• Music For Chameleons – A Visitor’s View of The Firms

    By • Dec 1st, 2008 • Category: Pure Content


    A new friend recently asked me, “Do you keep all of the books you buy or do you give them away and throw some out once and a while?” He knows I’m an avid reader and suspects that my house is full of books, maybe old ones, dusty ones, duplicate ones. I sense he enjoys a little more world order than he’ll find at my place.

    I had the luxury this past long holiday weekend to read a little more, write some non-audit related pieces, and think. I answered my friend that I have a lot of the same books and many unexpected ones. Not as many business books as you might suspect and quite a few collections of everything written by and everything written about certain authors. I also keep duplicates of my favorites, because I like to lend them. My siblings and a few friends are regular “circulators” of books. Not because we can’t afford to buy them ourselves but because we like to read hardcovers and there is a joy in sharing something you’ve read and knowing someone else is now reading it. Then you can discuss it.

    John Cheever, Anne Sexton, Saul Bellow, Phillip Larkin, Vladimir Nabakov are some of the authors whose books and biographies sit on my shelves. 

    Another is Truman Capote.  

    Part of Truman Capote’s public persona was a long-standing rivalry with writer Gore Vidal who famously said, “Truman Capote has tried, with some success, to get into a world that I have tried, with some success, to get out of.”

    Truman’s undoing was discreetly conducting research (unbeknownst to his friends and benefactors) for his tell-all Answered Prayers (eventually to be published as Answered Prayers: The Unfinished Novel). He permitted Esquire to publish four chapters of the unfinished novel in 1975 and 1976. Although the issue featuring “La Côte Basque” sold out immediately upon publication, its much-discussed betrayal of confidences alienated Capote from his established base of middle aged, wealthy female friends, who feared that the intimate and often sordid details of their ostensibly glamorous lives would be exposed to the public.

    It’s with this theme of an insider telling tales, that I reprint for you here a long letter I received from a daily reader, Tenacious Truman. It’s music for the professionals who live as chameleons in the firms, changing their skins, as needed, to survive.  Tenacious Truman and I understand you, we even empathize with you, but we no longer envy you.


    Tenacious Truman has a long history in professional services in the original Big 5, having started at Arthur Andersen and worked in the consulting practices of two more now-Big 4 firms. He has recently moved to industry, an industry that is always busy, even in this time of financial crisis because it supports one of the oldest professions.  

    Hi Fran,

    After nearly 10 years in the “Big 5” accounting world (nearly all of which was spent as a consultant), this month I moved back into the corporate world. The commute is a killer but travel is next to zero, so I call that an even exchange.

    I was lucky in that I had been an “experienced” hire, meaning that I’d had more than a decade of corporate experience prior to joining in 1999 what was then one of the Big 5. So the transition back to corporate life has been a bit easier for me to make than I imagine it has been for others. The pace is certainly slower—and I must say that the dedication to “work/life balance” is palpable, and not merely the lip-service to which I’d become accustomed in the Big 4 accounting firms. We have flexible work hours, employee recreation clubs, commuter services, and there is absolutely no raising of eyebrows when people take time off (or dare to leave work on time).

    One thing I’ve immediately noticed is the graying workforce. Where I work most of the accounting staff is within 5 years of retirement. Retirement parties are common (we already had two this week) and people are concerned about succession planning. But talent is scarce and my company has more openings than it can fill—even in this economy! There are jobs aplenty for the right people with the right combination of skills, background and positive mental attitude. If there’s a lesson there for your readership, it might be that just having GAAP or audit or tax skills is not sufficient; one must also have a good understanding of industry issues and the other, softer, skills, in order to make a successful transition out of the Big 4 and into a position within industry.

    For some time I’ve wanted to talk about my decade of experience in the Big 5. I’ve held off because (obviously) it wasn’t appropriate to criticize my employers while taking a paycheck. But now I get to tell the truth (or at least my version thereof,) which is kind of what you do on your blog.

    Here are some of my “truths” :

    1. The partnership model is broken. It’s utterly ineffective for executing the mission of the accounting firm. How can five thousand (or one thousand or even 500) Type A “equals” ever agree on anything? They cannot and they do not. As a result, firm “leadership” makes decisions and the rest of the partnership is subsequently informed of those decisions. Which is why partners are frequently as surprised as staff by layoff notices, reorganizations, new branding, etc. This is also why partners spend so much time away from client-facing work; they are on calls with each other (many of which are regularly scheduled) trying to figure out what is going on … so that they can align with it.

    I usually tell people that there are two levels to each of the partnerships: partners and everybody else. If you’re not a partner then it doesn’t matter what title they give you. But in fact, the partnership itself appears to be a multi-level pyramid, with a leadership model based on “apostolic succession” (to borrow from the law partner-as-employee legal decision) rather than merit. This model is outdated and irrational (to say the least), and it will eventually lead to the downfall of these firms unless reform is undertaken.

    2. Which leads me to the difficult realization that, with rare exceptions, the partnership is in it for themselves. As you have blogged, the goal of the partnership is to make money for the partners. There is no higher purpose, no more overriding “professional” mission, no fiduciary duty beyond that of making money. Partners are focused and measured on two things and two things alone: (a) ability to keep staff billable and (b) ability to sell work that will keep staff billable. (Okay, other things are measured but success is defined by those two attributes.)  

    Staff are enticed to stay with the firms based on a dream of one day becoming partner so that they too can share in the wealth generated by the aforementioned pyramid scheme. To call an accounting firm a “for-profit business” woefully understates the true basis of the partnership, which is (quite simply) … greed. 

    Now, I’m not against greed, per se. As Michael Douglas playing Gordon Gekko in Wall Street noted, “Greed … is good. … Greed works” but there is often a price to pay for such greed. One of the tradeoffs I noticed was that accounting expertise took second place to sales expertise; it was astounding how little time I spent on technical issues compared to the amount of time I spent on sales pursuits. My advice for all students of accounting is to study psychology and sales and marketing … because those skills will be highly prized by the firms, as opposed to accounting or audit or tax expertise, which will be largely taken for granted.  

    Another price paid is lack of integrity. At one firm, I was told to “eat” hundreds of billable hours because the partner had negotiated a fee ceiling and didn’t want to go back to the client for more. Sure I could have reported said partner but, as we know, that would have been a career-limiting move, and I was on partner track (or thought I was). I’m pretty sure that my experience is a common one; and it begs the question as to how the firms enforce quality or ethics rules when the partners who violate the rules are the same ones who get to decide annual performance rankings, or who gets admitted to the partnerships and who doesn’t.

    Here’s another true story about another partner: Our employee satisfaction survey results were too low. The partner was grilled by local leadership as to the causes for the low scores, and directed to fix the morale problem(s). How did he address staff morale issues? He did it by visiting every one of the staff and telling us that his compensation was tied to the employee satisfaction survey scores, and now our compensation would be tied to the scores as well. Guess what? Next survey he had the highest scores in the region! Based on his ability to drive staff morale to such high levels, he was then asked to help other partners turn-around their low scores as well….

    3. Making partner is a long, arduous process. It’s a mystery which remains a mystery, even to those who participate and is still a mystery long after it’s over. The firms have a vested interest in keeping it that way because it gives them flexibility to promote certain partner candidates without regard to merit or even diversity concerns. 

     

    One thing I found fascinating was that the scorecards used to evaluate partner candidates didn’t align with the metrics used to evaluate partners after their ascension. Given the firms’ push for revenue and utilization, you would think those Senior Managers or Directors with the best business cases would be the ones who were chosen, but that was often not the case. I’m quite sure that I don’t understand all the nuances of partner candidacy (nor do the partners themselves, as previously noted,) but it seemed to me that partners were chosen as much for looks and conformity and ability to “go along to get along” as for anything else. 

    That’s what “soundings” seemed to be for – to vet out non-conformists and other outspoken “relationship risks.” (Soundings are the feedback reports required by many firms as part of the partnership candidacy package. As many as 50-100 feedback reports are necessary, from existing partners that a candidate worked for, with, or in the vicinity of throughout their 10-15 years prior.) Such an approach, so highly dependent on peer review and subjective criteria, has obvious implications for audit quality and the way a firm gets new business (see my comment about enforcing ethics rules, above). 

    In my last Advisory position, partner candidates were told that the firm was looking for generalists, for “utility players” who could “deliver the firm” – and that subject matter experts were not well-suited for partnership. I was astonished at this statement. It was like telling Shaquille O’Neal that he couldn’t play in the NBA because all he can do is play Center! Instead of looking to build a diverse, well-rounded team of partners who could (together) drive excellent client service, it was clear that Advisory leadership was looking for quiet, non-boat-rocking types who would agree with (and support) current leadership: quiet managers and solid citizens with noses firmly to the grindstone (as opposed to criticizing leadership’s decision-making).  

    From my point of view, the passed-over “boat-rockers” who created friction were quite possibly the firm’s future leaders, with charisma and ideals and the courage to speak truth to power; and so the partner candidate vetting process would tend to discriminate against the very folks that the firms would seem to need the most right now. (One of the most frequent criticisms, and it’s quite correct, is that leadership is comprised of good auditors and managers and administrators—but very few good leaders.)  As you have described it, it is quite literally “the bland leading the bland.”

    4. Which leads me to the sad conclusion that although the most obvious aspect of the greed-based culture is getting rich off the backs of the staff, a more insidious one is enticing clients through appeals to their baser natures. For example, how much money do you think the firms spend on skyboxes and suites and box seats at sports events, music venues and theaters? How many staff positions could be retained by eliminating those seats? More importantly, why have them in the first place except to act as potential gratuities and bribes for client decision-makers? What about the thousand-dollar dinners to wine and dine CFOs, CEOs, etc? Why the SEC and PCAOB permit this type of amoral behavior is not known but it is part of the greed-based culture and needs to be eliminated right now.

    I need to reiterate that the purpose of the partnership is to make money for the partners. This leads to immediate gratification decision-making, where staff with high utilization gets RIF’d before the partners’ income is touched, even though RIF’ing staff reduces long-term income prospects. Partners don’t care about tomorrow; that’s the problem of those (future) partners. 

     

    As a corollary, partners have duties and obligations only to other partners, and not to employees (staff) beyond that required by statute. Nobody entering the Big 4 should think for a minute that the partners they work for have any special duties, obligations or responsibilities to them. (This is why the Big 4 HR function is basically a joke. There are no checks and balances on how partners interact with employees, except those imposed by statute or those the partnership agrees to establish.) That’s not to say that the working conditions are poor; the hours are long but the opportunities are really priceless. What I’m trying to say is that Big 4 partnerships aren’t like corporations. Corporations (in my experience) have checks and balances, and most employees (even management) live within well-known constraints; such is not the case with the accounting partnerships. The environments are different and one needs to bring differing sets of expectations to the party. 
     

    5. One unfortunate result is that the Big 4 firms spend millions upon millions of dollars in branding, advertising, and internal messaging trying to convince everybody that the firms are “one firm” when in truth they are simply a series of interlocking partnerships and every partner is in it for themselves. 

     

    It’s quite a bit like a McDonald’s franchise, wherein every restaurant owner signs up for the branding and marketing, and agrees to serve the same menu cooked the same way to the same quality standards. Franchise owners (i.e., partners) who want to serve a better burger are prohibited from doing so, because that’s not the McDonald’s way. Not that McDonald’s isn’t successful, but it also isn’t known for the best (highest quality) burgers and fries either. As for me personally, I haven’t eaten more than two or maybe three McDonald’s burgers since seeing Supersize Me several years ago. But the point here is that (as you have blogged, Fran) one’s job satisfaction will come from the immediate partners (and other staff) one works with, and not from the firm as a whole – because there is no firm as a whole. 
     

    6. At my last firm, leadership was focused on creating a “culture of high performance.” We got this messaging at every opportunity. I found this preoccupation ironic, because it was clear to me that the Big 4 firms already had such a culture. Nowhere in my career have I encountered such hard-working, knowledgeable, dedicated employees. Sure, there were some exceptions (aren’t there always?) but those were usually taken care of during annual performance reviews. 

     

    Working in the accounting firms is so hard; so much is asked of each person every day; it takes so much pain and sacrifice just to get a “meets expectations” rating. Yet the partnerships are focused on driving additional performance out of their staff, forgetting the adage about blood and turnips. If the leadership were really in touch with what was going on, the partners would realize what treasure lay at their feet, and work to retain high-performing staff instead of driving them away through the continued escalation of demands and required tasks, and the occasional RIF. 
     

    7. One more point – it’s time for collective bargaining. Staff at levels perhaps as high as “manager” need to organize and unionize if they want to have a voice in their compensation. Engineers already do it and accountants can as well. Failure to bargain collectively leaves each individual at the mercy of the partnership, which is not very merciful. 

     

    (Example: “I’m sorry we couldn’t promote you to Manager this year, even though you met all the criteria for doing so. The fact is, we have to maintain our leverage model, which means that not all deserving candidates can be promoted.”) That’s not to say that compensation and benefits are poor – they are typically better than industry – but the only way to open the veil that covers compensation and promotion is to do it on a collective basis, since individuals essentially have no ability to do so and, as noted above, individuals who rock the boat generally are not considered to be good candidates for promotion. 
     

    Okay that’s it. Perhaps a bit more sour grapes than intended, but that’s what the internet is for, right?

    Best,

    Tenacious Truman

     

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    48 Responses »

    1. Thanks for posting that email from Truman, Francine – it’s very encouraging to hear that he was able to find better work/life balance in Industry. Overall I wouldn’t call that content ‘sour grapes’ so much as ‘grass is greener’ – legitimately greener.

    2. Insightful and thoughtful letter from Truman. Information you provide Francine is always appreciated. Truman’s views are not a new angle on the subject but a few observations for those reading it:

      One could surmise Truman didn’t make partner and made a decision to move onward and upward into industry. This is how Truman appears and it seems he passes over to briefly that yes it may indeed be sour grapes due to this process.

      Also, not wanting to criticize while their but writing away afterwards all because it didn’t seem right about collecting a paycheck at the same time? An apologist if I ever saw one – especially for someone who goes on at length about needing leaders to speak up and “rock the boat.” Yet, Truman did no such thing but pick up his stuff, moved on and now throws stones from a distance. Practice what you preach otherwise. Back up your words with actions. It appears from Truman’s letter that he made all these observations and never spoke up until he was at a safe distance. Sounds as if Truman was not one to rock the boat either. That’s hypocritical – and many people are – hell I’m writing this anonymously but the point should be made. Will Truman do the same things if he becomes unhappy at his industry job and will make similar criticisms once leaving or would he raise those concerns and try to be a force of change and leader? I suppose time will tell.

      Regarding taking vacation: This has never been an issue at my firm – and leaders have been accomodating with vacation and yes sometimes people have to fly back to a client direct from vacation but at no extra out of pocket to the employee – just an extra suitcase. I’ve never heard of someone, who properly communicated their planned vacation, not being allowed to take it or being given grief over it.

      Regarding Truman’s revelation about eating billable hours:
      I have heard this issue discussed by professional practice and general counsel and it is forbidden and people are supposed to report it immediately. This is not something sanctioned firmwide and partners that do this or push it are rogue and violating their own ethics policies.
      So the question begs, why wouldn’t Truman with his high ethical standards call the hotline and make the report? Usually what happens that i have witnessed is if someone reasonably exceeds budgeted hours – they get to submit those in their time tracking and get utilization credit but the firm does not bill those hours to the client. If a person took 20 hours to a job that took 8 because they are inept than they should eat those hours – incomptence is not billable. But if a task is more complicated and requires an overage of what was budgeted that is acceptable and the engagement eats the time but the employee gets to bill. Again, my experience and what I have witnessed. If it goes down the wrong way – call it in.

      Truman goes off on a tangent about sports executive suites. This weakens some other stronger observations about the partner model and is a feeble minded view. Executive boxes do generate revenue – those events are part of building relationships with clients. Not sure about the audit side of things but with consulting clients these are necessary costs – opportunity costs. It is a short sighted view to think that by eliminating them it would “save” jobs of staff. The counter argument is without those relationships would not be built or strengthened and revenue would suffer thus still causing staff to be rif’d.

      Nowhere in my career have I encountered such hard-working, knowledgeable, dedicated employees. Sure, there were some exceptions (aren’t there always?) but those were usually taken care of during annual performance reviews.” Thank you Truman – this is a very poignant observation. Accurate too.

      I shuddered when I read the idea of unions. What appeared to be a well thought or at least intentioned letter lost all cohesion lost all credibility. It had a haunting sound of “workers of the world unite!” theme. This may possibly be the worst idea i’ve ever heard. It would do such damage to firms and their operations. Unions break the will of companies and suck dry so many resources in their never ending quest to seek concessions from management. Need we use the Big 3 autos as a bigger example. Having the staff unionized would corrode and devistate all that drives the success of these firms – not the partners – the employees. To Truman’s above point about hard-working, knowledgeable and dedicated people – a union force would eviscerate this because a union would evaporate the need for such attributes and just protect everyone INCLUDING the sub-par performers. People would gradually not perform as they have under a non-union structure because of union protection and the work product would suffer a horrendous fate because of this mentality. Not to mention the way pay is structured in unions.

      I would venture to guess that Truman would not have the corporate gig he has now without his Big 4/5 experience and he lacks giving that any credence whatsoever in his diatribe.

      If his overall message is that change is needed – not much to disagree. Things do need to change as with any large organization but how quickly that will happen is another story all together. His ideas for change are misidentified, poorly thought out, and do not further the debate and discussion in a valuable, substantive way. They rather provide flaw after flaw from his singular vantage point now that he is at a safe distance but are idealistic beyond the pale.

      However, the divergent and contrarian opinion was worth the read.

    3. Wow, that was a lengthy read, but, having worked for 3 of the Big 4, its good to see another insider’s take on the Big 4. Having been victimised by unfair performance appraisals at 2 of the Big 4 (leading to job loss), i found the comment that corporates have better/more protective/HR structures. Two observations – what does RIF stand for? secondly, are we all being rather hard on Big 4 audit firms? I am bitter myself, because of what i mention above, but don’t all firms lay off people? don’t Big 4 audit firms provide good experience and decent pay? doesn’t that level off things then? lets not forget that Big 4 partners are human beings like everyone else, hence entitled to the occasional goof.

    4. RIF – Reduction In Force.

      Consulting/speak for layoffs/large firings.

    5. Great post!

    6. Excellent post as always –

      One point that Truman posted that I found interesting:

      ————-

      One more point – it’s time for collective bargaining. Staff at levels perhaps as high as “manager” need to organize and unionize if they want to have a voice in their compensation. Engineers already do it and accountants can as well. Failure to bargain collectively leaves each individual at the mercy of the partnership, which is not very merciful.

      ————-

      I for one would find it fascinating if the accounting profession ever unionized. Does anyone have any knowledge of this being done in any country or within another financial services sector? While I understand the road blocks such action would face it is pretty interesting to think about :) Maybe it would end all the OT discussion that comes up year after year.

      Cheers.

    7. …I feel like I chose the wrong profession.

    8. rif = reduction in force

    9. Wow, great post.

      Our profession is definitely ripe for some reforms.

    10. I also feel like I chose the wrong profession. Accounting has sucked the life out of me. I suppose I am thankful that I have a decent paying job.

      With that said, unionization is a terrible idea. There’s plenty of competition in the market, even now, for the market to work. I think the Big 4 have a little too much control when it comes to entry level staff. There’s really only one game in town. With a few years and a few certifications under your belt, you can go anywhere.

      I really can’t complain about public because there is always an exit. If I wanted to leave, I could.

    11. Hi Anon of 3:49 — Thanks for the thoughtful comments. Your insights are interesting. Yes I did not make partner; I'm not sure I deserved to using the firm's criteria so I'm not bitter about that (really). But once it's clear that you will not make partner, suddenly all the sacrifices seem utterly pointless, so why stick around?

      I don't agree that it's hypocritical to criticize (if indeed that's what I was doing) after departure. In fact many folks try to create change from within; I believe I was one of those folks. But as any Change & Transformation consultant will tell you, change creates friction and friction is not especially collegial. It only takes one (or in my case three) "counseling" sessions regarding criticizing the firm before you learn that change comes from above, not from within, at the accounting firms.

      Vacation is an interesting concept. How many are daring enough to take two weeks of PTO (paid time off) without checking the Blackberry or voice mail, or participating in conference calls with clients? Not very many, in my experience. And when one is on R&R, who gets that work done? Or does it simply pile up, awaiting one's return? If the latter, we quickly learn to minimize vacations since that leads to catch-up work.

      Regarding reporting the partner who directed me to eat the hours. That was a tough call. That same partner was one of my key sponsors for partnership. Ultimately I decided against reporting him, a decision that shows my weakness(es) and one I have come to regret. I surmise others frequently face similar ethical challenges, but my experience is all I have to go on.

      We can debate the need to use high-priced tickets at sporting events to woo clients. Alcohol plays a role in such "meetings." Your take is that it's relationship building. My take is that any relationship built on gratuities is tainted. As you know, many if not most companies now prohibit employees from accepting such "gifts" so as to prevent the very conflict of interest that the firms are trying to create. I would hope that new business could be won based on quality and top-notch client service, and not based on such "Predator's Ball" tactics.

      What else? Oh yeah, the unionization idea. I came up with that one a few years ago when I (and many others) suspected that the incentive comp forumulas were being stealthily "adjusted" at year-end by one of the firms. The firm kept reporting record earnings but bonuses for top performers could barely buy a nice dinner. What was needed was an independent audit (irony duly noted) to reassure staff that the payouts were on the up-and-up … but how to get the partnership to permit it and who would pay for it? Despite your comment that the idea was poorly thought out, unionization would be one way to address that issue … I await your better method. (As a note, I've consulted to the auto industry and unions are NOT the problem there, despite what propaganda you may have read. Toyota proved that superior management works well with unions, or haven't you heard about the NUMMI plant in Fremont, CA?) My point is that if engineers can form a union for collective bargaining, other professions can as well.

      Finally, would I have my new corporate gig without the Big 5/4 experience? Yes, absolutely. I did the corporate thing for 15 years before going into Big 5 consulting; it was the knowledge I learned in the corporate world that qualified me for my consulting role. One thing though: I was able to negotatiate a much better salary coming out of the Big 4 (versus doing a lateral from another corporation). So that was a tangible benefit, for the record.

      Hey! This is almost as long as my orginal email to Fran. But as I said, thanks for your thoughtful comments. I figured they deserved a thoughtful reply.

      Final note to those other commenters and to others. The large accounting firms are a great place to start a career, to feel out what part of the business world fits your talents, to learn and to grow and to form a point of view on what works and what doesn't. I wouldn't suggest that people avoid the firms, not at all. But the law of diminishing returns works at the firms as it does anywhere else; and after a while one is either on the road to partner or it should be time to move on. (That was my decision anyway.)

    12. Truman,

      @349 Anon here. I agree with you that friction is not liked in the Big 4…and if it does occur the partners almost never let it trickle down. But that is how it should work – gripes go up not down. This is where I agree – people do not seem willing to debate matters and seek out divergent views and argue their points. As you said partnership is somewhat nominal as leadership makes the decision. But again any debates do not trickle down so far – though I hear of them from time to time in a somewhat sanitized version.

      I took two weeks PTO while on a major, high paced, high stress engagement because I had the vacation booked 5 months before the engagement and I told the partner and director the 3rd day their that it was coming in a month. YEs, I checked my email while away but very infrequently and I was quite of out of pocket to lend any valuable hand and when I came back I was welcomed back and worked on the project for another 3 months. I think if people plan and give proper notice it is not a problem. Having said that it does not necessarily mean they will not have to take a call or respond to an email while away -this is a service job and performance and excellence are demanded and that means doing a few things on vacation. People may disagree with this but many professions have these responsiblities where you cannot just unplug all together – law firms, i-banking (does this still exist), etc. Even corporate industry folks I know communicate with their office while on vacation. It’s the world we live in.

      As for unionization – I will never agree with that. Yes, mgmt in the Big 3 are big tumors as well but the unions certainly have not helped or made those companies better in the past 25 years. And Honda operates many plants with non-union workforce and hmmm didn’t see them begging Congress for a bailout and being sucked dry by unions and all the benefits they extract.

      And yes, your final point is correct – when the partner track fades away in front of you into the woods it is time to move onward and upward. I agree with that.

      Good chat sir.

      Cheerio,

    13. there, not their. Just a minor edit.

    14. To Tenacious T – you should move to a communist country where everything is “fair”. You have managed to demonstrate that you also had no backbone in reporting the partner that made you eat time, so you were part of the problem as well. My advice to you is to put your pacifier down, take the cracked chip off your shoulder and start looking through the front windshield of life, rather than dwelling on the past. Each of us needs to take personal responbility, and you have only pointed out that you lacked the courage to do so while at the Big 5.

    15. @1249…agreed. The letter does not inspire confidence in the author.

    16. As someone who has worked at a Big 4 firm for the past 6 years I think many (if not all) of Truman’s thoughts are accurate.

      I’d like to now see some thoughts on how to fix the problems.

    17. Truman, by your use of the term “meets expectations,” I gues that you did a stint at Deloitte. Being a former Deloitte employee, I can attest that the BS you summarized above is common practice. My friends at other firms do not face the time eating drama as much as I did. The partners were not shy about it. After the recent layoffs, some referred to eating time as realigning the hours (or transfer time from a chargeable code to a nonchargeable code). Good to hear that you found a more satifying avenue to spend your time.

    18. Eating time is such a common practise.

      Partners bullies managers and managers bullies the supervisors and the supervisors bullies the associate into doing it.

      the cards are always stacked against the less senior person to prove complexity over incompetence.

      ===
      The problem begins when audit fees are billed flat or pre-negotiated vs a time-bill.
      ===

    19. DMP rant.

    20. Truman, Thanks for the honest commentary. I see that your detractors are trying to discredit you because you admitted rolling over when pushed to eat hours. So what? At least you admit your mistake – not sure why you are attacked for that. Maybe those throwing stones are disgusted with their own lack of guts and hence the attacks. The idea of unionizing is a bit out there for me, but just a difference of opinion (and no need to attack you). The recent wave of layoffs at Deloitte and other big four are having unintended consequences i.e. more open dialogue/reflection/critique re the current system and the need for change.

    21. @ 12:49 – MAYBE YOU SHOULD GO INTO THERAPY? SO MUCH ANGER EMINATING FROM YOUR POST, WHEN YOU ARE A SUPPOSEDLY NONBIASED INDIVIDUAL? AREN’T YOU REALLY ANGRY ABOUT FULL DISCLOSURE ON EATING TIME? DON’T THE SEXUAL AND OTHER PREDATORS ALWAYS WANT THEIR VICTIMS TO BELIEVE THAT IT WAS THEIR FAULT FOR THE ABUSE. YOU POST SEEMS TO HAVE THE SAME MO OF ATTACKING THE VICTIM. PERHAPS YOUR BS WORKS BEHIND CLOSE DOORS, WHEN YOU HAVE THE UPPER EDGE (POSITION). BUT COME ON! THIS A PUBLIC BLOG.

    22. @250…learn how to use your computer and turn off caps lock.

      Thanks.

    23. Anon 12:49 and 6:13 – Non communist, union skeptic, Ted Nugent lovin' Republican here – not sure what "confidence" your own comments inspired, but I think you dismiss a very thoughtful post too easily.

      I'm seeing a lot of talking points/dogma about unions, but Tenacious T's point about the need for a *ahem* collective voice for the bottom feeders is good food for thought whether you agree with him or not.

      As a D&T senior, I can tell myself my efforts will "pay off" in the end. And for a single-digit percentage of us, that may well be true if we're talking about partnership. But let's back up and apply the "suck it up" logic to the entire firm here. If we have a few high achievers on the partner track who don't care how the lower level employees are treated, (considering it a paying of dues in their own case I suppose) then it will be no surprise in 10-15 years when the partner group is stocked with cold and callous a-holes showing a lack of respect for the average employee.

    24. @3:59 – SO WHEN I PURPOSEFULLY HIT THE CAPITAL LOCK BUTTON AND TYPE, IT MEANS I DON’T KNOW HOW TO USE MY COMPUTER? WHAT LOGIC. WHICH FIRM HIRED YOU?

    25. @532…yeah pretty much.

      Collective voice? Not sure how that works when firms seek out stock their staff ranks with a-type personalities. A-types don’t want a collective voice it doesn’t mesh well with their chi..

      But hey don’t we all fill out those employee surveys to see how the firm is doing with treating the staff – and we always hear what a smashing job we are doing from those troglodytes in HR…so if they say so than everyone must be getting treated well and the ones who are not well..ahem, there must be something wrong with them.

    26. Ted Nugent – “cold and callous a-holes” certainly an accurate description of DT…nice way to bring that home.

      And all this talk about partnership – after all Francine has laid out regarding partner pay – the pay vs. risk, vs. stress and other bullshit – is it worth it? Not so sure the numbers fall in favor of it adding up.

    27. Very interesting post & follow ups.

      Sounds a lot like KPMG as well from my time there.

      I'm curious as to thoughts of how the profession should be reformed. Seems like the old model is put up with the screwing until you can be a screwer rather then a screwee, and then screw all you can. I'd like to think that if someone were to run a firm with more transparency, talent would flock there and provide a competitive advantage.

    28. Screw all you can! I like that motto…

      oh wait, this about an accounting firm…wrong kind of screwing.

      Damn.

    29. Regarding your “truths”:

      1. There is a hierarchy within the partners of a partnership. Wow, how insightful. You mean all 1,500 partners are not absolute equals? If the partnership model is broken, as you claim, what model would you propose in which there is NOT a hierarchy? Also, you make assumptions that all partners are “Type A” personalities, that Type A’s cannot agree, or that they even have to all agree in order to effectively run a firm. All 3 are faulty assumptions.
      2. Wow, partners and partnerships are motivated by money. Shocking. Absolutely shocking. I had no idea. Skip these 5 paragraphs.
      3. It’s hard to make partner. Who knew? I thought anyone could make it. But you didn’t? Sour grapes indeed. Skip 5 more paragraphs.
      4. “This is why the Big 4 HR function is basically a joke. There are no checks and balances on how partners interact with employees, except those imposed by statute or those the partnership agrees to establish.” – Are you serious? There are NO checks, EXCEPT FOR TWO CATEGORIES – self-imposed and imposed from outside. Yeah, that’s like saying, “there are absolutely no human beings anywhere in the world, except for women and men.
      5. This seems self-evident. As an employee in NYC, a partner in LA or Atlanta will not directly impact my life at a Big 4. I miss your point again.
      6. Big 4 have high expectations. Maybe they should lower them, you’re saying? You think that’s a good idea? My experience has been that the high expectations only bother the people who have trouble meeting them.
      7. Ludicrous idea. Enough said.

    30. Francine,
      I think you should invite a bunch of people to some kind of live podcast/webcast where you verify who everyone is, scramble their voices so they won’t be recognized, have them all call in so they won’t recognize each other, and let them have a no holds barred conversation of what it was really like working for any of the six largest firms.
      I normally post my name but with this suggestion I’d prefer to remain anonymous.

    31. Six largest firms? Only 4 of them really count – c’mon GT and BDO are hucksters and the red head step children of the Big 4…bwahahahaha! While we are at it lets have Scotty beam us up to some magical planet or do you prefer to Star Wars and we can dress as a character perhaps as Darth Vader to hide our faces and change our voices…thanks for not posting your name since we would just ridicule you further – or should we call you Darth?

      @346…well done sir. But not everything is perfect in the Big 4 but they are not Dante’s 7th level of hell. I think Truman needs some cheese with his wine…perhaps a 2002 Screaming Eagle Cabernet…oh wait only partners could afford that and Truman is not…2 buck chuck!

      Francine – when is the new blog layout going to be rolled out? I hope you are not having DT do your system implementation…i fear we could all be old and blind by then!

      – All Snark

    32. Anon 3:46 – I’m not even sure why I’d respond to your post, except to say comments are usually more helpful on this blog. dripping with sarcasm is one thing, but you’re soaked, and it’s just mean-spirited.

      I think I’ve made my points in a previous comment, but I would just say this to those of you opposed to the “whining” – in a large firm, you are going to have many different viewpoints, and people are going to have experiences much different from your own. If you just write off complaints of unhappy employees as sour grapes, you’re going to lose some very talented people, and you’re going to miss out on valid criticisms that would help us improve the firm if/when we’re the leaders.

      - The Nuge

    33. It’s been fun reading all the comments. To those who want to peg me to one firm or another, let me just say that. in terms of internal working environment, most of the Big 5/4 firms are about the same. If you say that I’m describing KPMG or using a Deloitte term, I would reply that what you see as a firm-unique thing is really not unique to your firm. That is either by design or (more likely) by default, based on the intense competitive scrutiny the Big 4 firms apply to each other. When one firm innovates or changes anything, the others look at adopting the change to “catch up”.

      The good news is that it makes transitioning between the firms quite easy. The bad news is that your clients don’t see big differentiations between the Big 4 either. To some extent, external auditors are perceived to be a fungible commodity in the eyes of the clients. One vector for potential reform might be to start to change that perception.

      To Anon @ Tuesday @ 12:49 and Anon @ Thursday 9:49, I will accept your suggestions but combine them together (or “leverage” them if you will). When I arrive at my international communist sanctuary, I will declare myself leader of a new political party dedicated to fairness. I shall call it the “Whine and Cheese” Party.

      – Tenacious T.

    34. Double T – Nice to see you can take the sarcasm and the digs and come up smelling like…well wine and cheese i suppose. No need to tell you to take it with a grain of salt since you obviously already have. Touche sir.

      Be sure your party drops a shingle that says “No A-Type Personalities Accepted”.

    35. Nuge –

      Sorry to offend you with the sarcasm, but your “truths” uncovered through 10 years at Big 4 are all self-evident to most of us. And the contradictions and faulty assumptions you made were too glaring to go unaddressed. Yes, Big 4 firms are profit-motivated, hierarchical organizations. So are all other professional service firms and most companies in the US. And yes it’s hard to make partner. Shouldn’t it be? And yes, the evaluation and promotion process is not perfect. That’s because PEOPLE run it, and PEOPLE are not perfect.

    36. 2:43 hit the nail on the head.

      The solution is to reduce the fallible human component and bring in something better.

      Next big shift in audit will be a new audit firm backed by the One Holy Catholic and Apostolic Church.

      The Holy Spirit will guide us past audit failures and other sins.

      Think about it.

    37. I find myself in the same position as Truman, having spent over a decade in multiple Big 4s and having moved on to bigger and better things.

      I agree with most of Truman’s assessment, although I
      question the idea of unionization… the fate of GM and UAW is telling, and personally I am a big believer in market forces. I also disagree that the marketing expenditures are a waste. I have seen multi-million dollar contracts being signed because the Chairman of the firm or similar senior leader took the client CEO for golf or a game where the deal was struck, even though we were not the best provider in that space.

      A few thoughts:

      1. My Big 4 experience was very valuable. Unfortunately, you can monetize it only when you either make partner or leave the firm.

      2. Since the metrics for making partner are such is mystery it is virtually impossible to determine if you are dong the right things and you are basically gambling that you are on the right track. Although I was very strongly on partner track with mostly ‘Exceeds Expectations’ ratings I decided to move out to a place where direction is a little clearer.

      3. Since partners are measured by year-end results, there is really little opportunity for long-term strategic initiatives. How many really significant initiatives have a 1-year turnaround?

      4. Eating time is common and I have seen it at all Big 4s. It got to the point that as long as I met billing requirements for the client and my chargeability goals I stopped bothering to charge additional time – that just meant another 15 minutes wasted completing my timesheet, which I was doing on my time anyway since that is not chargeable time.

      5. Particularly for the next 2 years, the Big 4 are going to be in a holding pattern. 100% plus utilization is going to be the baseline norm, that will do little more than help you keep your job. The difference between meeting target and significantly exceeding targets is going to be maybe a few thousand in bonus. Is it really worth driving yourself crazy for that?

      6. ‘Going along, getting along’ is absolutely critical. Most Big 4 partners have worked like crazy to make partner. They have no intention of jeapordizing that. They also have to live with the other partners for pretty much the next 25-30 years, so wisely they have no intention of pissing off another partner. Partners are locked together in a stronger bond than marriage! It is a very pragmatic approach: taking risks and trying to be an agent of change could make you more money, but the risk associated with that move backfiring and the potential loss of partnership more than offsets the potential gain. Therefore the safer move is to keep your head down. You make less money, but hey, as a partner, you would rather make a million a year safely than take risks and lose it all in the hope of making a few more hundred thousand.

      7. The franchise analogy is spot-on. I agree with one of the comments that a partner in LA would not particularly impact an employee in NYC. I think what Trumann is trying to say is that if you have say 5 partners in your local practice, then really your local and primary partners for whom you work set the tone for you, which may be divergent from the firm’s tone. I have worked with one partner where I was treated badly and swore to never work for that person again. I was lucky in that I was able to swing that. Even though I am leaving, my experience with my current partners has been radically different and very positive.

      8. My biggest concern is the quality of work we deliver. Auditors have never really been under much scrutiny. The only time someone looks is when an organization fails. How many others get away? Even though the PCAOB reviews the big 4 and publishes results, I have never seen any penalties being imposed. Failures and lack of quality continue to be noted. In the last assessment, I saw that one of the Big 4 responded to a negative assessment with basically “we do not agree….” and that was the end of the discussion. Given the pressure on people, my opinion is that we do not have enough time for due diligence, and I have seen this in practice way too many times. Now I am sure sure someone is going to say “Why have you not spoken up” – the response is “Firstly, unless I have positive proof of misdeeds I am not going to commit an CEM; Secondly, Get Real! – if you think anyone is going to jeopardize a shot at partner for the greater good on flimsy evidence, you have some level of growing up to do in the real world.” Now that sounds self-centered, and ethically wrong – but I am not going to apologize for it – I am not in this for my health. The only time I would pipe up is if I saw something egregious or blatantly illegal, and even then I would most likely just protest, report and quit. I am not in the business of trying to change the firms.

      9. Making partner is like joining a whole new organization with 5-7000 partner employees. A new partner is suddenly the equivalent of a new associate in this ‘super organization’. And yes, junior partners do what they are told. I have seen RIFs with partners being told “you need to drop x number of people – figure out who”. They will start with lower performers, but if the number demanded is high enough they have to start cutting into muscle and bone to meet the mandate, even though they realize it is going to hurt them in the long run.

      10. I also love the description of the Big 4 as one giant Pyramid scheme – that is so true! You put up with all the crap with the big payoff carrot of making partner someday, which is expected to compensate you for everything.

      Overall, I think people should be aware of these flaws when they decide to join a Big 4 – please don’t go in expecting it to be all roses. Should that stop people – Hell NO. Firstly, in the industry you will see these and more problems. Secondly, the value you get from being in a Big 4 is huge. Would I go back to the Big 4 someday? If the opportunity made sense – Sure!

      IMO, best time to monetize, unless you see something stellar happening for you, is when you make Manager.

    38. Truman, how does one start the collective bargaining process? How do you start a unionizing movement? If Screen Actors and Broadway stage hands have unions why can’t accountants / auditors? I would think that a union may eliminate the so called throwing under the bus scenarios and back stabbing scenarios. To where if someone attempts to ream you out, you simply say I’m going to have to call my union rep before we proceed to where there is someone in the room with you on your side as opposed to the partner manager tag team action.

    39. Anon @ Friday 12/12 12:22 PM –

      “how does one start the collective bargaining process?” That’s an excellent question and one to which I don’t have the answer, having never participated in a union movement before. I’m sure that there IS a process, I just know don’t what it would be. I’m also not a labor attorney but what I think I know is that once a workforce files the appropriate paperwork, then there are certain Federal laws that kick in to protect invidual workers from any reprisals the firm might undertake.

      It seems logical that one would contact one of the existing unions and discuss representation. I’m sure that they understand the process and can knowledgeably discuss pros and cons.

      Finally, despite certain aspersions cast my way, I’m not especially pro union. But I am pro collective bargaining to offset the power that the partnership has over the individual employee. The partnership’s power comes from a lack of transparency, implied threats (“rock the boat over your compensationa and you’ll never make partner”), a guild requirement to put into two (or whatever amount) years as an apprentice before being allowed to practice, and an oligopoly position in the market to reduce market pressures. I’m carefully NOT alleging anti-trust activities (e.g., collusion between firms regarding setting compensation levels) because I have no evidence such activities are taking place.

      Also to Anonymous of 12/10 @ 12:08 PM — very nice post. I’m glad my post could spark such an insightful reply. Students entering the Big Accounting profession would do well to read your post to properly set expectations.

      Regards!

      Tenacious T.

    40. Like Tenacious, I too have been around the Big 8/6/5/4 for a while, and joined as an experienced hire. I’ve been in 3 of ‘them’, and was a partner in 2. I’ve read, and reread, T’s posting several times, and always arrive at the same conclusion – he has hit the nail squarely on the head when it comes to life in the current Big 4, as we know it. I can’t/won’t comment on the collective bargaining proposal, but on his other points, he is dead-on. The partnership model is broken – in fact, I don’t see how a partnership model can function in today’s economic realities unless it’s much smaller in size, and is comprised of partners who truly know and trust one another, vice the massive structures and sizes of today’s Big 4. The goal of today’s Big 4 partnerships is, quite simply, to increase partner earnings (total cash compensation, unit values, revenue per partner, etc) and preserve the future of the parternship so partner pension, profit sharing, and other funds upon which retired and retiring partners depend will remain intact (and funded). Everything else – employees, clients, and (and I hate to say this) integrity – is secondary. T is also correct with the mystery that surrounds the partner nomination, candidacy, and admission process — looks, conformity, ability to fit in, and not rocking the boat (too much) all count (but you won’t see that in any published evaluation criteria). His point about “series of interlocking partnerships” is also spot-on. Any talk of ‘one firm’ might be great for branding, but once the money starts to flow it’s a behaviour-changing experience to see which business unit/separate partnership claims victory (and in the case of a cross-functional sale, how revenue is divided among partners). That, in turn, causes unnecessary competition between business units (within the same partnership), drives staffing/recruiting, and ultimately affects client service. (I believe Arthur Andersen was perhaps the closest to having a ‘one firm’ approach, in practice – but certainly that’s history now, and has been since 2002). Finally, there is no doubt that the designation of some Big 4 firms as a great place to start a career is well deserved. These truly are high-performance and demanding environments that can be a great launching pad for bright, aggressive young staff, recruited from this and other nations’ top universities. Whether or not they are a good place to stay in a career – or even end a career – is another story altogether. Hats off to T for telling it like it is.

    41. Re the point on partners impacting others in different offices – just look at Andersen……

      I also agree with TTs points being another with over a decade in a big four….most of them are sad but true.

    42. I found your blog via Google while searching for eagle haven golf course, thank you for posting Music For Chameleons – A Visitor’s View of The Firms!

    43. Wow TT, I don’t know how I never ran across this page. Great cross-section analysis of life in public accounting. I don’t agree about collective bargaining*, but I agree with pretty much everything else.

      *I think that creates a completely different beast, which is quite capable of causing just as much havoc (if not more). You’re just switching partner greed with staff\manager greed. If we are going to pretend like public auditors (again, my background is auditing, sorry to the advisory and tax professionals) are actually serving the public rather than their own wallets, then there needs to be (shudder) more regulations on them. Things have gone too far, as you illustrated in your article. Take out the problems from the top down. Empower the staff with regards to compensation and you’ll have a GM on your hands.

    44. @43 SocalPizza

      With 750 posts and more than 5,000,000 words, there’s always something you haven’t read yet.
      Glad I could point you to it. He’s too modest.
      Francine

    45. As a general comment it seems that Tenacious simply doesn’t like the consulting firm/LLP business models. Every privately held firm or LLP has leadership for whom the rest of the employees work to make rich (called partners, CEO, etc.). Only if it is publicly held do you get to the level of everyone is working for the sake of the shareholders – and as such everyone is an employee. But even in that scenario, it is the senior management that are getting rich and the lower level staff doing the work.

      The only interesting thing I got out of this letter is the McDonalds comparison. I think that is a good analogy to say that the B4 are all providing the exact same product… and that quality isn’t really the issue. I believe I can agree that there is a problem because the product is a check-the-box, meet the regulation thing, and the client gets no real value over that. So, there is no real distinguisher between the B4 and quality isn’t what the client is really buying… they are all the same and the provide a mechanical solution that meets the regulations.

    46. […] by Tenacious Truman […]

    47. Wow, just found this article. I’m not going to comment on all the points made by Truman other than I agree with the vast majority of them. I cannot speak on behalf of any of my colleagues or competitors but I will provide my perspective on a topic that is sore for me personally.

      – Regarding Vacation –
      1. In 7 years I have never had an uninterrupted vacation, despite vacation being booked months in advance and going through extensive socialization with my team. Nevertheless I always seem to get voicemails that start with “I know you’re on vacation but…” I once took vacation in South America, and received a call from one of my partners who asked me “you brought your laptop right?” Sometimes these calls come from my clients, and they almost always end the conversation as soon as they find out I’m on PTO. I hear 3 words time and time again from clients but never from my partners – “it can wait.”

      2. For my firm, PTO is included in the denominator for utilization calculations, meaning PTO counts against my utilization. This seems at odds with my firm’s “worklife commitment.” If we are encouraged to take vacation, why does it damage our most significant individual performance metric? Wouldn’t it make sense to remove this from utilization entirely and impose sanctions on people who go over their PTO balance?

      3. I can cite (but will not do so publicly) numerous instances where either myself, or my entire team have been asked to forego vacation to meet client needs. One instance, our entire team worked over Christmas through the new year…

      4. I have heard from one of my superiors “if worklife balance really existed, then we wouldn’t be profitable.” If this is really the case, then we have far more serious issues than what Truman discussed above.

      – Regarding Eating Hours –
      1. Eating hours happens all the time, though I have never been directly asked to eat hours from a Partner. I have had partners tell me “we bill hours by the budget.” Most of the pressure to eat hours is indirect, leaving the partner with plausible deniability – “this engagement must be profitable,” for example.

      2. We sell our projects way under budget (usually due to a combination of lack of skilled people and price competition from smaller firms who bill out at less than half of what we do).

      3. I have never had a project with hours budgeted for the internal mess of red tape, and no client wants to pay for our internal overhead, especially at our rates….

    48. […] anyway, Tenacious Truman has written his perspective on leadership. He asserts that “the question is not IF you will […]

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