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Doing It All

Cathy Engelbert, Peter Yang

Deloitte LLP’s new CEO, Cathy Engelbert, is driving innovation among the firm’s 70,000 employees—and helping to equalize the nation’s corporate balance sheet.

On the cover: Engelbert photographed by Peter Yang with hair and makeup by Carrie LaMarca.

Cathy Engelbert sits behind a large wooden desk in her corner office at 30 Rockefeller Center in Manhattan. Afternoon sunlight streams through windows offering a world-conquering view of the empire state building, while a cable news station flashes on a TV across the room. Perched on a ledge behind her desk is a basketball signed for her by a group of executives and Deloitte partners at a pharmaceutical conference. Slightly more impressive is the additional signature of fallen former NBA star Allen Iverson, who was at the hotel bar after the conference. “I begged him to sign it,” says Engelbert, a hoops junkie who played college ball at Lehigh University in Pennsylvania.

In front of Engelbert are piles of handwritten notes congratulating her on becoming the first woman CEO of a major American audit and consulting firm—Deloitte LLP, the U.S.-based member firm of the global network known as Deloitte Touche Tohmatsu Limited. There are letters from students, deans of universities, fellow CEOs, even one from the Florida Supreme Court. Their general refrain: This is a big deal. And it is, considering that at last count there were just 25 female CEOs in the Fortune 500 and 51 in the Fortune 1000 (were it a public company, Deloitte would easily crack the Fortune 500).

When it was announced in February that Engelbert, 50, would succeed interim CEO Frank Friedman as Deloitte LLP’s chief, the media released a flood of reports and puff pieces that rightly focused on gender but glossed over the position itself and the fact that it’s incredibly difficult to rise to the top of your field—no matter your sex or race. I ask Engelbert how she feels about the “female CEO” label.

“That I’m sitting here is a testament to Deloitte’s commitment to diversity and inclusion,” she says, noting that her firm was the first major American accounting and consulting outfit to hire a minority CEO (Joe Echevarria) and a female chairman (Sharon Allen). “But I tell people the key for me was doing different things in my career to build my capabilities so that when I came up for leadership roles people said, ‘Let’s consider Cathy—not because she’s a woman but because she has the capabilities.’ ”

It’s a tactful response that shows that Engelbert is a product of second-wave feminism—she’s a beneficiary of Deloitte’s Retention and Advancement of Women program, which rolled out in 1993 and has since tripled the number of women in leadership roles at Deloitte. But it also shows she’s pragmatic enough to know that after you lean in, you have to get to work doing what you’re qualified to do.

“Cathy is smart, perceptive and skilled in bringing together many different points of view so that she can make decisions that are in the best interest of our clients, our people and our firm,” says Mike Fucci, Deloitte LLP chairman and one of Engelbert’s many cheerleaders. “Like all great leaders, she has a way of engaging the business community, our clients and our people that is inspirational and authentic.”

At Deloitte LLP, Engelbert inherits a partnership that recorded $14.91 billion in revenue in its last fiscal year, employs 70,000 workers and serves more than 80 percent of Fortune 500 companies. The firm is broken into tax, consulting, financial advisory and accounting subsidiaries, which provide services to clients in tech, financial, consumer, health care and other industries. Measured by annual revenue, Deloitte’s global network is the largest of the Big Four accounting firms, with PricewaterhouseCoopers, Ernst & Young and KPMG rounding out the list.

Despite its size and steady post-recession growth, Deloitte is not without its flaws. In its most recent report, government-regulated auditing watchdog Public Company Accounting Oversight Board found deficiencies in 28 percent of the audits carried out by Deloitte in 2013 (it should be noted that issues were found at the other Big Four firms as well). Deloitte also recently completed a one-year suspension from consulting for New York-regulated financial firms due to suspicious ledger activity carried out by its former client, Standard Chartered Bank.

Engelbert acknowledges the challenges and demands of running a large firm but says that growing up in a big family helped prep her for the job early on. “It was always competitive,” she says of her childhood in the small community of Collingswood, New Jersey, just across the Delaware River from Philadelphia. Her IT manager dad and medical practice administrator mom raised eight kids—five boys and three girls—and Engelbert says she and her siblings were “always competing for cereal and for time with our parents.”

Engelbert competed on the lacrosse pitch and basketball court as well and eventually captained her high school and college teams in both sports. “My confidence and leadership ability are rooted in sports,” says the CEO, who tends to stick out her fist like a politician when she speaks, pointy thumb and all. (She also frequently repeats my name during the course of our conversation—a classic management school trick that is quite effective).

Another confidence builder came in the early 1980s when Engelbert attended Lehigh, where the student ratio was then about 4 males to 1 female. “I said, ‘I can do this. I have five brothers,’ ” says Engelbert, who studied computer science before switching to business after someone told her accounting majors were all but guaranteed a job out of college.

Engelbert landed at Deloitte’s Philadelphia office as a staff accountant in 1986 and, as at Lehigh, it was a boys’ club. “I had to build my confidence from mentors and sponsors who were men,” says Engelbert, who counts former Deloitte Touche Tohmatsu CEO William Parrett as a mentor thanks to the encouragement he gave her in the late 1990s. “I was a senior manager in our national office at the time, and pregnant with my daughter,” says Engelbert. “I thought it would be easier to go work for a corporation in New Jersey, but Bill said, ‘Cathy, you don’t know how much potential you have.’ He also told me that I could have children and be successful. Nobody had ever told me those things.”

As Engelbert climbed the ranks at Deloitte—first as a partner, then as CEO and chairman of its auditing subsidiary—she realized the importance of asking for what she needed to find a semblance of work-life balance. When the firm wanted to move her to St. Louis in the early 2000s, she requested to be placed with a major New Jersey pharmaceutical company instead, to avoid uprooting her family. Deloitte said OK.

“Women start to think at different points in their careers, ‘Can I do it all?’” says Engelbert, who now has a 14-year-old son and a 17-year-old daughter attending Villanova University in the fall. “The answer is yes [to doing it all, not having it all—a term she dislikes], but you have to ask for that flexibility. And it’s important to know that your job demands and skill sets will change over time and that sometimes you might have to do something you don’t like for three to six months.” And what about companies that don’t value flexibility or gender balance? “Culture is hard to change,” says Engelbert. “But when you look at companies around you and they’re all changing, you don’t have a choice.”

Deloitte has made strides toward toppling the white guy culture that Engelbert first encountered in the Reagan era. Of the firm’s 24,000 projected new hires in the next fiscal year, 66 percent are expected to be minorities and women. But Engelbert knows there’s more work to do. The Wall Street Journal and Forbes have pointed out the gap between the relatively high percentage of female CPAs in the professional services sector (40 percent, according to 2013 data from the American Institute of Certified Public Accountants) and the much lower percentage of women in high-level accounting positions (17 percent at large firms, says the AICPA).

“I think it’s important that I can be a role model,” says Engelbert. “You’d be surprised at how many young women and men say, ‘Cathy, it’s great that you raise two kids, coach their sports teams, attend everything.’ ”

Aside from rallying Deloitte’s troops, Engelbert is focused on driving innovation—both internally and on the client side. “We’re trying to be innovative around people,” she says. “When you have 70,000 employees, you have to think about how people want to work—and how they want to be evaluated.” She’s referring to the firm’s radically overhauled performance review pilot, which launched in mid-2014 and replaces old-school methods such as number rankings and 360-degree reviews (where multiple people scrutinize each employee) with four straightforward questions answered by one team leader. For example: “Given what I know of this person’s performance, I would always want him or her on my team (answered on a five-point scale from ‘strongly agree’ to ‘strongly disagree’).” Anyone who’s ever endured the Kafkaesque song and dance that is your typical performance review will likely hope this streamlined approach rubs off on Deloitte’s clients.

Engelbert is also focused on hiring data scientists, cybersecurity specialists, STEM graduates and experts in risk, strategy and human capital in addition to accounting audit and tax specialists—a savvy strategy, given that the digital space seems to reinvent itself every other week: “We’re very focused on the digital strategy of companies in retail and consumer products and in health care, where the digitization of records is changing the way health care information will be delivered,” she says.

Maybe it’s because she comes off as passionate and down to earth in person, but Engelbert manages to make even the unsexy world of spreadsheets and analytics sound halfway interesting. Imagine how fascinating she must seem to young Deloitte hires plotting their own rise to the top.

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