Ann Hopkins, PwC, and Building on a Culture of Belonging

Katherine Campbell, University of North Dakota, [email protected] Duane Helleloid, University of North Dakota, [email protected]

EXTENDED ABSTRACT1 Large public accounting firms are currently prioritizing diversity and inclusion, and they are making commitments to increased transparency by publishing diversity, equity, and inclusion reports. PwC U.S. issued its first public diversity and inclusion report in 2020 (PwC, 2020), and other Big Four public accounting firms issued reports in 2020 (Deloitte, 2021; EY, 2021). Several recent high profile social movements, including #MeToo and Black Lives Matter, have created a sense of urgency regarding the need for more progress in diversity and inclusion. Despite this urgency, diversity and inclusion reports published by Big Four firms make it is clear that diversity and inclusion remain an ongoing transformational process rather than an immediately achievable goal.

This case explores PwC’s self-described diversity and inclusion journey by juxtaposing the firm’s first publicly released diversity and inclusion report with the decades-earlier experience of one of its partners. This approach allows a longitudinal perspective on diversity and inclusions and analysis of the roles of organizational policies, culture, and leadership.

Ann Hopkins was hired as a consultant in Price Waterhouse’s Washington DC consulting practice in 1978. Although she thrived and secured the firm’s largest ever consulting contract at the time, Hopkins was denied admission to the partnership in 1982. At the conclusion of years of litigation, including a landmark U.S. Supreme Court civil rights case, Hopkins was admitted to partnership. After returning to Price Waterhouse as a partner, Hopkins worked at the firm until she retired from PwC in 2002 (Hopkins, 2005).

This case raises a variety of interesting issues related to policies/programs and organizational culture in the context of diversity and inclusion. Arguably, the Price Waterhouse organizational culture was a good fit for Hopkins in many ways; she describes enjoying the culture and excelled in terms of important metrics including revenue generation, client satisfaction, and evaluation from her direct supervisors. Yet the decision not to admit Hopkins to partnership suggests the culture at the organizational level may not have been in complete alignment with that at her unit in the Washington, D.C. office.

A Supreme Court decision is an unusual path to partnership in public accounting firms. Rather than simply a financial settlement, Hopkins specifically sought admission to the partnership as a legal remedy. Contrary to what many might have expected, within a few years of returning to

1 This section includes information that might be better placed in the introductory paragraphs of a teaching note. While this is clearly longer and covers more content than a typical abstract, given the preliminary state of the case, we hope this extended abstract helps to better frame the case for reviewers.

1 Price Waterhouse as a partner, Hopkins and the firm found a path forward that was successful for both. Hopkins went on to develop and lead a unit that was both profitable and diverse (Hopkins, 2005). This outcome required forward looking mindsets from Hopkins, colleagues, firm leadership, and clients. Ann Hopkins’ observations and PwC’s diversity and inclusion report issued decades later provide interesting parallels in the emphasis on the role of organizational culture, and leadership in shaping the culture.

This case brings a longer-term and first-person perspective to view PwC’s current diversity and inclusion status and self-described journey. It provides a context for exploring open-ended questions, with both historical and personal perspectives on a current issue. The case challenges students to consider the implications of the role that culture and leadership play in achieving diversity and inclusion, the challenges and opportunities that pathbreakers and their employers face, and the ways PwC is measuring, monitoring and attempting to accelerate its progress toward diversity and inclusion.

KEY WORDS: diversity, equity, inclusion, employment, discrimination, stereotyping, Ann Hopkins

LEARNING OBJECTIVES 1. Analyze PwC’s diversity “journey”, and the role of programs, processes, people, and organizational culture. 2. Evaluate the current extent of diversity at PwC and compare this with environment Ann Hopkins encountered. 3. Recognize the role individuals can play in changing a firm’s progress towards diversity. 4. Evaluate the challenges individuals and firms face when breaking new ground in achieving greater diversity.

VALIDATION PLAN A version of this case is being used during Spring 2021 in masters-level accounting class (Seminar in Accounting Issues), with students answering specific assignment questions. A survey of students will be administered following the assignment to understand students’ perceptions of how the case fulfilled the learning objectives. Data from the assignment and the survey will be used to further refine the case before utilizing it again in two classes in Summer 2021: a graduate level course that includes both MBA and MAcc students (Leadership and Ethics) and a graduate accounting class (Seminar in Accounting Issues). The two classes will have no overlap in students, and they are taught by different faculty at the same university.

The tentative plan is use feedback from the Spring class, and hopefully this workshop, to refine the case, the discussion questions, and the validation instruments for use in the summer. Before the case is introduced in Summer 2021, students will complete a survey that assesses both their knowledge of diversity and inclusion in large accounting firms, and their perceptions

2 of the issue. Following the presentation/discussion of the case in class, another survey will be administered that includes some of the same questions on knowledge and perceptions, and also asks students to reflect on the extent to which the case met the learning objectives. Comparing the pre-case and post-case answers to survey questions, along with written response to discussion questions, will be used to verify that the case contributed to students’ knowledge and achievement of learning objectives. This can be supplemented with students’ post-case opinions of whether the case achieved the learning objectives.

CASE On August 26, 2020 PwC U.S., part of one of the world’s largest and most prestigious pubic accounting firms, publicly released its first Diversity and Inclusion Transparency Report (PWC, 2020). The release came with some fanfare, first shared with the firm’s 55,000 U.S. employees by PwC U.S. Chairman and Senior Partner Tim Ryan in a live webcast. While the metrics reported in the report might be interpreted as providing mixed evidence regarding the firm’s diversity and inclusion, the release of the report was itself news. Articles reporting the release of the PwC report appeared in popular business magazines and publications focused on the human resource and accounting professions.

The report includes metrics and goals for diversity and inclusion (D&I). In fiscal year 2020, PwC reports that its U.S. workforce is 48 percent female and 40 percent individuals of non-White race/ethnicities. Notably, diversity differs by rank. While administrative positions are predominantly composed of women, Black and Latinx individuals, diversity generally decreases with rank, and managing directors are 34 percent women, and 17 percent non-white.

The firm interprets reported metrics as indicating progress but concludes that, “we are not yet where we aspire to be.” In the report PwC articulates an aspiration to “build a workforce in the US that better reflects the diverse makeup of US higher education enrollment” and specific aspirations to see 35 percent Black and Latinx representation in its hires, and 50 percent women and racially/ethnically diverse partners.

PwC describes a variety of programs and plans for realizing these aspirations, but the report describes a “journey” of more than two decades that is ultimately focused on building an organizational culture of “belonging and trust” and a firm that “embraces D&I as an essential aspect of our purpose, culture and values.” The importance of culture in successful diversity and inclusion efforts is highlighted in the title of the report, “Building on a Culture of Belonging.” The report uses the word “culture” thirty-one times. In the firm’s press release announcing the report, PwC US Chairmen Tim Ryan emphasized the importance of organizational culture in becoming diverse and inclusive:

At the heart of our effort is to continue to build on our culture of belonging for all, so that everyone at PwC can achieve their fullest career aspirations at our firm. No single program, action, or leader can foster a culture of belonging. Rather, it has to be the result of many deliberate decisions, difficult

3 conversations, consultations with outside expertise, and learning from what has worked and what hasn’t. Our data-led strategy has evolved from a series of programs to targeted interventions at the critical moments along our peoples’ career journey. In addition, it focuses on engaging our colleagues in the majority to play a key role in further entrenching a culture of belonging and committing to allyship. (PwC, 2020)

While the report describes a journey and identifies milestones beginning in 1993, the firm’s journey is actually much longer than this, and includes the influence of Ann Hopkins.

In the summer of 2018, two years before the release of PwC US’s first diversity and inclusion report, obituaries for a retired PwC partner appeared in many major newspapers including the New York Times and the Washington Post. Ann Hopkins had taken an unusual path to becoming a partner at Price Waterhouse, one of the predecessor firms of today’s PwC. Along the way she became, in the words of her daughter, a “reluctant civil rights landmark. (Brooks, 2018).

Ann Hopkins was born in Texas, the eldest child of a career army officer and a nurse. She earned degrees in mathematics, a bachelor’s degree from Hollins College and a master’s degree from the Indiana University. Hopkins began her career at IBM in the late sixties, first developing mathematical models for aerospace and then moving into project management. After stints at some smaller companies, she began a career as a management consultant at Touche Ross & Co., one of the “Big Eight” public accounting firms. When she was hired, Hopkins was one of the three women on the consulting staff in the firm’s Washington DC office. Hopkins thrived at Touche, working on a variety of projects. At Touche, Hopkins also met and married another consultant. Once married, Touche nepotism policies made it impossible for either Hopkins or her husband to become a partner. As a consequence, Hopkins left Touch in 1977 and began working for a computer consulting company. Hopkins’ husband went on to become a partner at Touche (Hopkins, 2005).

Hopkins did not enjoy the culture of the computer consulting company. She decided to look for an opportunity to work at an organization more like Touche. A Touche partner suggested Price Waterhouse, made an introduction, and provided a recommendation. As a result, Hopkins joined Price Waterhouse in 1978 in the consulting practices of the Office of Government Service (OGS). At Price Waterhouse, Hopkins once again began to thrive. Shortly after joining the firm, she decided to write a proposal for a State Department engagement. Ultimately, this led to a $30-50 million contract that was the biggest consulting contract the firm had ever secured (Hopkins, 2005).

In August 1982 the partners in Hopkins’ office nominated Hopkins for partner in a class to be admitted in July 1983. Of the 88 partner candidates, Hopkins was the only women. At the time, six of the firm’s 667 partners were women, and 10% of the firm’s partners were consultants. Ultimately, 47 of the 88 candidates were admitted to the partner, and Hopkins

4 was not among those selected. The firm’s Senior Partner, Joseph Connor, informed Hopkins that three voting partners who knew her well had voted to admit with strong positive comments. Among the remaining 26 partners 10 voted to admit, seven not to admit, one to hold over for another year, and 8 abstained. Connor read Hopkins some of the negative comments, including, needs a course in charm school, overcompensated for being a woman, and macho (Hopkins, 2005).

When Hopkins asked what she needed to do to make partner in the next year, Connor advised her to keep up the good work and avoid getting negative comments. Another partner and mentor in the Washington office advised her to walk, talk, and dress more “femininely” and to wear makeup and jewelry and have her hair styled. When the time for nominations arrived the next year, Hopkins was told she would not be proposed for candidacy, and she would never be a partner (Hopkins, 2005).

In response, Hopkins filed a sex discrimination claim in August 1983, alleging that Price Waterhouse violated Title VII of The Civil Rights Act of 1964. Hopkins left Price Waterhouse in 1984, working first as a consultant for the State Department and then as a budget officer for the World Bank. Hopkins sought back pay, legal fees and court costs, and, most notably, admission to the partnership (Hopkins, 2005). The legal process Hopkins’ suit initiated took seven years to be resolved, and Price Waterhouse’s appeal to the U.S. Supreme Court in Price Waterhouse v. Hopkins became a landmark case that established stereotyping as a form of discrimination and a way of showing evidence of discrimination (Brooks, 2018).

While Hopkins substantially prevailed in the litigation, evidence introduced by attorneys on both sides described Hopkins as simultaneously a capable and successful leader and a potentially challenging person to work for and with. The Washington Post quoted a former colleague’s comments about Hopkins, “Either you loved Ann or you were intimidated by her…. There were not lukewarm feelings about Ann. Everyone knew she knew her stuff and was wicked smart.” (Schudel, 2018)

Throughout the years of litigation, Hopkins, despite repeated entreaties from her lawyers and the advice of many others, continued to seek admission to the partnership as a remedy. The judicial record makes it very clear that she was not wanted as a partner at Price Waterhouse, in 1983 or at the conclusion of litigation seven years later. Even the federal trial judge asked her, “And you want to leave that job and go back and join this crowd? That’s what you’re asking me to do, right?” (Hopkins, p. 20). At the end of the litigation, Price Waterhouse was mandated to pay back pay, court and legal costs, and to admit Hopkins to the partnership. Hopkins returned to Price Waterhouse as a partner in 1991, first in a private sector consulting practice, but after a year she transferred back to the OGS group where she had previously worked. Hopkins once again began to thrive, and she remained at the firm (subsequently renamed PricewaterhouseCoopers) until her retirement in 2002. In her own words, Hopkins described her tenure as a Price Waterhouse partner as, “I developed an admirable track record for sales, client service, and staff development in OGS. I became a positive force in the Office. I am proud that at least half a dozen of the staff that I worked with, mentored and managed became

5 successful partners.” (p. 54). She quotes a friend and fellow partner as saying “’You successfully played the hand you were dealt, and I’ve never seen worse cards.’” (Hopkins, 2005)

In a personal account published in the Hofstra Labor and Employment Law Journal in 2005, Hopkins made some interesting observations in describing changes she saw over the twenty years after she sued Price Waterhouse:

WHAT CHANGED? Twenty years ago when I sued Price Waterhouse, the firm lacked even a published equal employment opportunity policy. When I rejoined the firm in 1991, human resource (HR) policy was published in a classy, bound volume about the size of Fortune magazine. HR professionals and processes abounded. The firm had retooled the partner candidate evaluation forms, but not significantly - the instructions included language to prohibit gender-based comments. The evaluation process and criteria hadn't changed much…

In my experience, HR professionals, in and outside the firm, were generally talented, conscientious, caring people, but their role was, at least partly, to manage a process designed to protect the corporate interest from lawsuits. My comment to them was always that an appropriate corporate culture and managers who act on that culture are far more effective in eliminating discrimination than HR processes that seek to discover, examine, investigate, protect, and (usually a long time later) remedy discriminatory acts.

When I attended my first meeting of the partners and staff who worked in my practice area in OGS, the staff included two Asian women. They were new to the staff and recent graduates. One graduated with an MPA from the Kennedy School at Harvard, and the other earned a BA at Wellesley. They observed that they constituted most of the Asians on the OGS staff and asked why Asians were so underrepresented. A senior manager with many years tenure, who was heavily involved in recruiting, and the partner in charge of the practice area, both white males, engaged the two Asian women in a discussion. The men talked about how hard it was to recruit minorities. There just weren't enough able minorities available in the places we recruited. The discussion moved to where we recruited. The women suggested that maybe we weren't looking in the right places; the men held that we might have to lower our standards if we looked elsewhere. The senior manager summed it up "You can't catch sharks in Lake Erie." I annoyed both men by saying "Find a better body of water." We had better look for different fish in different waters. My comments in that meeting marked my debut as the office spokesman for diversity and a culture that seeks to encourage diversity.

6 Beginning in 1992 when I returned to OGS, I worked with HR and other partners and managers as an outspoken advocate for a culture that prized diversity and sought and nurtured it in the work place. I acted on perceived discrimination (in consultation with HR and without a lot of process) and encouraged other managers to do so. Five years later, in 1997, my OGS made more money than most of the rest of the firm and had a staff that was sufficiently diverse in that protected groups did not feel like minority groups. Only half of the thirty or so partners were white Anglo-Saxon men. The composition of the group of partners and staff that served clients was quite different from that in 1983 and even in 1991. Something changed. I believe it was in the culture.

Outside of my office, in the rest of the U.S. firm of Price Waterhouse, I believe the demographics (or the culture) were different. When I sued in 1983 only 1% of the partners were women. By the time I returned to the firm in 1991 the number of women partners had risen to a whopping 3%. I don't believe the number ever topped 10% and the largest number of minority group partners was in my office.

While I was a partner, Price Waterhouse merged its affiliated firms worldwide to form a global partnership. I went to at least one global partner meeting and was hard pressed to find ten women in hundreds of men. After the 1998 merger with Coopers & Lybrand, I attended a "women's partner meeting," a Coopers & Lybrand remnant of which I mildly disapproved. A huge display calendar showing significant events related to women in the firm occupied several linear yards of wall space. I wasn't on it. The self-proclaimed "leadership team" of partners from the national office came to the meeting briefly to introduce themselves and demonstrate how important the women partners were to the firm. They seated themselves at different tables around the room. They needed no introduction; with one exception they were all men.

(Hofstra Labor and Employment Law Journal, Vol. 22, Iss. 2 [2005], Art. 2 http://scholarlycommons.law.hofstra.edu/hlelj/vol22/iss2/2 PERSONAL ACCOUNT OF ANN HOPKINS)

7 DISCUSSION QUESTIONS

1. Review the 2020 PwC Diversity and Inclusion Transparency Report (https://www.pwc.com/us/en/about-us/diversity/assets/diversity-inclusion- transparency-report.pdf). What conclusions do you draw from the reported metrics?

2. Consider comments in the report about firm culture. How does the firm describe the role of organizational culture in achieving diversity and inclusion? How does the firm try to influence and assess its organizational culture with respect to diversity and inclusion?

3. Consider Ann Hopkins’ experiences when she came up for evaluation for partnership at Price Waterhouse, her decision to sue, and her decision seek partnership and rejoin the firm. What aspects of her story do you find most surprising?

4. Ann Hopkins returned to Price Waterhouse as a partner seven years after beginning litigation against the firm. What challenges do you think that Hopkins, the firm’s leadership, and other professionals at the firm faced when Hopkins returned as a partner?

5. The Hopkins case was highly visible and became a landmark heavily cited civil rights case. How might PwC’s “diversity and inclusion journey” have differed if Hopkins had lost? If she had won, but not returned as a partner?

6. Consider Hopkins’ comments about what changed at the firm between the time she was denied partnership and her retirement. Compare her observations about policies versus organizational culture to those communicated in the 2020 PwC Diversity and Inclusion Transparency Report.

7. Do you think that PwC could have done more, faster, in order to address diversity and inclusion issues and/or build a culture of belonging and trust? What challenges and opportunities existed as early as 1983?

8. PwC notes that diversity and inclusion issues affect the firm in ways that expand beyond relationships with employees to include relationships with clients, suppliers and society. What are the boundaries of PwC’s responsibility for diversity and inclusion?

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REFERENCES:

Bazelon, Emily (2018) “Ann Hopkins: The Accountant Who Struck a Blow Against Gender Stereotyping” New York Times Magazine.

Brooks, B. (2018). Ann Hopkins, who struck an early blow to the glass ceiling, dies at 74. The New York Times, July 18

Brotherton, Phaedra (2005) “A History of Determination” Journal of Accountancy, October 2005, Volume 200, Issue 4, Pages 71-75.

Deloitte (2021) “2021 Diversity, Equity and Inclusion (DEI) Transparency Report.” Available at: https://www2.deloitte.com/us/en/pages/about-deloitte/articles/diversity-equity-inclusion- transparency-report.html

Estrada, Sheryl (2020) “Pwc Publicly Releases Diversity Data and Strategy for First Time,” HRDive, September 3. Available at: https://www.hrdive.com/news/pwc-publicly-releases- diversity-data-and-strategy-for-first-time/584671/

EY (2021) “EY DEI transparency report: pathways to progress,” Available at: https://www.ey.com/en_us/diversity-inclusiveness/pathways-to-progress

Hopkins, Ann (2005) "Price Waterhouse v. Hopkins: A Personal Account of a Sexual Discrimination Plaintiff," Hofstra Labor & Employment Law Journal: Vol. 22 : Iss. 2 , Article 2. Available at: https://scholarlycommons.law.hofstra.edu/hlelj/vol22/iss2/2

McGirt, Ellen (2020) “PwC Releases its First-ever Diversity Report,” Fortune: August 27. Available at https://fortune.com/2020/08/27/pwc-diversity-report-first-ever/ LeadershipDiversity and Inclusion

PwC (2020) “2020 PwC Diversity and Inclusion Transparency Report: Building on a Culture of Belonging.” Available at: https://www.pwc.com/us/en/about-us/diversity/assets/diversity- inclusion-transparency-report.pdf

Schudel, M. (2018, July 18). Ann Hopkins, who won Supreme Court gender bias case after being denied a promotion, dies at 74. The Washington Post

Stokes, S. (2020, September 23). PwC's inclusion chief lays out why the Big 4 firm revealed its diversity stats in 'uncomfortable' detail and how other companies should follow suit. Business Insider

9 Tosczak, Mark (2020) “Companies Seek Ways to Report Diversity Progress,” Journal of Accountancy, October 29. Available at: https://www.journalofaccountancy.com/news/2020/oct/companies-seek-ways-to-report- diversity-progress.html

Vigilante, Barbara (2005). “Women at Full Throttle,” Journal of Accountancy, October 2005, Volume 200, Issue 4, Pages 76-77.

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