E-Alerts: Organizational Effectiveness Archives

March, 2006

An article titled “Up The Down Staircase: Why Do So Few Women Reach the Top of Big Law Firms?” on the front page of the New York Times Sunday Business section (March 19, 2006) caused quite a stir – far beyond New York and beyond the legal profession. Most women I know read it and, I hope, a lot of men. It's been a subject of conversation on Wall Street (where things are even worse for women in financial services), in lunch speaker programs I've chaired and attended, on blogs, and many other places. And given that there are more and more women clients in some industries who want to see women in charge of their engagements, client teams and outside firms, publicizing the slow progress in such a visible forum is good. It keeps the issue from being swept under the rug and rationalized in terms of “building the pipeline.”

Here I'd like to focus on the “up staircase.” There is some good news in law firms which was not discussed in the article; and there is notable progress in other professions, particularly accounting and consulting, which also operate primarily on the billable hour (what many of us think is a broken model for today's workplace) and can serve as models for law and other service businesses.

The slowly developing good news for women is the emergence of female managing partners in growing numbers in large law firms. Many of them are in place in branch offices rather than firmwide, and many of the positions are more like a chief operating officer taking care of day-to-day operations than a CEO responsible for strategy and overall firm leadership. The numbers are still small given the percentages of women in law firms, but given the still small percentage of women partners in most firms, this move to leadership and recognition of their capabilities is good news we should be celebrating.

If firms can convince women that they will make it manageable and worth their while to stick around long enough, we'll see more ascending the up staircase with their talents. So let's look at what has already happened with women CPAs and consultants.

As reported on Accounting Web (January 17, 2006), “Nineteen percent of partners in public accounting firms were women in 2004, according to bizwomen.com, but women received 30% of partnership promotions within the last three years.” Is there a solid business case for undertaking the women's initiatives that have been in place in some firms for over 10 years? Well, Deloitte & Touche, KPMG, Ernst & Young and PriceWaterhouseCoopers have seen revenues rise dramatically in that time period. Some of the increases in client fees can directly be attributed to women's roles and much cannot be documented as such – but it obviously is not hurting the bottom line. And an American Institute of Certified Public Accountants (AICPA) study of both men and women members found that smaller firms were promoting women at even higher rates than the large ones were.

The AICPA annual report stated “while women are not advancing in comparison to their numbers, once they made partner they advanced to leadership positions in their firms. Firms apparently are increasingly offering non-partner tracks for those less interested in partnership – women are taking advantage of such options over men, by a margin of more than two to one.” The ability to achieve some measure of work-life balance was one key to retention. However, the crux of the matter for both genders is opportunity for advancement: 64% of females and 58% of males reported limited or no opportunities to advance where they were.

Flexibility is being embraced in the accounting profession. A study of over 2,600 CPAs released in February 2006 by the AICPA's Work/Life and Women's Initiatives Executive Committee indicates that both men and women are taking advantage of the alternative career paths instituted by many firms. Here are some findings from A Decade of Changes in the Accounting Profession: Workforce Trends and Human Capital Practices study (available from www.aicpa.org/worklife ).

• Men in the CPA profession are becoming as interested in and affected by flexibility policies as women (a growing trend).
• Accounting firms that focus on the personal needs of their professional staff are seeing productivity gains as they are motivated to better serve the firm's valued client base.
• Women are choosing smaller firms where their advancement is more pronounced.
• A gender gap in the desire for partnership exists; 65% of male and 41% of female senior managers expressed a desired for partnership.
• Women professionals are less likely than men to be aware of networking opportunities, leadership development programs and practice development training – unless firms make a point of building the awareness and making the case for their participation given the other priorities in their lives.

One of the above “Executive Committee” members stated “That 90% of women taking maternity leave are returning to work on either a full or part-time basis is an example of the effectiveness of (flexibility) policies.” Doesn't sound like “opting out” to me, and it sounds like a smart business strategy.

The progress in retaining and placing minorities in leadership is far worse than for women as a group. Firms are getting more serious about their diversity efforts and slowly trying to make people of all diverse backgrounds feel comfortable and “life integrated” enough in the workplace to stay and devote their talents to the success of firms and their clients.

The most recent law firm addition to Fortune magazine's “100 Best Places to Work” list, Nixon Peabody, was cited especially for its low attrition and an impressive diversity program of internal surveys, training and affinity groups implemented firmwide in 2005. The firm's Chair (chief executive) heads the diversity efforts along with two partner co-chairs.

Professional firms are finding ways to improve their retention, organizational effectiveness and profitability by both looking inward to their own cultures and practices and outward to the successful models beyond their borders. Firms and individuals can either throw up their hands and say change is impossible because many valued professionals won't conform to the way things are structured now – and lose out. Or they will put muscle and heart behind creating new success models. Which camp would you rather be in?

As always, I encourage your comments pwhaserot@pdcounsel.com

© Phyllis Weiss Haserot, 2006. All rights reserved.