Sharon Allen, the outgoing chairman of the board of Deloitte, has a lot of "firsts" at the big-four accounting firm: the first woman to be hired in the audit function in Boise, Idaho, where she got her start; the first woman to become a managing partner; the first woman elected to the board of directors; the first female regional managing partner; and the first female chairman.
Allen, 59, was appointed chairman in 2003 and has been with Deloitte for 38 years -- her entire professional career. She started with the firm's predecessor, Touche Ross, after graduating from the University of Idaho and also received her CPA in that state.
As chairman, she is responsible for overseeing the firm's management and navigating the firm through consistently-changing regulatory landscapes, like after Sarbanes-Oxley was passed in 2002. Based in both New York and Los Angeles, Allen travels frequently, whether to meet with the global board of directors, give speeches on corporate ethics, or advise large clients.
FINS spoke with Allen about her career, her impending retirement and how she passes the time when she does all that traveling.
Julie Steinberg: What does it mean to be chairman? What do you actually do everyday?
Sharon Allen: I commit first and foremost to good governance in our organization. I'm responsible overall for governance and I spend about 35% of my time on that. That means planning the agenda and assuring that we have best practices in place for good corporate governance. We have 3,000 partners. Those partners are as equally interested in good governance as our public shareholders. In addition to that, I do have a responsibility to clients. I don't file audit opinions anymore, but I act in an advisory role to the some of our largest clients. I represent our firm in new business opportunities. I also participate as an active member on our global board of directors; I chair the risk committee and I'm a member of the governance committee. No day looks the same. One week I may be totally committed to attending audit committee and really focus on partners, the other week I may give up to three speeches.
JS: How has the accounting profession changed in this regulatory environment, especially in light of the Lehman/E&Y scandal?
SA: The public accounting arena has indeed changed a lot. It's now a regulated profession with oversight that's provided through the Public Company Accounting Oversight Board. We are still, both the regulator and the profession, trying to work through that, with the common objective of improving audit quality. We're learning how to work within a regulated environment that some years ago we just didn't live with.
JS: Non-Big Four accounting firms have told the EU that the sector is too concentrated with the Big Four. They want to dilute their influence by spreading work amongst more firms. How does this affect Deloitte?
SA: Just last week, we were talking at our global board meeting about how the profession got narrowed down to this number to begin with. The last reduction wasn't the choice of the profession with [Arthur] Andersen out of business. We have to operate effectively overall on a global business. Our clients are all multinational. We have to be able to serve them in small countries and small cities. There just aren't enough business or resources available in the small countries around the world. You have to have concentration of enough business to service the clients properly. If you spread that across eight firms, there just isn't enough that supports that kind of that activity. In some of the major countries, the additional number of firms make sense, but when you look at it across the world, it doesn't work. We're not opposed to the competition; there are next-tier firms that are very good, and we encourage them to be in the mix in terms of proposal opportunities. It's healthy. But the reality is the concentration will and probably should continue.
JS: The firm plans to hire 250,000 over the next five years. Why such a big ramp up? Are there some areas that require more hiring than others? Are there any markets that are priorities?
SA: We're certainly growing at a fast pace. We're focusing on emerging markets and economies that many others are focusing on, like China and India. We have the good benefit of having a growing organization. We do have some turnover. We are increasing our numbers, though. In the U.S. alone, we will hire 10,000 to 12,000 a year. We're expanding our practices and responding to the demand in financial services and health care. We also have a very significant federal practice. We are focusing on emerging consulting opportunities like data analytics and continuing to develop around sustainability, which is very important in the emerging area focus.
JS: You're set to retire in May 2011. How did you come to this decision?
SA: I'm approaching the end of my second four-year term as chairman. We have a limit of two terms. While I'm not at mandatory retirement age yet, I concluded that it's a really good time to make this move. I've had a fabulous 38-year career. But I'm also very comfortable with the transition leadership and the state of the firm. It's a good time for me to leave at the top of my game. My husband is looking forward to spending more time with me. I will probably go on a couple boards and direct my attention to other pursuits.
JS: How does the replacement process work?
SA: We have a nomination process that we undertake. We interview through a nominating committee chosen by the board. They interview about 1,300 partners for their input on the type of attributes they'd like to see in the chairman and CEO positions. Then the committee interviews some individuals who match up with those qualities and ultimately proposed the nominated person. The ballot is out right now among all our partners to approve the chairman and CEO. [Ed. Note: Barry Salzberg has been voted in as global CEO. The results for chairman will be released in two to three weeks, a spokesperson said.]
JS: What have been some of the biggest challenges you've presided over?
SA: There are couple things that have been big challenges. Initially, when I took on the role of chairman, we were just reintegrating Deloitte consulting. We made a choice to separate our market instead of separating our firm. While other Big 4 firms had chosen to separate the consultancy, we chose to keep the consultancy as part of the overall organization. That was one of the first things we were doing. We were also responding appropriately to the new rules under Sarbanes Oxley that limited the consulting work we could do for the audit client. It turned out to be a powerfully good decision for us. There were naysayers who wondered whether we could make that work. We did make it work and were very successful.
The challenge over the past few years has been how to deal with this economy. Through oversight of the board we were able to do a lot of good scenario planning. We were a little ahead of the game in anticipating the downturn that allowed us to prepare well for the difficult times to come. We had some reductions in our workforce, but they were not as substantial as they might have been had we not appropriately planned for the downturn.
JS: In an interview, you said that you were once passed over for a promotion and when you gave your supervisor a list of reasons why you should have earned it, he said he didn't know you had done all those things. How do you make your accomplishments known in an elegant way without bragging?
SA: I was so fortunate to learn the lesson (of putting yourself forward) early in my life. You think everyone must know the good things you're doing in an organization, but sometimes they really do go unnoticed. But you can make it clear without being a braggart. I think one way is to strike up a conversation with your supervisors about a project or task that's important to what they're doing. Make it clear how much you know about what you're talking about. In that conversation, you can make it clear what you've done. I believe in an open line of communication. We talk about the importance of transparency for managers. It's equally important that a young person coming up in their career be transparent with their supervisor. This is the big "ah-ha" moment: You should not assume they know about your accomplishments.
JS: What was your career trajectory like?
SA: I started working on the audit side. I grew up in the organization as an audit staff manager and then partner. I became office managing partner for Boise. When I moved to Portland, I was still serving clients in an audit partner role but I was also managing partner. After a couple of years there, I served in a regional managing partner role, which was based in LA and covered the Southwest. I was elected to the board of directors a couple of times. Eight years ago, I was elected to chairman of the board.
JS: What did you do after graduation?
SA: I went directly to work for Touche Ross, Deloitte's predecessor, in Boise, Idaho. My husband was graduating in engineering. For a while he had a job offer in the Midwest, I had a job offer on the West coast, and we both had job offers in Boise. We stayed and it kept us close to our friends and families.
I stayed in Boise for over 20 years with the firm. We stayed there because my husband had started his own business. We were a classic two-career family. While I had many opportunities to move to other offices, I chose to build my career in Boise. I was elected to the board of directors while I was in Boise.
JS: Did you find that working in a smaller office allowed you do more hands-on work and get noticed?
SA: I call it my best mistake. I actually did just that. I had the opportunity to serve a lot of big clients. I was the managing partner there. As a result, I was able to learn the business. I did it all -- we did recruiting, marketplace activities, business development, which helped me understand how the organization operated. I was able to put that to work when I was asked to move to Portland and then to Los Angeles to take on what was the second largest region in the firm.
JS: So accountants shouldn't worry if they start out in smaller offices instead of New York or LA?
SA: It could be an advantage. The key is to learn everything you can and leverage the opportunity to be able to progress as you wish.
JS: What jumps out to you on a resume?
SA: We do look at academic success. As much as people would like to say grades don't matter, they really do. We very much look for the well-rounded individual who will come to us well-prepared to work in teams and be collaborative and hit the ground running.
JS: How can women reach the top echelons of the accounting industry?
SA: One of the most important things an organization needs to know is to understand the importance of the flexible work-environment, which doesn't only apply to women. I think that's important – the flexible-work environment over the course of a career. Organizations shouldn't make assumptions for or about women. You need to allow the women to make the choice for themselves. I've had the benefit of a lot of opportunities presented. But I think it's equally as important to take the opportunity. There's a mutual obligation on behalf of the employer and behalf of the employee to make that work.
JS: So do women just need to talk themselves out of the self-fulfilling – and self-defeating – prophecy that they can't have it all?
SA: Every individual – women in particular because of the more traditional expectations – really need to work through what works for them. How do they find the appropriate fit between life and work? They may say, I'm going to be in an accelerated mode and then I may want to level off a bit, or even take a reduced work commitment and then go back. In the long term, it's about fitting it all in. It's a corporate lattice, not a corporate ladder. You can do it all, you just can't do it all at once.
JS: How important were sponsors and mentors for your career?
SA: Sponsors and mentors were both very important in my career. Mentors are what we have often talked about for years, having someone who can look out for you and who can help you with preparation with your career. I've had the good benefit of having sponsors in my career. Those are the people who will be an advocate for you in the organization and position you for that next promotion. The best example I have was when the new CEO in our firm asked me to go to LA to become regional managing partner. He and I had worked together on the board of directors and he had gotten to know me and my capabilities. I had been in a smaller market but he recognized I was able to deal with a larger market. He took a chance on me and put me in this very significant role. It gave me that boost and allowed me to become a chairman.
JS: Some say that you're chosen by a sponsor ahead of time and that it's tough to cultivate ties on your own. How do you feel about that?
SA: I do believe there's a way to cultivate ties with sponsors. Good performance and distinguishing yourself within those roles will always position you for that next opportunity. People will see your performance and your success and will be much more likely to sponsor you for that next position. I do indeed believe there can be changes in people's views of others in an organization. They can move themselves ahead based on performance. You may have an advantage if people see you as a rock star at the start, but it won't sustain it throughout the rest of your career.
JS: How do you handle all the travel you do?
SA: I drink a whole lot of water. I'm also fortunate to be able to adjust to time zone changes relatively easily. I work on domestic flights, and I do take my iPod and my computer.
JS: What are you listening to these days on your iPod?
SA: I'm a country music fan.
Write to Julie Steinberg