An Idea and $2,500

Others were asking the same questions. AACSB, the body that accredits business schools and  GMAC,  the  organization  that conducts the GMAT test for business  school  admission,  had sponsored the abandoned MSI program. Disappointed in its outcome, they remained greatly concerned about the lack of diversity in business schools—both on faculty and as students. A paper arguing for more inclusion written by the head of the Cornell University doctoral program, a white scholar named John Elliott, widened awareness and stirred deeper concern in the academic community. But no successor to MSI was emerging.

KPMG and Citicorp were far from alone among major global employers in calling on academia to develop a larger pool of minorities for them to hire. After a brief recession ended in 1991, the U.S. economy was entering its longest period of growth in history. The Internet and personal computing were igniting a great  technology boom, with new companies and even new industries seeming to come alive daily.

And they were serving a customer base that was not only global but more diverse than ever. The U.S. Hispanic population was soaring at unprecedented rates. African-Americans, a generation after the civil rights era had opened opportunities, were attaining new levels of affluence.

Combining it all, corporate demand in the U.S. for skilled young workers from diverse backgrounds was ravenous.

There was another problem: by now, even the youngest Baby Boomers were established on career paths, and the generation following them was notably smaller. Supply was failing to keep pace with demand and, the experts warned, the imbalance  threatened  to place American business—and the country—at a disadvantage in the competitive global economy.

Companies responded, to greater or lesser success, by competing intensely against each other over available talent.  Great sums of money and large amounts of energy were expended on a vast zero-sum game: none of this effort expanded the pool at all.

This was the backdrop that business school deans faced each day. The clamor to educate and graduate more business students— including students of color—was growing louder and more impatient. Employers were demanding it. The demographic trends were virtually dictating it. And a new generation of minority undergraduates was increasingly populating high prestige professions like law and medicine.

But they weren’t coming to business school.

At AACSB, discussions grew more serious about how to inject diversity and inclusion efforts into the standards for accreditation. But, as one participant would recall two decades later, “It was just not something on the front burner. You would hear a lot of, ‘We can’t find them [minorities]; they are not interested. And a lot of the people that do come to us—well, they aren’t capable of making it.’” Also concerned about the issue was  the  American  Institute  of Certified Public Accountants, better known as the AICPA. Public Accountants historically served their business clients with tax and audit services. But by the 1990s they were offering a rich mix of strategic and financial consulting services. These—unlike the cold numbers on a spreadsheet— required accountants to understand business  practices and customer behaviors that were being permanently altered by increased diversity. The uncomfortable scene that had played out between the retailing CEO and his KPMG auditors was being echoed in other boardrooms.

Among the accountants thinking about these issues  was  a close colleague of Bernie Milano’s. Robert Elliott (no relation  to scholar John Elliott) had worked alongside Milano in KPMG’s Philadelphia office early in both men’s careers in the 1960s. (An office that was then, like so much of the profession, all white and all male.) The two men eventually were reassigned to different offices, but maintained a friendly rapport and stayed in frequent contact. Within the firm, and increasingly within the profession, Elliott was  widely regarded as a visionary, a source of intellect with an uncanny ability to see, interpret and act on the big picture. In the early 1990s, he was an assistant to the chairman and sat on the firm’s strategic planning committee. He was someone Milano liked to look to for insights and ideas.

So sharp were Elliott’s intelligence and leadership strengths— he would ultimately become chairman of the AICPA—that he was establishing a national reputation. In 1992, the American Accounting Association (AAA)—the organization of accounting professors— honored him with its Wildman Medal Award, given annually for advancing theory and practice in their profession. The award carried a cash award of $2,500. Traditionally, recipients rolled the money back to the AAA. “I wanted to do something different,” Elliott would later say.

Elliott had for some time been thinking about the interrelated issues of global competitiveness and diversity in business and access to education and educators as role models for minorities. Focusing on the dearth of minorities in accounting, he realized that while African- American youngsters might see African-American teachers and doctors in their communities, they weren’t—as Theresa Hammond was documenting—seeing Black CPAs. At the time, 12% of the U.S. population was African-American, yet only 1% of CPAs were, while 4% of doctors were Black. “With no disrespect to my profession,” he would later say, “it is a lot harder to become a doctor than a CPA… surely we could do better than 1%.”

Rising to accept the Wildman Medal on August 11, 1992, Elliott explained that he was donating his cash award to create a new fund: one that would financially support the African-American doctoral students in accounting programs who would one day become professors.

But, he acknowledged, $2,500 would not go far to address the issue. And so he was triple-matching the amount to enlarge the pool to $10,000.

Still, he confessed, this was not much. Then he revealed the fruits of weeks of private discussions he had held with Milano and the leaders of the KPMG Foundation: KPMG would match the amount to make it $20,000.

“And,” he told a now stunned crowd, “I’m very pleased that the AICPA will match that, bringing the total to $40,000.”

That afternoon, the cause that Milano and Thorp had been discussing, prodding and debating privately with their cousins in the academy went public, with a highly visible program and funding to back it up. It would be just the beginning of a new era in the pursuit of greater diversity in business education.

The AICPA was to administer the two fellowships created from the fund Elliott had established, and it awarded them  the following academic year. Still, an AICPA executive lamented  to Milano and Elliott, it was a shame that more could not be done: other talented students had also applied for the fellowships.

“Send me their applications,” Milano said. “I’ll see if we can do something.”

From the mid 1970s through the early 1990s, the KPMG Foundation had vastly expanded the body of academic accounting research by pouring millions of dollars into  supporting  worthy scholarly work. The program, hugely impactful, had  been  largely driven in its early days by Elliott.

“It’s time to declare victory and close it down,” Elliott said to Milano one day. “We have another issue to address.

“If we can do for diversity what we’ve done for research in auditing and tax,” he said, “we will have made a lasting difference.”

Milano agreed fully. The first outcome came a short time later. In autumn 1993, the trustees announced creation of a KPMG African- American Accounting Doctoral Students Scholarship program to fund some of the others who had applied to the AICPA. (It was later expanded to include Hispanic-Americans and Native Americans). Four recipients were identified and funded. What had begun as a $40,000 gesture of intent by Elliott now had the attention, backing and commitment of one of the accounting profession’s global giants. The issue of diversity in business education was moving off the back burner and out of the cloistered hallways of academe, into the light of day.