Counting Change and Making Change - Finance, Accounting and Equity
When we run audits and equity assessments at QuakeLab, we often include a review of finance and accounting. If we’re being honest, more often than not, most organizations are not thrilled or willing to share their material. But to be clear, we don’t look to run a financial audit - that is assessing bookkeeping, spending, budgets, etc. What we’re more interested in is the decisions, policies, and procedures that inform how all stakeholders in an organization move through your financial systems and infrastructure. We can separate these into three overlapping categories; pay, policy and procedures.
To be specific, we’re interested in:
Policies on expenditures and reimbursement;
Pay transparency and compensation (this often overlaps with HR);
How DEI budgets are allotted;
Non-salary monetary compensation and provisions (eg. bonuses, access to professional development funds, mortgage or down payment funds, etc.);
Non- traditional financial processes (eg. salary advances).
Much like science, technology, math, and STEM in general, finance and accounting has often been positioned as an industry and discipline that exists in a vacuum untouched, unobstructed and unaffected by power, oppression and inequity. The going argument is that this field sits on a mathematical foundation that cannot be biased or inequitable. But if you’ve been with us a while, you know that inequity doesn’t respect our organizational boundaries and more importantly, our workplaces often (if not always), reflect the inequity of the world.
Put more plainly, here are a few objective truths we know about the Canadian labour market
Women working full-time and part-time make 89 cents for every dollar men make (Canadian Women’s Foundation).
Racialized women make about 59% of white men’s earnings on average (Canadian Women’s Foundation).
The gender pay gap is worse for those who face multiple barriers, including racialized women, Indigenous women, and women with disabilities. Though it differs by age group, the gap starts from a young age and carries into the senior years (Moyser, Statistics Canada, 2019).
While income disparity between [Indigenous] peoples and the rest of Canadians narrowed slightly between 1996 and 2006, at this rate it would take 63 years for the gap to be erased (Canadian Center for Policy Alternatives).
Nearly two in five Canadians with disabilities earned less than 50,000 Canadian dollars a year, compared to one in five Canadians without disabilities. Meanwhile, one-third of Canadians without disabilities earned more than 100,000 Canadian dollars a year, compared to 19 percent of people with disabilities (Statista).
Millennials are the generation that accounts for the largest share of the working-age population (33.2%) (Statistics Canada), they are also the most educated generation in history. However, millennials also by far carry the most debt of any generation. In 1999, young Gen-Xers had a 125% debt-to-after-tax income ratio, while Millennials in 2016 had a 216% debt-to-after-tax income ratio. (Credit Canada).
In Canada, university-educated Canadian-born members of a visible minority earn, on average, 87.4 cents for every dollar earned by their white peers (The Conference Board of Canada).
Racialized individuals are more likely to be in families in the bottom half of the income distribution (60%) than non-racialized individuals are (47%) (Canadian Centre for Policy Alternatives, December 2019). This is particularly jarring considering racialized individuals and Indigenous peoples are more likely to be responsible for multiple households, live in multigenerational homes, and contribute financially to their communities and extended families.
What does all of this have to do with inequity in your organization's finance and accounting policies? To reiterate, the labour market and your workplaces are a mini reflection of society at large and the inequalities that play out in the world. Your organization, much like the national data, is probably employing a large number of millennials who are the majority of debt holders in the country. Additionally, regardless of generation, your racialized, Indigenous, female, disabled, and transgender staff are navigating a labour market that values their labour significantly less than their white, male, able bodied counterparts, while they also carry more debt and are statistically more likely to be financially responsible for multiple households. To complicate matters further, immigrants and new Canadians who may or may exist in the intersections of multiple identities also have less access to credit and financial support.
So a policy as simple as reimbursement is either going to take into consideration these realities, or further marginalize people in your organization. Asking an employee who does not have access to credit or large amounts of cash to pay for flights, hotels, supplies etc. then go through a rigorous, lengthy reimbursement process is inequitable. Unpaid and underpaid internships will mean only those who are financially comfortable will have access to opportunities for growth. If skill development is necessary for mobility, however you do not provide the money for this development, only those who already have access to capital to invest in their growth will be upwardly mobile. Building compensation policies that underpay young employees under the assumption that they have less responsibility ignores the levels of debt they statistically carry and that Indigenous and racialized youth are likely contributing heavily to family and community. Providing bonuses for purchasing a house but not student debt repayment support means privileged employees will continue to get a leg up.
To start building equity into your finance and accounting systems it’s important to first differentiate between advocacy actions and design actions.
Advocacy Actions: These are the ways finance and accounting professionals can leverage their expertise to advocate for equitable changes in financial systems. This will be particularly relevant for areas where you do not hold decision making power, but have influence. Here you’ll be looking to advocate for consistent budget lines for equity work, pay equity audits, the collection and analysis of disaggregated organizational data for informed decision making etc.
Design Actions: These are the actions you can take within your parameters of authority and decision making. This will vary depending on your level of experience and seniority. They may range from completely overhauling organizational policy to incorporating disaggregated data (income inequality, etc.) into your analysis and assessment of your work and individual professional decisions.
A lot of this work is what we at QuakeLab call equity as a technical skill, this is the process of focusing on building equity into the outcomes of your work by understanding what you do, the tangible outcomes of your work, and tapping into existing research to design equitable solutions. This approach hinges on your existing knowledge and expertise, rather than first throwing yourself into learning everything there is to learn about DEI, over decades, before making significant, impactful changes.
We know there’s a lot of ground to cover and a lot of the financial and accounting systems you are working within were created and implemented decades ago and are upheld as industry best practices. We also know that this is a heavily regulated industry - for good reason. These two truths need not be a deterrent to your work, but a stronger argument for why you are best situated to assess and reassess the parts of this system that validate existing inequity, you know this better than anyone. You can do this.