professionals working virtually also can have fewer opportunities to share their perspectives. That means that intentional effort must be made by managers to ask for their feedback during team and group meetings.

Norms around professional standards can also get murky over time, especially if there is no intentional scheduling of coaching, training, mentoring, and apprenticeship for business development. Without these career advancing practices, employee expectations and any desired upskilling can suffer because employees have fewer informal opportunities to develop relationships internally at the firm and with clients.

Actions for leaders & aspiring leaders

How leaders and managers can resolve the tendency to push employees back to pre-pandemic norms and mindsets that no longer serve personnel and firm goals is a necessary question with complex answers and a variety of related concerns over where and how work gets done. Some differences can raise strong emotions, including: the differing needs and desires among parents and non-parents; and among those workers who enjoy the camaraderie and nurturing relationships of an in-person workplace and those who don’t care about that as much.

Of course, the question of how those employees who are new to the firm, especially newly minted lawyers, can acquire the needed orienting and mentoring is vital, as is how they can make themselves and their skills known to the more seasoned lawyers. For many, it’s not a generational issue as much as it’s being driven by external motivations and the other factors.

To create better outcomes, law firms and tax & accounting firms need to increase their investment in developing managers at all levels. Daily actions of supervisors, such as using team norms for engagement, seeking multiple viewpoints during group settings, and ensuring team members are accountable all should be daily behaviors. Consistently practices, these behaviors can go a long way to establish productive connections and effective micro-cultures of collaboration and respect among their team members.

Tips for leaders and managers

There are several actions and changes in behavior that leaders and managers can undertake now to gauge the work preferences of their employees, including:

• • • ask questions to establish a more accurate view of preferences and needs without assuming that one size fits all;
    • conduct internal research on the expectations and wants of each generational cohort and level of hierarchy through one-on-one conversations or short surveys if possible;
    • encourage cross-generational discussion because the time spent will pay off in many essential ways;
    • assemble a multigenerational group of leaders and high potential professionals to have candid discussions in an environment of psychological safety; and
    • agree on a short list of desired leader attributes.

Importantly, law firms and tax & accounting firms need to realize that their leadership is situational and revisiting the needed leadership attributes and policies every few years (if not more frequently) is a good idea.

While the impacts of the still on-going pandemic are still being felt, adjusting to living with these changes long-term requires a mindset from all generations. Simply demanding that everyone returns to the office full time is not a workable strategy that will allow firms to retain their most desirable talent. Instead, showing an openness to changing needs is most likely to produce the kind of work environment that sustains and retains valued talent and is productive and profitable long-term.

Yet, despite all of the relatively negative workplace trends covered, the results from a Thomson Reuters Institute pulse survey taken in August didn’t uncover the depth of negativity among younger workers employed at tax & accounting firms the media would have you believe. In fact, more than half of all young workers surveyed in the US and Canada reported that they are highly satisfied across a number of workplace factors, including: i) individual factors such as a feeling that I can be myself at work, opportunities for growth and career progression, flexibility, and a feeling that I am treated fairly and with respect; and ii) firmwide factors such as their firm’s collaborative culture, current leadership, and direction and strategy.

Firm Satisfaction

Diving deeper into the data, you can see some differences in the top satisfaction factors between the US and Canada. In the US, for example, the top drivers of high satisfaction were a mixture of individual and firm factors, with individual factors sitting in the first and third spots. A large majority of respondents (79%) said they were very satisfied with the feeling that I can be myself at work; and 76% were very satisfied with the idea that I am treated fairly and with respect — and 78% said they were very satisfied with their firm’s reputation.In Canada, on the other hand, the top drivers of high satisfaction were solely individual factors — I am treated fairly and with respect was cited by 76% of respondents and flexibility was cited by 74%.

More consistency existed in the areas that were less satisfactory across the US and Canada with just over half of respondents saying they were highly satisfied with reward and remuneration and the firm’s strategic direction.

When respondents were asked in an open-ended question about what they like most, colleagues and clients were at the top of the list, with 40% of US respondent saying that and 30% of Canadian respondents. Not surprisingly, the second most popular factor that young accountants liked about their accounting firms was flexibility in the US, and the autonomy and the type of challenging work in Canada.

Drivers of flight risk

Flight risk among young accountants was significantly lower than their peers in the legal profession. The flight risk of accountants is about 25% to 28%, while the average flight risk for law firm associates is about 46%.

Interestingly, while drivers causing employees to move in the US and Canada are somewhat consistent across broader, cross-industry employment trends, it did vary for those young employees at accounting firms in the US and Canada. For example, compensation, lack of career progression, and unhappiness with firm leadership and firm strategy topped the list of reasons to leave your current firm for young employees in accounting firms in the US. And compensation, unhappiness with culture, and a lack of support from managers were the key reasons to leave among young accountants in Canada.

Recommended actions for employers 

Of course the challenge for accounting firms in both the US and Canada, especially those that want to retain the next generation of accounting professionals is finding ways to turn these insights gleaned from the survey into positive action, such as:

Double down on strengths — Being treated fairly and respectfully was a top area of high satisfaction for accountants in both the US and Canada. Fair treatment is a strong indicator of employee retention and is a disincentive to for young workers to leave their current employer. Indeed, it has been widely reported that among younger employees the thought of “being treated fairly and with respect was even more important than their income.”

Further, young accountants see authenticity at work as a strength for tax & accounting firms, and again, this is a strong factor in employee retention. Indeed, more authentic workplaces produce better retention and more productive employees, according to the Society for Human Resource Management.

Young accountants see authenticity at work as a strength for tax & accounting firms, and again, this is a strong factor in employee retention.

Finally, Canadian accountants valued their flexibility and saw it as a strength of their employer. Therefore, continuing to promote flexibility in terms of where, when, and how work gets done will encourage longer tenure by young employees at tax & accounting firms.

Increase the effectiveness of firm leaders and managers — If there were any actions for tax & accounting firms to address based on the fact that 25% of young accountants remain a flight risk, it would be to focus on ways to increase satisfaction with firm strategy, as well as with firm leadership and management.

Communicating and articulating the firm’s strategy from the top of the organization down to first-line managers on a consistent basis so that each individual can see how their role contributes to the overall strategy is vital to this process. In this way, employees — especially younger or new employees — can learn and understand the firm’s strategy while seeing how firm leadership and managers are conveying it. “Managers need to create accountability for individual performance, team collaboration, and customer value,” according to management consulting firm Gallup. “And employees must see how their work contributes to the organization’s larger purpose.”

Likewise, improving manager effectiveness by training managers to hold conversations about their life situation, strengths, and goals is a key mechanism for improving the employee experience and engagement, and avoiding burnout. The “best requirement and habit to develop for successful managers is having one meaningful conversation per week with each team member — 15 to 30 minutes,” according to Gallup.

These investments of time and energy will help tax & accounting firms to boost their retention of young workers. At the current cost of six figures in turn-over costs for most entry-level accounting roles, multiplied by the level of flight risk, managers who spend 15 minutes or more of one-one-one time with each employee seems like a worthy investment, relative to the cost of attrition.

In reality, there needs to be a wholesale shift in sustainability beyond making it a simple branding exercise, says Mark Grider, a partner at international law firm Brown Rudnick. Grider,  counsel Jessica Lu, and associate Honieh Udenka serve as ESG advisers to companies on legal issues. Corporations that wish to focus on sustainability need to shift their practices by embedding their values into their core business and corporate culture, the three say.

Indeed, even traditional compliance activities have led to values signaling when the public attention to ESG makes it necessary to “make sure that an ESG strategy is built in and not bolted on” during the implantation process, Udenka states, adding that this “bolted-on” strategy ultimately fails “because ESG values were only loosely coupled with business objectives and operations [and often] added on as an afterthought.”

Instead, Lu states, when sustainability is built in, commitments “go from a moral-value orientation to a value-derived orientation, which can drive the creation of business value.”

ESG’s tax factor

Many factors at play are driving this change, but there is one area that does not seem to be getting enough attention — corporate tax departments. Indeed, the role of sustainability cuts across a corporation as data sets containing ESG information sit in siloed databases across the organization’s finance, legal, and sustainability functions, among others.

However, corporate tax leaders too often are not part of these efforts. In fact, the 2022 BDO Tax Outlook Survey found that three-quarters of those responsible for tax matters were not currently involved in their organizations’ ESG strategy, despite the ongoing attention ESG is getting by cross-jurisdictional regulators.

What does tax have to do with ESG?

Tax incentives and requirements are often used as a financial tool to drive sustainability activities in businesses; for example:

• • • As part of the environmental part of ESG, carbon pricing in the form of environmental taxes has emerged as a popular way to send clear signals to organizations that they need to be aware of how their operations impact the areas in which they operate. In addition, governments have offered grants and credits to encourage the adoption of more green technology in corporations’ operations.
    • As part of ESG’s social aspect, taxes are often used as a key method by which companies can contribute to their local communities. In addition, more commonplace remote work scenarios also have tax implications concerning in which jurisdictions the work is being done and the employees live.
    • As it relates to the governance, a clear definition of tax strategy, process controls, and compliance are critical parts of corporate governance. Further, tax reporting around sustainability is important to comply with rating agency requirements. In fact, a rise in rating agency requirements around ESG indicates that tax matters will continue to be under scrutiny in the future and will have significant reputational impacts as well, according to a BDO report.

Given all this, forward-thinking executive leaders now have the opportunity to use tax reporting through an ESG lens to better share a holistic narrative about the organization’s purpose. This also demonstrates transparency and builds trust among a growing audience of stakeholders, including customers, investors, and the local community in which the company has operations.

The massive paradigm shift around sustainability by customers and employees, for example, increasingly requires tax reporting and disclosure to consider a wider audience. As a result, corporations — and more specifically, corporate tax leaders — have their work cut out for them, despite the already overwhelming and ever-expanding cross-jurisdictional tax requirements. Indeed, there is already more than 1,000 environmental taxes levied by the 38 member countries of the Organisation for Economic Co-operation and Development, according to a PwC report.

Define how your specific tax function fits into the corporate ESG strategy

To report accurately and with transparency on ESG, corporate tax leaders need to first understand the evolving landscape around ESG, the implications for tax departments and how tax reporting requires action beyond just publishing data. Then, leaders of corporate tax functions need to crystallize and communicate the purpose and values that guide their tax function and how that function contributes to ESG, according to BDO.

The narrative on how the tax strategy fits into ESG is important — and without a story around a tax strategy, negative assumptions can be easily made. For example, if a company takes advantage of a new tax incentive to invest in a climate-friendly technology solution, it could easily be accused of tax avoidance unless a strong narrative is offered. Likewise, efforts by corporate tax leaders need to be made to spell out the tax implications of corporate operations around ESG based on the analysis of what frameworks the organization will use to define the separate components of ESG.

Make efforts to fix fragmented systems now

Recently, corporate tax functions have received increased scrutiny from corporate stakeholders because of the need for transparency in ESG metrics and for greater accountability across a company’s tax practices.

However, the increased demand for tax transparency is a huge challenge. Nearly two-thirds (62%) of respondents in to the BDO Tax Outlook Survey said data collection and analysis is the biggest challenge their departments face in successfully leveraging this data, underscoring the need for increased investment in addressing data governance and fragmented systems among an organization’s various functions.

Clearly, ESG is not going away. Such initiatives and strategies strengthens the case that corporate tax leaders can make to their superiors for additional corporate investments in talent and technology.

The issue of toxic behavior in law firms, tax & accounting firms, and corporations is a cause for concern among diversity, equity & inclusion (DEI) advocates and other professionals because it means that roughly one-third of employees within these organizations are experiencing a lack of inclusion and belonging.

However, some believe the current paradigm of DEI with its top-down approach and its priority on individuals with a single underrepresented identity will not adequately address this type of systemic exclusion, while others believe in an integrated strategy of all three components with an increased focused on belonging.

Problems with the current ways DEI is framed

Stephanie Felder, Director of Professional Development and Diversity at Groom Law, is a proponent of the combined approach. “I don’t think it’s quite that black & white as the need to focus on diversity versus belonging,” says Felder. “Both are important, but until you level the playing field and eliminate the exclusionary practices, processes, and systems within your organization, you can’t actually build diversity or belonging.”

Helen May, Director of Belonging@Work, is one of those who calls for an overhaul in assessing and addressing issues of belonging and inclusion based on the human experience. Organizations and human resources in the years leading up to the pandemic evolved to emerge as “bureaucratically diluted of the human element, including diversity and inclusion,” she explains, adding that the current DEI paradigm causes greater division because of the prevalence on setting and achieving targets and too much focus on “othering” large sets of people.

By focusing on a single underrepresented identity, many white men feel othered even as those with underrepresented identities already feel othered in the current environment. In addition, the current DEI approach does not sufficiently address intersectional needs of those with more than one underrepresented identity.

Another challenge concerning the current DEI paradigm is that it is driven mainly in a top-down manner rather than from the bottom upward though the organization. When approached primarily through a top-down perspective, the root causes of what is driving a sense of exclusion are difficult to identify, says May. Because a lack of belonging tends to stem from exclusive behaviors by individuals from both majority and minority groups, it is hard to work out exactly where within management the sources of the issues are occurring, she argues.

Pursuing inclusion through a belonging lens

May advocates for a revised approach to inclusion through the lens of belonging and well-being that uses human-focused questions as a starting point. These questions include:

• • • What is going to make people perform at their very best?
    • What is going to make everybody create that psychological safety they need?
    • What is going to protect well-being and foster a sense of belonging?

Working through the lens of belonging by default is intersectional because it is human-focused, she explains. “We live in a very intersectional world, and it disincentivizes people with other identities to participate, despite many efforts in the current DEI paradigm to invite ‘allies.’”

Using the belonging and inclusion lens, small networking groups within the overall firm or company are created as a safe place for people to have discussions that focus on people empowering themselves and empowering others. Curiosity is used to explore individuals’ unique qualities and experiences as a way of being within the organization and community that has a responsibility to protect the well-being of everyone, regardless of who they are or into what demographic they fit.

How to execute a belonging strategy

Using belonging and well-being as a fundamental context, May says organizations should start with a future vision of culture that defines a framework to attract the right sort of talent at the board level. Then, once the board is in place, it should then in turn focus on identifying individuals who display these culture framework attributes as part of the board’s succession plan. The board also needs to partner with future board members to outline how to empower employees based on activities and behaviors. Along the way, existing systems of promotion and performance evaluation are left alone.

To demonstrate the positive results from this approach, May describes how one client emerged through this process as an employee-owned business with a four-day work week and unlimited paid time off because it asked employees what they wanted. Those next-in-line for the board have evolved into a hub of the community rather than being seen at the top, directing down.

She says that a key part of the solution is to have first-line and middle managers appoint someone to ask the following questions “until it becomes a habit to ensure inclusion is weaved into every process, including performance evaluation, promotion, recruitment, training, and onboarding system.” These questions include:

• • • Who have we forgot to consider while we’re making this decision?
    • Who might we have disadvantaged with the action we’ve just decided upon?
    • Is there anybody else that we should ask about this decision who may be able to give us an alternative perspective?

The result allows law firms, tax & accounting firms, and corporations to build their culture through behavior and habit because people will start skewing their decisions in the in the right way by default without it having to be a formal process.

Indeed, a few men believe that DEI efforts at their firms and companies disadvantage them and voice some real concerns about it. To learn how best to respond to these concerns, the Thomson Reuters Institute consulted with its Equity, Diversity & Inclusion advisory board to gain the experience of members and learn their thoughts on effective responses.

3 ways to address concerns about specific initiatives being unfair

Employee resource groups (ERGs) and targeted leadership programs have been part of the DEI fabric for a while. In fact, ERGs started off being a group for support, networking, and mentoring; however, as the need for increased representation of diverse individuals at senior levels within organizations has expanded, there is a growing perception that ERGs are providing an advantage to under-represented talent.

Here are some of the best ways to respond to concerns around ERGs and other internal efforts that white men may see as more advantageous to minority talent:

1. Collect more information and listen for common ground — Seek to understand what men are perceiving as unfair by saying, “Tell me more about what you see as unfair…”

Then, perhaps explain to those concerned that some communities — such as first-gen college and law students — don’t have access to family and friend networks of white-collar professionals. Therefore, they have a need for mentors and sponsors who can help them navigate the unwritten rules and norms for success. And that’s why forward-thinking employers have put together targeted programs as part of their offer.

2. Point out that diverse talent is good for business — Explain to them that clients want diverse perspectives in their supply chain. There are hundreds of in-house counsel and corporate accounting and tax functions that are looking for diversity on the teams that staff their engagements because they see the value of having different perspectives — such as gaining new insights or avoiding blind spots. Failure to adhere to these requirements means that law and accounting firms run the risk of losing work, which hurts everyone.

In addition, all employees benefit from having diverse teammates, supervisors, and stakeholders because leaders are consistently working on and stress-testing key cross-cultural skills like cultural fluency, delivering and receiving feedback, effectively addressing conflict, and learning how to grow and support the development of diverse teams.

3. Make it personal about legacy — Ask those who have concerns, “Wouldn’t you want your daughter (or wife, mother, niece, or LGBTQ cousin) to be in an environment where their perspective is valued, and they can thrive?”

Then, emphasize that white men may also identify as members of under-represented or marginalized groups at times. All communities are multidimensional, including people with disabilities, veterans, first-gen college students, and LGBTQ+ individuals, among others. In this way, white men may be members of an under-represented group as well.

How to respond to concerns about lack of future job opportunities because of DEI

One of the default, yet problematic, criticisms around DEI is that it is a zero-sum game. While this is an alluring belief where someone wins and someone loses, it is exactly the opposite. If the organization is stronger and performs better, more opportunity is created for all. Here are a couple of ways to deal with this “zero sum” game mentality:

Use an analogy, such as the “curb-cut effect”  — Shane Lloyd, Head of Diversity, Inclusion & Belonging at Baker Tilly US, points out that one way to think about DEI efforts is with the example of installing curb-cuts on sidewalks to make it easier for people in wheelchairs to cross the street. Yet, it had unintended benefits for others, including people pushing strollers, cyclists, and people with temporary injuries.

Workplace DEI efforts similarly contribute to the curb-cut phenomenon by establishing policies that benefit a broader group. For example, while flexible work arrangements are typically considered women’s issue, men benefit from flexible work arrangements too, allowing them to balance the demands of caregiving or pursuing other interests outside of work.

Highlight what can be gained in terms of leadership — Explain how the most effective leaders are those who can lead diverse teams. Opportunities are expanded when this competency is demonstrated and consistently stress-tested. To lead and actively demonstrate respect from others who are different, it is imperative for leaders to hone these skills by working in normal and challenging conditions.

Today’s business environment requires leaders not only to run an effective operation but also speak to a broader set of issues. An organization with a strong DEI focus will provide opportunities to frame polarizing or highly political issues in a manner that allows for focus on how these dynamics impact people. Framing issues in this way allows leaders to develop an invaluable long-term skill.

In addition, as many companies invest in DEI, it becomes important that leaders have experience playing an active role in DEI efforts. Serving in a leadership role of an affinity group, working towards increasing representation for under-represented talent, or fostering an inclusive culture are competencies and skills that strengthen candidacy for promotion or stretch assignments.

In order for every individual within an organization to have a sense of belonging, to feel comfortable bringing their authentic selves to work, and to engage in friendly debate about work and other issues, everyone needs to be able to engage in healthy dialogue around different understandings and perspectives around DEI.

The workplace is one of the most meaningful environments in which people are engaging across differences. It is important to ensure leaders can enable all team members to have the skills to engage cross-culturally in order to help the business thrive and support an inclusive culture throughout the organization.

These recruitment and retention headaches risk triggering broader operational resilience concerns and require employers to adapt to changing work culture and expectations.

Asia skills shortage “particularly acute” post-pandemic

Consultancy firm PwC has described the skills shortage across Asia as “particularly acute” based on findings from a recent survey in which 18,000 employees based in the Asia-Pacific region participated. Similarly, findings from a report released by Poly Research in March found that 60% of organizations surveyed in the Asia-Pacific region believed that they faced the risk of losing staff and being unable to attract new talent, compared with 53% in Europe, the Middle East, and Africa (EMEA) and 53% in the Americas.

Skills shortages in the region have further brought into focus how recruitment and retention risks could impede the ability of businesses to expand. Data center operators in the Asia-Pacific region will face challenges in expanding capacity to meet demand over the next few years, due to skills shortages, according to research conducted by automation company ABB and Data Center Dynamics.

More than 40% of respondents said data center construction in the region has not been able to keep up with demand during the pandemic. The unavailability of specialist skills was named as a major contributing factor, along with access to specialist sub-contractors and trades.

“Quiet quitting” and “lying flat” receive attention

Following the Great Resignation during the latter part of the pandemic, labor and skills shortages have emerged. A survey of 52,000 workers in 44 countries conducted by PwC found that 20% of workers plan to quit their jobs before the end of this year, suggesting that talent retention will continue to be a concern for employers.

Many countries are also grappling with regional attitudes towards job dissatisfaction. Across Europe, Canada, and the United States, a phenomenon known as “quiet quitting”, in which employees intentionally do the bare minimum to complete their job duties, is prompting companies to look for mitigating options.

A survey of 15,000 workers conducted by U.S. workplace researcher Gallup in June found that more than half of the respondents described themselves as “not engaged” and could be considered quiet quitters. Further, 18% of respondents described themselves as “actively disengaged,” the highest percentage since 2013.

In fact, workers in Europe ranked at the bottom for workplace engagement, compared with their peers around the world. Gallup found that only 14% of workers in Europe said they were engaged at work, compared to 33% in the United States and Canada, 24% in Southeast Asia, and 17% in East Asia, Australia, and New Zealand.

In China, a budding movement of “lying flat” and rejecting high-pressure work culture in favor of a minimalist anti-consumption lifestyle has gained momentum over the past two years. Initially spawned from backlash against high-stress overtime work that is a hallmark of corporate culture at Chinese companies in the digital economy, lying flat has spread beyond the tech industry and could have longer-term impacts on economic growth in China.

Considerations

As today’s skills shortage poses recruitment and retention challenges that could result in wider business continuity risks for organizations, corporations must endeavor to understand how regional attitudes towards work are evolving in order to adapt and mitigate their risk exposure.

In western markets, discussion over quiet quitting is prompting some employers to review job responsibilities for employees, with a view toward expecting only what is formally outlined. This shift in expectations is likely to have a wider effect on corporate cultures, with businesses moving towards more transparent and prescriptive methods of performance evaluation.

In China, regulatory reform and pressure from authorities have prompted many technology companies to cut back on overtime and be more mindful of their compliance with Chinese labor laws.

Businesses around the world are becoming increasingly aware that upskilling their workforce is their best option to mitigate retention risk and shore up skilled labor. Equally important — yet less emphasized during the tail-end of the pandemic — is the need to factor employee well-being into talent retention planning. Overlooking employee job satisfaction potentially risks losing valuable resources spent on upskilling key employees to competitors.

Guidance for employers

Hispanic and Latinx leaders continue to be underrepresented at the executive ranks within the accounting and legal industries. Collaboration with the National Association of Latino Professionals for America, which serves more than 100,000 professionals, and the Hispanic National Bar Association (HNBA) are helping employers make progress, but conversations with Hispanic executives suggest additional effort is necessary.

Compare your internal Hispanic/Latinx representation and that of your customer base — More than 18% of US consumers are from Hispanic backgrounds, according to the US census. Dumitrache Martinez, chief financial officer at Kind and Nature’s Bakery, advises corporations — particularly retail companies — to have similar ranges of representation between their Latino employees and their customers.

If there is a big gap between the countries and cultures from which your customers come and internal representation at the executive level, then there is some work to do. This gap, if left unaddressed, could impact business performance and how marketing messages are created and delivered to Hispanic customers based on different uses and habits, explains Martinez.

Formally sponsor Hispanic and Latinx talent — Intentional effort to develop executive talent from Hispanic and Latinx backgrounds is required by those organizations that have a very large majority presence in the executive suites. The careers of both Martinez and Gerardo Casahonda, Senior Director for International and Indirect Tax at Thomson Reuters, both benefitted from sponsorship by non-Hispanic executives. The HNBA’s PODER25, which seeks to increase the number of Hispanic attorneys occupying senior positions within corporate legal departments, is one example of the type of partnership in which employers can seek to partner with advocacy groups in this area.

Without intentionality, affinity bias, which causes people to gravitate toward others who appear to be like them, kicks in more often than not. Therefore, formally matching Hispanic and Latinx rising stars with executives for sponsorship helps to build bonds across differences that are not so obvious without a formal opportunity to forge a personal connection with someone from another function.

Invest in pools of talent from countries in Latin America — Casahonda indicates that the fact multiple activities of his business is done in Mexico and Costa Rica signals to employees that the company is vested in the development and advancement of talent in these locations and the communities in which these businesses operate.

Moreover, people in the US who work with people from other jurisdictions help to hone cross-cultural skills and develop future potential leaders. Indeed, all employees benefit from having diverse teammates, supervisors, and stakeholders because they are consistently working on and stress-testing key cross-cultural skills like cultural fluency, delivering and receiving feedback, effectively addressing conflict, and learning how to grow and support the development of diverse teams. These conditions are exceptional for building competent leaders of all backgrounds.

Train executives to embrace differing cultures — It is important for leaders and executives to signal proactively that different perspectives are appreciated. They can do this by proactively seeking the thoughts of others from underrepresented backgrounds. In fact, Casahonda says that individuals come to him for his views and insights because of his international work experience and his heritage outside of the US.

Advice for ambitious Latinx and Hispanic employees

In addition to investments made by employers, there are actions for both Hispanic/Latinx professionals. In fact, both Martinez and Casahonda share ways that they got ahead in their own experience and career journeys.

Hone cross-cultural leadership skills by working with others from different backgrounds — Martinez sought to work with a global company with locations in different countries to better expand his breadth of experience working with colleagues across regions. It forced him to work on his cross-cultural communication skills daily.

Improve mindset by reframing thought limitations on English as a second language — Casahonda says he once received feedback from a job interviewer that he needed to stop thinking that English was his second language. The interviewer emphasized that Casahonda should change his mindset and have confidence that he earned the interview because of his talent and be confident that his communication skills would improve over time.

Make ambitions known and seek feedback — One way to proactively communicate the desire to advance within an organization is to ask for management’s advice on what individuals need to do to get their moved up to other jobs. Casahonda sought guidance on how to get his manager’s job and followed the advice.

Of course, there is no magic formula to rise through the ranks of an organization today. It takes both the efforts of the individual and the guidance of mentors, sponsors, and managers in addition to organizational investments to advocate for rising stars and help them get the necessary experience and skills to advance. Employers taking these actions in combination with proactive action on the part of ambitious individuals increase the likelihood of improving representation of Hispanic/Latinx employees at the senior levels within the finance, accounting, and legal industries.

To date, most employers had used a gentle nudge approach for RTO because of the need to retain employees. Even now, flight risk among accountants and lawyers continues to remain at 30% and above and is even higher for those professionals from underrepresented groups. Indeed, the flight risk for lawyers of color in most cases was at least five percentage points higher, according to a survey of 1,500 legal associates, and in the case of Black lawyers, it was 12 percentage points higher.

Further, the process for returning to the office for employees, in particular those from underrepresented backgrounds, also is tricky. Working remotely provided a huge relief and improved mental health to employees with diverse identities because many did not encounter microaggressions as frequently as when they were in the office, pre-pandemic.

This means, however, that many employees are facing a potentially lose-lose situation. They might have to sacrifice their mental health to return to office; or if they seek to continue working remotely, potentially sacrifice their career progression because of management’s tendency to favor those people who are closer to us in time and space. This is known as distance bias or the “out-of-sight, out-of-mind” concept.

Without effective awareness and proactive tactics on the part of management to mitigate distance bias, those professionals who the most vocal, most visible, and present in person may inadvertently be regarded as “high-potential” over others who are more introverted and prefer to work virtually — yet, work just as hard with better results.

Here are some ways to reduce the impact of distance bias:

1. Conduct “stay” interviews regularly

Managers who proactively initiating conversations to get to know team members on a deep level are laying the groundwork for better retention of these employees. Managers may not feel comfortable with doing this at first; so, it is best practice to provide managers with a template and guidance on how to effectively administer these kind of stay interviews.

Bill Bradshaw, head of Diversity & Inclusion at Withum, said managers conducting such interviews with employees should include three questions:

• • • How are you really doing?
    • What can I do to support you?
    • What can I do to ensure you have a rewarding career here?

Consistently asking these questions builds trust, helps the employee to feel appreciated, and assists the manager in supporting the employee in exploring career opportunities. Remember, however, it is important to note that employees may have different timescales on trust-building — some may take months, while others just days.

2. Brainstorm “inclusive” norms and behaviors within teams

Another exercise is to crowd-source inclusive ways of behaviors and expectations within the team for those in the office and also for those working remotely. Start with these questions:

• • • What does an inclusive team look like at the firm?
    • What would be some of the observable behaviors to demonstrate inclusivity?
    • What are one or two things that people should be doing to show inclusivity?

For those managers who may be hesitant, Shane Lloyd, Head of Diversity, Inclusion & Belonging at Baker Tilly, recommends posing additional questions to the team that bring in the “client lens” to give more focused insight for managers, partners, and executives.

• • • Start with the question, “If our team were known as the most inclusive in our organization, what behaviors would we observe?”
    • Follow that with, “If we were known as the most inclusive organization among its clients, what would our clients be saying?”
    • Next ask, “What belonging challenges are we likely to encounter?”
    • Finally, engage in a group discussion on the question, “What behaviors resolve these belonging challenges?”

Questions such as these provide direct insights for leaders on how they can effectively foster the conditions that bring to life the responses provided by employees while offering a kaleidoscope approach to viewing efforts of inclusion. “We want to understand these important dynamics from a variety of vantage points — individual contributors, groups, leaders, and clients,” Lloyd adds. Additionally, normalizing conversations about belonging challenges and discussing them openly allows teams to think about how to effectively address those experiences when they arise. Although it seems counterintuitive, openness around discussing belonging challenges is an evidence-based practice that contributes to fostering an inclusive climate.

3. Have an on-call “belonging” coach for executive leaders

This service allows managers to have a resource available to learn more about microaggressions or help them navigate among the different managerial challenges they are facing. These coaches can also help managers shore up their vital personal communication skills. Based on the “warmLine” service implemented by Intel in 2016, Baker Tilly used a similar approach for employees and now plans to do so for managers soon, according to Lloyd.

Withum took a different approach and hired a full-time coaching team to serve the entire organization, which included the option of offering full-time roles from the business teams that sit within the talent management function of the firm. Specifically for managers and senior managers, the coaches helped executives increase their effectiveness in managing a team of people from diverse backgrounds, while delivering superior business outcomes for clients and helping to fulfill outside-of-work commitments.

Remember that different engagement strategies are necessary to manage employees who work in-person, hybrid, or remotely, and for many managers those differing strategies are not intuitive. On way managers could engage remote workers would be, for example, to create the virtual equivalent of “water cooler” chats by hosting open hours for employees to drop in.

4. Enhance performance evaluation documentation requirements

Keeping quality records on performance over the course of the working relationship (not just during performance evaluation time) is also key. Adding and aligning all of the critical work that employees do for leading employee resource groups, or for vital endeavors like coaching, mentoring, and sponsorship are important investments to recognize as part of the overall value that each individual brings to the organization every year.

At the same time, managers should encourage employees to keep track of their own performance successes and other feedback regularly. This is important ingredient when it comes to performance evaluation time. Then, the manager and employee can compare records, and this action helps to reconcile differing recollections of events and mitigate distance bias.

Overall, the best way to retain all employees is to equip leaders with the tools they need to ensure their own accountability for keeping their finger on the pulse of all team members. Following these aforementioned steps can help guarantee that this happens.