Hey Big 4! If I Were You, Here’s What I’d Do (Instead…)

By • Apr 8th, 2009 • Category: Audit Firm Management, Latest, Pure Content, Your Career

All of the Big 4 firms have had significant reductions in staff during the last 18 months, and especially the last 8-12 months. The largest reductions seem to be at Deloitte and KPMG. But significant cuts have occurred at EY and have been rumored  to have occurred, although couched in “performance only” language, at PwC. Only KPMG and Deloitte have issued voluntary, anticipatory press releases for their “workforce resizing.” But not recently. PwC was forced to acknowledge some cuts last February due to reports here, but did so reluctantly and only after questioning by another publication. Their reductions have been mainly through attrition and forced ranking approaches that pushed employees to seek other opportunities involuntarily. These cuts have occurred in the US and outside the US.

One of the main suggestions I make to firm spokespersons and their recruiting professionals is about the handling of these terminations by HR/local partners. The numbers to cut may come down from on high, often decided on a nameless, faceless and arbitrary basis. However, execution, literally and figuratively, is all local. I’ve heard many reports and I’ve seen the personal and professional impact of botched paperwork, poorly handled meetings, and inconsistent treatment within offices and even within practices in a specific location. I’ve heard strong cases for discrimination complaints and have had former employees cry on the phone when describing their shame and embarrassment mixed with confusion and a sense of betrayal. If the firms could do one thing better, if they must continue, it would be to develop teams of highly trained, focused, dedicated professionals to handle these issues in each location so that consistency and adherence to  appropriate policy, procedure and employee rights/employer responsibilities is ensured. The local partner who thinks they can talk their way through and make exceptions ends up promoting more bias, perceived favoritism, and unfair retribution and punishment and is, therefore, a dangerous weapon that must be stopped.

So what’s happening out there? How are the Big 4 cutting costs and eliminating payroll costs in order to “survive” ?

(This information is based on not only emails, calls, and personal interviews I’ve conducted, many of which are included in the blog posts linked to, but the thousands of comments provided by readers in particular on the posts here, here and here.)

Existing employees

  • All of the firms have had reductions in force
    • KPMG
    • PwC
    • EY
    • Deloitte
  • Implementation by some of short weeks with proportionate reductions in pay, although how realistic this is in actual practice remains to be seen.
  • Implementation of mandatory paid holidays during non-busy season
  • Offering sabbaticals to top performers
  • Offering secondments to top performers, although this is just moving the checkers around the checkerboard, since
    • a secondment is usually paid for by originating firm, and
    • then there’s the problem of not enough work in the destination, and
    • the commitment to reemploy after the time period that is now subject to quite a bit of uncertainty.
  • Reducing Paid Time Off (PTO) carryover – Effectively reduces liability for vacation and other time off from a scheduling and a financial liability perspective. The financial aspect is especially significant due to the obligation to pay accrued paid time in the event of involuntary terminations.
  • Application of “forced ranking” techniques to seemingly force otherwise or previously good or above average performers into lower performance categories. This approach is used to justify termination or an unexpected Performance Improvement Plan (PIP) process that is really just a self-fulfilling prophecy
  • Denial of unemployment compensation based on the sudden or fabricated “performance problems.”
  • Attempts at recouping signing, CPA, or other bonuses based on “performance-based” terminations versus business based reductions.
  • Demotion and outright termination of partners who are effectively at-will employees via similar techniques as the staff terminations.
  • Forcing equity partners, including those in protected categories, out via sudden poor performance ratings, loss of responsibility and corresponding compensation level reductions
  • Terminating pre-MLOA (primarily pregnant women,) on MLOA, or MLOA immediately upon return to work under the guise of job elimination.
  • Terminating visa holders, often with no notice, who then have very short times to find new sponsors or else return to their home country. Many of these employees were recruited from the university. Firms save costs of sponsorship and other legalization costs if employee had been kept on. In some cases, firms have denied these employees their rights under law, due to rushed terminations, stonewalling, or denial of required legal assistance.
  • Reducing administrative staff by closing administrative and technology support centers in some cities.

And how are the firms reducing payroll and costs related to new recruits and employees under one year of tenure?

  • Firms are terminating employees with less than one year of tenure, even though most of them came to the firm after serving an internships prior to graduation and are most often the top graduates of the top accounting programs in the world. These new hires are returning to campus to their alumni placement offices and asking for support as well as spreading the word to their friends still in school, thereby engendering quite a bit of fear and uncertainty amongst imminent hires.
  • The firms are still recruiting on campus and, in some cases, paying bonuses for referrals for campus recruits. This is happening while they are terminating tenured employees, including those in protected age categories. Although the spigot on the university pipeline has finally been turned a half-turn during the last six months, the firms were very reluctant to do anything until their hand was forced.
  • Firms are holding fewer interviews in campus for internships and full time or are holding interviews with no commitment to number of hires.
  • Start dates for those already offered a job and accepted have been delayed, sometimes multiple times.
  • Some firms have rescinded offers completely, leaving students with few options.
  • Firms are frequently changing practice or location both before and after a letter of acceptance has been issued.
  • Some firms are sending out offer letters with no salary, “pending changes in their compensation programs and evaluation of market conditions at the time of start date.”
  • Changing salary after offer is extended and accepted.

Other techniques to reduce costs/increase profitability being employed

  • Forcing professionals to eat hours or work even more than usual to make up for less staff and or reduced budget. This is happening without overtime and with less paid time off, comp time off and insecurity in taking earned time off.
  • Overbilling or inaccurate, inflated billing, especially on fixed fee/monthly retainer engagements such as internal audit and tax compliance.
  • Forcing managers and partners to do staff work, thereby losing more margin (because the client can’t be charged a higher rate of course for same work) and resulting in a loss of review/quality assurance layer and objective independent risk management.

Why they’re doing it

What are the business reasons the firms are feeling a reduction in profitability, a loss of business and a strong feeling that they need to take significant measures to reduce costs?

  • Compression of number of clients both on audit and consulting /tax side due to number of bankruptcies, acquisitions, nationalizations and attendant pressure on fees in remaining clients related to subprime and financial “crisis.”
  • Significant reduction of Sarbanes-Oxley revenue stream due to maturity of this initiative with regard to financial controls, in particular, and pressure from clients on fees for any current or future work both on the external audit and the consulting sides.
  • Over-hiring or wrongly allocated staff during SOx era left some firms overstaffed in wrong practices, wrong locations, and not prepared for reallocation/reassignment.
  • No comparable new “next big thing” in practice pipeline. IFRS, XBRL, not as big.
  • Bankruptcy trustee and corporate investigation work is shorter term specialized work compared to audit, with key independence constraints in US and limited duration, except in rare instances, (Lehman for PwC in UK, for example.)
  • Softening of all spending on technology and business process improvement consulting unless it has clear and compelling cost saving component and even then delayed starts, reduced scopes and pressure form clients on rates.
  • Firms took longer than they should have to slow flow from university pipeline due to reluctance of firms to alienate universities and dependence on leverage (constant stream of lower cost/lower hassle resources from universities.)
  • Firms did not see cost savings and efficiencies from offshoring that they’d hoped (Deloitte and PwC, in particular) just as their clients did not.
  • Significant and increasing litigation settlement and ongoing securities and wage and hour litigation defense costs.
  • Fear, anticipation of additional costs associated with wage and hour litigation.
  • Significant increase in compliance costs, including technology, that has not resulted in efficiencies, as a result of scandals like KPMG tax shelter, independence violations, and increased PCAOB inspections.

It’s not easy to turn the massive Titanic-like ships of states that are the Big 4 firms away from the iceberg. It may be that they can use the excuse of the financial “crisis” to defend the actions they’ve taken to reduce costs and make, “…targeted and limited workforce reductions where appropriate.”

But the things they are doing to respond to what they see as a business downturn and a profitability squeeze are only tactics. They plug holes temporarily. They don’t renew, redirect, and retool the firms to respond to reality. It’s hard to fault them. They are constrained by a model and a mentality that quashes long- or even medium-term strategic thinking. Notice: I didn’t say anything about increased competition for the Big 4 firms.  There is none, by design.

So I asked myself, “fm, what would you do if one of them asked you to step up and offer solutions?” After all, I’ve been accused by even my own readers of stirring up the masses to violence and rebellion, not to mention encouraging demands for overtime pay, unionization, and potentially the rejection of the default position that a Big 4 career is the only worthy one for a top graduate of a top accounting program.

If anyone asked me to help find a way to get through this period,

  • Without reductions in force,
  • Without betraying the trust of otherwise very loyal employees,
  • Without losing the confidence of key clients,
  • Without endangering quality and integrity in the work they’ve been enfranchised to do under the exclusive licensing of various federal governments and public/private bodies such as exchanges,
  • Without risking new lawsuits for negligence and complicity on fraud and malfeasance, and
  • Without completely abdicating responsibility to their true client – the shareholders and investors in the public companies they audit,

I would start at the top.

I have tried to stick to criticizing, and specifically criticizing by name, only the top leadership of the firms and those who are publicly named in litigation or regulatory enforcement actions. That approach is taken for two reasons. The first is that I do not have the resources or time to verify claims regarding anyone other than those who professional journalists already write about, who are in the public eye, who have held their actions open to public scrutiny. The second reason is that I have a great deal of respect for the average accounting/audit professional, at all levels, who knows their stuff and does their job in the best way under tough conditions.

The firms and the profession have an incredibly loyal membership. Even in the face of what I have called double dealing, incompetence, betrayal, and downright double-faced lies by the firms, the regulators and the universities, many still defend not only the firm leadership but the way of life which is a Big 4 job, in particular in audit. It borders in some cases on a kind of “Stockholm Syndrome” response.

I frequently ask others for an explanation for this behavior. That discussion delves into the realm psychology and, potentially, a quite biased and stereotypical portrayal of the kind of people who choose and succeed in this profession. Not the purpose of this post, but perhaps an indulgence for me at a later date.

If we focus on actions of the top management and the most strategic decisions of the Big 4 firms, I believe we’ll see some things that could be done differently and more effectively, if only the senior leadership were willing and able. In making the following suggestions, there are two assumptions to keep in mind:

  • I’m not necessarily offering these suggestions for the next tier firms (GT, BDO and RSM.) Their size, model, and client base is so dramatically different from the Big 4 as to make the discussion of their strategy completely different. And I’m not sure these three are all long term players anyway, especially BDO. For that reason, I have most often not focused on them on the blog except when their issues spillover to the industry in general or to the Big 4 themselves.
  • This blog has discussed the general lack of purpose, the worthlessness of the current audit opinion for public companies. Another completely different approach is needed, in my opinion, to protect shareholders and investors in public companies than the current product, especially when the shareholder/investor is the taxpayer as has occurred in the recent investments in AIG, Fannie Mae, Freddie Mac, Citigroup, GM, etc. But for the purpose of this discussion, we will assume the Big 4 need to keep doing what they’re doing, but more successfully, profitably, with their current staff rather than cutting their nose (their staff) to spite their face (maintain partner profits in the short term.) A bigger set of propositions includes government control of audits of companies taxpayers are significantly invested in, utilizing a Service Corp for Accountability and Transparency made up of the professionals the firms are irresponsibly shedding.

So, starting at the top, at a strategic level, I  recommend significant changes in two main areas:

  • Refocus on the true client – the shareholders and investors of the public firm, and
  • Reform the business development process with an emphasis on meeting client needs, where they need it, how they need it, and with the kinds of resources required to do the work in a quality and risk-managed way.

Tomorrow I’ll post the details behind these two recommendations.

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136 Responses »

  1. I have a lot of friends at non-accounting companies who have received across the board 5-10% paycuts and they have been letting a lot of people go. I don’t see why the BIg 4 wouldn’t be any different during a massive downturn. My firm has been giving 2 weeks severance pay per every year served plus 4 weeks if you sign the agreement not to sue. That’s not that bad of an exit package.

    The tone of your post seems to imply they should not fire anyone and just lose a ton of money. I look forward to your recommendations for the firms as I don’t see much here except a big list of what you think they are doing wrong. Yeah it sucks they have to defer start dates or let people with <1 year go but if those people aren’t going to generate the revenue they planned on why are the firms still under an obligation to pay them?

    What industry or companies do you see in the market that is handling this really well?

  2. @J

    You’re funny. It’s a crying shame when a “professional” says, “everyone else is doing it” to excuse greed and poor leadership. And FYI, no one in the Big 4 is losing money (is that what they’re telling you?) unless they schmuck up a particular engagement and then that’s just internal management accounting loss. You have no idea of the profit margins. They’re just trying to “not” not make as much money as in prior years. But since they don’t disclose their financials, you have to take their whining about their situation as gospel.

    And yes, these firms should not be firing anyone. To fulfill their exiting obligations to shareholders they require every hand on deck and more so. If they can afford to cut so many, especially out of audit, there must not be much value to what they’re doing. Hey… Maybe we can live without their “assurance” ? What would suffer? How much worse can it get? That’s a thought…
    Francine

  3. The firms are now cutting partners. Good partners, those that cared about staff and worked hard. They are keeping the old boys close to retirement who are just out to continue making as much $$ as possible at the expense of everyone else. It’s all about the politics.

  4. @3 Anonymous

    “those that cared about staff and worked hard.”

    But you said partners (plural) – I thought alot of partners were losing their jobs – there was only one?

    Yeah Yeah – I know: facetious.

  5. […] is a blog post that gives you some insight into commentary on the Big 4’s responses to staffing […]

  6. I think your two suggestions are right on the money. Balancing the competing pressures of sales / business development and client service are one of the main challenges for Big 4 personnel, especially at the more senior levels. No matter what the outward communication from the firms and from the top, the pressure on Senior Managers and up is ALL about sales. A partner told me to focus on sales and basically “don’t screw up” the other stuff. So, performance wise, if you do a mediocre job on quality, technical skills etc but sell, you will progress. Conversely you can be one of the best technically, with great integrity and client delivery, but if you don’t sell, you are not going anywhere. I know.

    A more transparent / better balanced way of managing these two areas would make a big difference, allowing the sales focused people to focus on sales and the delivery people to do delivery, although then you run the risk of a two tier performance model. Guess what is more valued by the partners? There is no way that the Partner and Stakeholder interests are aligned with the current model.

    On a related note I did hear from a PDP still at the firm that Deloitte is cutting 100 partners….

  7. “Other techniques to reduce costs/increase profitability being employed: Forcing professionals to eat hours”

    I’m willing to bet you won’t find a single firm that “forces” employees to eat hours. In fact, it’s against the law. Each of the Firms have “Integrity Hotlines” where people in such situations can report such violations. A “Firm” can’t control every employees individual behavior, it’s impossibe, so it relies on tools such as the Integrity Hotline to weed out those people. If someone is asked by a manager or sr manager/partner to eat hours, and does so without reporting it, in essence that’s an unethical person, who would be better off canned. Where’s the personal responsibility? Isn’t one of the fraud risk factors, rationalization, sounds like that’s what’s going on here. If I don’t eat hours, I’ll get a bad eval and I’ll be first for lay offs, so I may as well just be quiet and do it. Wonder what other frauds I can justify using that mentality… Shaking head…

  8. should those of us with January 2010 start dates ever expect to make it to day 1?

  9. Francine, you raise a subtle point that i think most people glaze over-“the work”.Case in point, a 6 person team at a complex client that i know of –

    1. The 2 great seniors(the geniuses) were fired,reason=H1B Pariahs

    2. Senior Mgr and Staff 1 also canned,reason=unkown

    So the engagement is now staffed by 2 people: kiss-ass mgr and 1 confused,nervous 2nd year, doing the same amount of work,with reduced time and the threat of “4” on their scorecards and firings looming.

    I am not a psychic, but something tells me that there is going to be alot of “FUDGED” testing and schedules that miraculously “TIE-OUT”……it is only human.

    Of course,i could be very wrong-maybe the firm just staffed an engagement with 6 highly paid people when really only 2 idiots were required to do the work

  10. @Anon replying to me @11:10

    Thanks for noticing. I know my writing can be dense (trying to use more bullets and such…) but I don’t think my readers are. It’s about “the work”. And service to the client – the shareholders.

  11. @College Kid

    January is a long way away. Anything can happen and probably will. I would suggests a Plan B and C.
    Francine

  12. I have witnessed partners being let go , and worse, demoted. I have seen good PPDs leave while PPDs without CPAs remain. The ones that were let go were the ones who cared about the staff and managers working for them. They were the independent thinkers. They were the ones who were able to see the big picture, who worked for the greater good of the firm, all the while mentoring and developing those who worked for them. They were the guys you’d hope the firm would want to keep. Unfortunately, they were also the guys who didn’t suck up to the Senior Partner. (What was funny to watch was that once these partners announced they were leaving it seemed as if they had developed leprosy. All of a sudden their partner group no longer spoke to them.) Alas, the PPDs who have remained are the ass kissers. The quintessential “Yes” men/women. They are only there for their personal gain. So I ask myself, with a firm full of “yes” men, how is anything going to change? Is there anyone left to ask the hard questions? Is everyone just going to go along and do whatever the firm leaders dictate in hopes that they will be spared from the unemployment line?

  13. To ex-DTer – you are so on the money. What good is focusing on sales if there is no one doing the work? These firms need to recognize their talent pool and bring them together to develop client services and business units. Some people are natural salesmen, some are technically savvy, and some can work non-stop for days to complete a project. These firm need to embrace this diversity and put it to work for them.

  14. […] If you work for one of the Big Four firms and have not already read Francine McKenna’s “Hey Big 4! If I Were You, Here’s What I’d Do (Instead…)” posting on her re: The Auditors blog, I strongly suggest taking the time to do […]

  15. “Even in the face of what I have called double dealing, incompetence, betrayal, and downright double-faced lies by the firms, the regulators and the universities, many still defend not only the firm leadership but the way of life which is a Big 4 job, in particular in audit. It borders in some cases on a kind of “Stockholm Syndrome” response.”

    Francine –

    You are right on the money. I personally suffered from the Stockholm Syndrome myself as it related to the work I was doing but not so much the firm leadership. I feel that it was mostly my personal commitment to want to do the work correctly and a commitment to team members that I was working with. I’m a bit of an idealist if you can’t tell…

    Many, many, many of my colleagues and friends (that are still left at a B4 firm) have a full-blown case of the Stockholm Syndrome to this very day. I feel that those of them that are consciously aware of this don’t know what to do in order to break free. The unconscious ones can’t be helped…

    Keep up the great work!

  16. @Former B4 Auditor

    Thanks for confirming my intuition. I am sure I wil be vilified for using such an “extreme” metaphor by those most in need of recognizing the symptoms.

    How to break free? Get out outside. Then walk one hundred steps. To a place where people are talking, laughing, about something other than work. Can be a bar, a cafe, a volunteer opportunity, a dog park, music playing outside, a child’s playground.

    If you are a student or a professional who would like to hear me tell you this in person, drop me a line. It’s getting nice out and I like being on the road. If I can drive, I’ll even bring Rosie Rott. All I ask is some courteous hospitality and I’d be glad to come visit.

    See you in the sunshine.

    Francine

  17. @fm — I was about to write a complement to your writing… suggesting that for the most part it is factual and well thought out. My only recommendation is to also point out that there are positives and while you have a long laundry list of negatives, where is the other side. These negatives are often anecdotal and not necessarily a fully developed trend or pattern… and in some cases they are pure and simple allegations rather than fact. But, it is still worth mentioning and researching the anedotes and the allegations. So to that end I was surprisingly pleased with your discussion… and had only the one recommendation.

    Then I saw post @1 which had some points worth note, and suddenly you revert back to your normal name calling self in post @2. I am now disillusioned again.

    The most interesting part of your post (to me) was that there should be no reason to lay off because (essentially) in this market there is more need than ever before to do this work and do it right. I agree, but I do not think the economy is allowing for it – simply because someone has to pay for it. I haven’t been able to reconcile this pandora’s box yet.

    As for positives — there are good partners and good practices… and note that some regions and practices are booming. I myself am swamped and we are keeping so many people busy and we are hurting for more staff. And, no I am not in audit.

  18. 7 – ‘integrity hotline’ YOU HAVE TO BE KIDDING! Do you even work in a big 4? If you resist eating hours several things happen. 1. no one wants to staff you because they think you are not efficient. 2. If you raise enough hell about eating hours no one will want to work with you because they think you will rat them out if you have to eat hours 3. If you say anything you are pretty much internally blacklisted because no one likes someone who thinks they are on the ‘ethical high horse’.

    Bottom line in any profession is you have to play ball until you are important enough not to. Your line of thinking will get you shown the door quicker than an auditor who cant do math.

  19. @13 – you are correct… but the problem is a national culture across all businesses. Many years ago some companies (I think IBM) tried (don’t know that they still do it) the dual career path idea. It had only moderate success – never really caught on. Essentially the technical career path was a well paid dead end that never reached to potential of the management path. The reasons it didn’t succeed are intriguing. I think that the best way I ever heard the reasons was a metaphor. If you get a job picking apples, then you work to become the best apple picker around. But picking apples only has so much value and after a while you simply cannot pick more apples in the same amount of time. So while you went from picking 5 apples a minute to 100 apples a minute — you have maxed out your value – you simply cannot get better. So the next step is to train and supervise other apple pickers. If you can get 10 others and convert them from 5 apples to 100 apples per minute then your value increases because of how you leveraged it to others. But you will eventually max out your value doing that as well. So then you have to move on — which puts you in the selling the apple picking teams as a next step. You will never max out there as long as you find paying customers to whom you can sell the product of these high functioning teams. I hate the metaphor — but it has a ton of truth in it.

  20. @Anon 12:37

    Thanks for your comments. I am interested in your specific feedback. Please drop me a line at fmckenna@mckennapartners.com

    I try to inject some balance related to specific professionals and the staff and the average manager and partner, in general. In this post, I tried to make it clear that my criticism is always directed at leadership of the firms, the half a dozen folks who really, effectively make all the decisions and are protecting their own interests at the expense of all the others. And of course, I will critique any individuals who do bad, bad things.

    A blog is a unique format. I’m glad I found it. Although I take it very seriously and strive to always have a strong basis for what I say, even if it only my own experience and intuition, you may not see that. I do not have to worry as the traditional media does about anything other than my own credibility. I can still say I have never been called by any of the firms or their lawyers and asked to correct, retract, or delete anything. Does that mean they are ignoring me? I don’t think so. It may mean they thought I would go away in time. I did not, and will not. In fact It’s going to get worse for them before it gets any better. I’m sure quotes in FT and the WSJ have woken them up to that fact. There is a strong hunger for this information and the audience is much broader than anyone who told me I was crazy at the beginning could have ever imagined. Unfortunately, interest has also grown because of recent economic events.

    There are many other places to get the the positives, real and imagined. I like to think this is a singular, unique place to hear about the rest of the business of the Big 4 and the mechanics of how the firms are run. I have the advantage in being independent of the Big 4. I will never work for them again and have no desire to. That time has passed, even on a consulting basis, unless they all hired me all at once. Anything else could give the wrong appearance.

    If you are busy and in need of more staff, let me know. Connect with me on Linked In. I know some folks.. :)
    Francine

  21. I can buy that the Big 4 are using a lot of the techniques you describe above to eliminate staff. I’ve seen some of these in play. But this one surprises me:

    “Terming pre-MLOA (primarily pregnant women,) on MLOA, or MLAO immediately upon return to work under the guise of job elimination.”

    I guess a firm is legally permitted to do this but wouldn’t it expose a company to a discrimination lawsuit? I know a pregnant woman here at my B4 firm who is 7 months pregnant and she’s telling anyone who will listen that if she gets fired, it will only be because of her pregnancy and that she’ll sue. Or if a person is on leave due to a disability and is terminated, couldn’t they sue, as well? Firing people on leave seems like a risky tactic and I don’t know how much benefit a firm would reap from something like this. I know, I’m probably just naive but this one puzzles me…

  22. @GollyGee

    Terming before, during, and after MLOA has happened. I did not say anything in that list that I had not heard myself, with my own ears, from specific people. The challenge is that each individual feels alone to address or redress their grievances. An MLOA, like a visa holder, is under extraordinary stress otherwise. They are vulnerable and are being exploited. There are multiple cases at more than one firm. I have referred some to attorneys in their locations.

    If any plaintiffs lawyer would like to look at the possibilities of helping these folks let me know. If anyone would like to send me details of your case so I can put you all together, let me know.
    Francine

  23. by “terming” do you mean terminating?

    Man FM is all over the comments in this post, she know it is going to catch fire :)

  24. @xgreendot

    Yes, “terming” means terminating, cutting, firing, involuntary release, eliminating your job (boo hoo)… Anything other than “layoff” because you ain’t goin’ back, Jack.

    I’m working on Part 2 and doing a ton of other stuff here at re: The Auditors HQ on Taylor Street, Chicago, US of A.

    Getting ready to get a beer in a bit with a friend and ex-Deloitter who bounced back quickly and well. Anyone in the mood for happy hour in Chicago, ping me at fmckenna@mckennapartners.com

  25. technically – terminated means leaving the firm for absolutely any reason, voluntary or not. Firing is initiated by the firm with cause, layoff is initiated by the firm w/o cause, resignation is initiated by the employee. All other vocabulary (cutting, eliminating, etc) are some version of the others and pretty much more like slang. But in HR teminology — anyone leaving a firm under any circumstances is terminating.

  26. Layoffs in PwC audit occurring now….

  27. Here I am curious — what does a company do if they have someone on LOA (maternity, sick otherwise), or someone holding and H1 Visa, or someone in a minority group who is not performing and they want to terminate for valid reasons. Companies are so scared of law suits that they often keep these people even if they are the right people to term.

  28. like right now? Bro they have been happening for a while now where the F have you been?

  29. Not surprised…tax will probably be next. I had a meeting with my coach and the HR person yesterday, and although they didn’t flat out admit it, they basically all but said that anyone with utilization below 40% is in danger. They also said that once busy season is completely over, it’s going to be harder and harder for me to find work, so I need to “market” myself like never before, and that I should start “getting creative.” Guess I’ll start wearing a clown suit to work.

    Bring it on….I’m sick of this environment, and only hope that I can eventually repair the damage I’ve done to my career by choosing to come here.

    Really sick of HR with their corporate buzzwords. I think if you took the average big 4 HR person and told them they were forbidding from using any buzzwords and corporate psychobabble., that they would be unable to converse in the English language.

  30. I’ve been starting to read up on this site for a while since I got on your twitter, Francine, but you know…now, it just seems so depressing (I guess we can’t run away from facts, though).

    What are students supposed to do though? I’m looking for a firm to intern with for spring 2010, and I’ll be graduating in 2011, but I can’t be so certain (unlike what people within and without the firms will say) that the economy will turn and firms will not have to use such draconian measures. Fortunately, I’m in tax, but as 29 taxnewbie says, tax is going to have to go too.

    So, what is the solution? Do we just stay far away from the most egregious ones that we’ve been hearing about (I’ve been reading through all of your commens and articles about Deloitte and KPMG, for example)? But what about PwC and EY, since as you say, they *also* have to do reductions, etc.,?

    And GT, BDO, RSM aren’t safe either.

    So, do we go lower/local with middle market? I am somewhat attracted by some smaller firms anyway for other reasons, but will different client-types, smaller firms, less resources avoid the problems that the Big 4 and the second tier 3 have?

    Do we avoid public accounting? or what?

  31. That person is not in a Big 4 or is in HR.. or maybe a partner who is leading the firm..up so high that they have no idea what goes on on the ground…

    Last time I heard someone complain on “eating hours”, he got docked some other way. Last time I heard about someone going beyond the budget ( because the job was not budgeted well), he got a 4 and was laid off using that excuse. Any excuse to lay off people…Downturn is a great excuse to lay off people they don’t like or who are a threat to their position, or who are in the way of someone else they want in your position….its not rocket science…all they want is get people to document lies about you behind your back so they can plant those in your personnel files. It will come in handy if you decide to sue them. That will catch you by surprise when you sue them..unless of course you demand to see whats in your personnel file…which employers are legally bound to show you if you request…anyone who refuses to share the info has sinister plans……so go ask your HR for access to your personnel files..you have every right to see whats in there and who’s been lying about you…knowing whats in there might make the lawsuit stronger if ever you decide to sue them for the right reasons…

  32. Big 4 still touted as the best employers to work for? are they on crack or are they paid by the Big 4? or insanely stupid journalist? Im not buying Business Week ever in my life…

  33. @ 30–I think students actually aren’t in such a bad position because the staffing decisions from now on will hopefully be more in tune with economic realities.
    It’s the people who were hired in 2007-2008 when times were good who are getting the shaft now. Their model depends on new blood, it’s just that new blood can turn into yesterday’s news very quickly.

  34. Sorry, but I’m going to have to be rather critical here.

    Having to deal with office politics and corporate double speak? Hah. If only life was so easy.

    Until you’ve had three engagements at once, each one individually having enough work to occupy someone full time, with the managers constantly breathing down your back wanting things NOW as if you could be devoted to their client 24/7, you have no idea of the Big 4 tax experience, or frankly, much of any grounds to be complaining.

    Count your blessings you’ve gotten a busy season on your resume without a fraction of the stress.

    Big 4 code speak –

    Do you have 20 hours a week on your schedule? = Can you put 20 hours a week on your schedule, and we’ll pretend that is a realistic budget, and then when busy season comes you can work 60 hours a week on it.

  35. A great place to work is an overstatement. A good place to work is a true statement. Regardless of how far you go you end up with something on your resume that is bullet proof.

  36. @31 — it must be terrible living life so paranoid.

  37. @5:18

    Which office are you from? Have not heard even a whisper of layoffs in NYC.

    Getting coached out is a different story.

  38. @28 – have you ever heard of irony.

  39. @ 26 & 29 —

    My info re: PwC layoffs is that the firm is going to great lengths not to have any “layoffs” right now. Of course, that may not be true for all lines of service; but my info is that at least Advisory folks should be safe until the year-end ARCs (May/June timeframe), at which point the firm can call the terminations “performance-related” because they will have an ARC rating and relative ranking to support such a statement.

    One day they may realize that the ARC process is more smoking gun than litigation prevention, but that time is not now.

    — Tenacious T.

  40. Layoffs at PwC in audit? I haven’t heard that – what offices?

  41. @34

    Sorry, I think it’s you who have little to complain about, since your experience seems to be the typical public accounting experience, which is what I was expecting to have when I signed up. I would love to be working on engagements and not have to worry about utilization, and most likely not have any concerns about being laid off. You want to talk about stress, now that’s stress.

    BTW, why don’t you delegate your work to someone else? That’s what they’re telling people to do here….of course, no one does.

  42. i love big 4!

  43. I see many comments above about eating hours. I was never pressured to do that, but if the average staff person is on site for 10 hours, but spends 6 hours on Facebook, Google, ESPN, taking cell phone calls, etc then they shouldn’t charge 10 hours to a client. They should charge 4. It is amazing how much time in a day that Gen Y/Millenials waste and then they complain that they are working too late….. It is the ADD generation. Stop messing around, focus on what needs to be done and go home…. Everyone would work a lot less in that scenario…

  44. Concerning eating hours, when you are on a team, you are generally there as a team for a set number of hours (9-12/day). I don’t know of anyone or why anyone would eat those hours. the managers, partners, and seniors all know when the team is there, so they shouldn’t be surprised to see 50 hours next to everyone’s name.

    It is those seniors and staff who stay several hours later each night, or go home and do more work where the hour eating is a problem. In my experience, people that have to do that are inefficient and should be let go. The good staff and good seniors are the ones smart enough to figure out how to be ever more efficient. Whether someone eats hours or not is their ethical problem, but it is an indicator of their competence. It is always a major factor in how I give evals to my staff.

  45. @2 fm

    I do know the margins. The point of the firms is to make the partners money. Making less than previous years would be considered “losing money”.

    If we lose clients or clients cut budgets, then there is an excess of supply. Partners are going to make a lot less money this year and some employees are losing their jobs to make up the difference.

    I still fail to see why Big4 should retain more staff than they have project time to book. So far the people I have seen let go were the bottom performers at their level. That’s what happens in a down economy.

  46. @J

    It’s a partnership, guy. Who in the world died and told you that constant growth was a given? Making less money than prior year in a partnership or anywhere else is not “losing money”. The problem is the skewed way you look at “profitability” compared to the rest of the world and your clients. And you’re the ones we’re counting on the be the watchdogs, the guardians of the public shareholders?

    The “point of the public accounting firm is to make the partners money” ? You’ve lost it. The purpose of the audit practice in a public accounting firm is to serve the public trust. That’s why you get to make any money at all. If you stop doing that, you don’t deserve squat.

    I’m disgusted.
    Francine

  47. fm

    Accounting is primarily a business. It is no longer primarily a profession.

    That’s been increasingly true since there have been fewer than 8.

  48. @jr

    And that’s the crime and the tragedy.

    Francine

    PS And the reason why I’m doing what I’m doing.

  49. #44 – “Eating hours” happens, not always in seniors/staff control, and neither in the partners’ control either.

    Sometimes there’s significant changes in client management or business, that partners are unable or unwilling to adjust for by the time the engagement starts. Lately, partners would rather not risk losing the few, solvent, available clients out there than ask for more hours or a higher fee. Consequently, partners monitor time sheets more closely, and demand that hours be “adjusted.”

  50. #44. – Less than a year ago, I was a senior manager at one of the big 4 firms. Over the 9+ years I was with the firm, many of my seniors/staff came to me and complained about other managers/partners expecting hours to be “eaten” in order to meet unrealistic budgets. Some of these people were among the more highly ranked seniors/staff, and others were right in the middle (none had performance issues – and i was on the committee that decided overall year end rankings). They were never described as inefficient.

    Maybe if you are on a large engagement with a pretty good budget, you haven’t experienced it yet, but trust me, it happens quite a bit. Personally, my biggest concern was that I could sleep at night knowing that as a team we did our best to deliver a quality audit (but then again, I never had aspirations to become a partner – not my cup of tea). There is definitely a lot of pressure out there – especially if one has partnership aspirations (or promotion aspirations). Its a dirty little secret that doesn’t get talked about publicly – in private, well, that’s another story.

  51. @fm 48:

    Stand your ground on this one. The big 4 and mid tier (I can’t speak for the smaller firms) have gone too far. In the mid-tier office I work at, we lose client after client and now people are being laid off. Why? So the partners can still see the same amount of money come in. How about doing what partners are supposed to do and just TAKE A HIT until YOU go out and get more business? And by take a hit, we all know that just means “maybe this year we only buy 6 real estate investments instead of the usual 8.”

    You guys that are defending the indefensible have simply lost it.

    I really think auditing in general is broken, and the public has NO IDEA. It’s a crime and a tragedy. I hate big government, but I really think it’s time the government (well… maybe we can wait for a less spend-happy administration…) stepped in and changed things. Large public accounting firms can no longer be trusted, and with that loss of trust goes the one thing they provided, an opinion. The ability to read financials and see how a company is doing is no longer relevant, because they can get nearly anything they want by the auditors if they try.

    It’s broken. The whole system is broken.

  52. I am graduating with a masters and cpa eligibilty this May. The firm I have signed with has decided they don’t need me for the summer, and will not return phone calls to give assurance that I will start after the summer. Should I start looking somewhere else? I have a 4.0, will probably pass the cpa the summer, whats the problem.

  53. 43 – If they ‘expect’ you to be there from 8-10pm or you will get docked for not ‘being part of the team’ and you only have 6 hours of work then WTF. I’m going to work 6 and charge 14, facebook time or not. To do otherwise is completely stupid. If your being in office/at client was only based on the number of hours f work you actually had and not what perceptions are then I think the offices would be emply come 5pm everyday.

    52 – Problem is you chose the wrong profession. Go to Med school friend.

  54. @fm:

    Could you extrapolate a bit on why you think that next tier firms (RSM, GT & BDO) aren’t long term players?

  55. exposing truths has nothing to do with living life paranoid – what are you drinking?

  56. @41 – you may be talking to me… I have delegated work across 5 other people. Do you think anyone can do anything? I am out of people with the skills I require. I am responsible for keeping 5-8 people busy at all times. I have 15-25 jobs going at any given time (about 17 right now). I train 2-3 new people each year, but they often move on to other areas… so they do not all stay with my work. I certainly understand the stress of potential lay offs. In fact I have been laid off in my life. So, before you start getting all sarcastic and before you make all kinds of assumptions — think about what you are about to say. I had very little work last summer and fall — in that time I got my butt in gear and started reworking my network and getting in a marketing mode. All of us did. And now we have a lot of work.

  57. Today I have been thoroughly pissed off by my firm. I am drafting a letter to every member on the committees investigating the collapses of these huge public client and how Big 4 is to blame. Hopefully I can testify and be on CSPAN. Muhaha.

  58. @Anonymous 5:34

    Take a look at these posts. If you want to talk about this more, you can always contact me directly.

    http://retheauditors.com/2009/02/the-big-4-and-pending-litigation-can-they-fight-the-law-and-win-2/
    http://retheauditors.com/2008/03/next-tier-or-next-to-fail/
    http://retheauditors.com/2008/12/if-its-not-one-thing-its-another-auditors-getting-sued-over-madoff/
    http://retheauditors.com/2007/09/bdo-nibbling-away-at-their-viability/
    Francine

  59. @53 — billing is an art not a science. People pay for work not availability. There are a few exceptions — sometimes a client pays for you to be warming the bench ready to go at any second — and they are willing to pay so that you are available when they need you. Liken it to this – you hire a contractor to work on your house. He/She comes to your house and is there for 10 hours but drinks beer for 3 hours (because you didn’t tell them what to do next). Would you pay for those 3 hours? Harder yet — what if it took this contractor 10 hours to do the job, but the average contractor out there can do that same job in 5 hours… would you pay for all 10 hours then?

    The bottom line is that we are paid to do a job – we are not paid by the hour. You are expected to get that job done, and sometimes the job you signed up for requires that you deal with lulls between tasks. If someone told you, you must be here on site 10 hours today and you cannot do any other work — then they just bought your 10 hours and you should charge them — facebook or not. Otherwise, at the end of the day you need to determine how much time you actually worked, solid work — and charge that.

    But the real problem is that facebook time is not part of your job — so when you have a lull in the work… you need to be doing something constructive. How about engagement documentation, prepare a list of potential future clients, study for the CPA/CFA, work on your performance review, call the manager and see what else you can do, check in with a co-worker on a different engagement and see if you can help out. If you aren’t doing those things — facebook simply is not billable.

    And who the heck is “docking” you — that means docking your pay. If you are exempt then they cannot dock your pay. The job you signed up for has you working long hours for a limited part of the year and has you warming the bench for much of the rest of the year. Try being grateful for the slow season… people always complain about the busy season but forget about the time when things are much nicer. You can’t have it both ways.

  60. I agree with pretty much everything that is in the article and in the comments, both positive and negative. I’m very interested in what the solutions will be. I think what you will find is pretty much what exactly what the government has found when looking at the bank failure. Banks were “too big to fail” and I believe that the BIG4 is “too big to change.”

    Francine, if you could somehow take your knowledge and ideas and plant them into a new recruit with the bold idea of changing the Big4 firm, they would weaken and find it is an impossible endeavor. It is far simpler to use the firm and then get out. Even if they really had the courage to stick it out to partnership and beyond they would find that there is no way to change the Big4, there are far too many partners completely happy with the steady earnings and do not want to turn the profession on it’s head.

    The best way to deal with the Big4 is to use them and hope that you can make it out before it all comes down. This sucks because it is not a solution to the bigger problem of effective audits and opinions that actually mean something, but it helps all those little CPAs go on with their careers and lives.

  61. I am a grad student in Accounting and have cleared 3 sections of CPA Exam. I haven’t done any auditing, and don’ know if I will stick to it after the experience requirement is fulfilled. In the light of Layoffs and big 4 business model(constant lookout for young blood), longevity in big 4 doesn’t seem like a good idea. I have couple of questions if anyone will be kind enough to answer them.

    1) Does working in BIG 4 firm provides extra benefits after leaving the big 4 (maybe in a private accounting or having own practice)? If so what should be the average stay to make it count ? Would it be better to specialize in a sector ( if yes which), or would it be better to spread out engagements (if there is an option to choose sectors) to improve prospects in private accounting?
    2) If other alternatives are taken (Mid Size/Small Firms), what will be the downsides/upsides for it ?

    I feel sorry for anyone who lost their job. Hope you guys find something to your liking soon. Good Luck.

    Francine you are doing a great job with this journal. Despite the skepticism, It provides great insight into the real world specially for students like me. Please continue with the great work.

  62. On Eating Hours

    Post #7, that’s interesting logic, basically you’re saying if the firm tells you (explicitly or otherwise) to do something wrong and you do it, then you’re the one who did something wrong, and thus you are the unethical one.

    Based on the integrity hotline reference, I assume you’re a D&Ter like myself (senior). Let’s break this down: recently, our minimum scheduled client service hours increased from 40 to 45 hours per week. Initially, we were told we could get a head start on planning for the next year, etc., sort of a Ponzi-like grab for tomorrow’s work, I suppose. Now what do you think is happening as a result. Did the firm win a bunch more work? Or are people hanging around an extra hour with marginal actual productivity in that extra hour? Essentially, we’re billing more hours for the same work.

    @44 – sounds like you’re on a good team. There are a fair amount of people who know their teams work those hours, and still raise cane when it comes time to look at budgets. And that makes it more convenient to eat hours. The people who share these anecdotes aren’t just making them up.

    Now it’s a fair point to say that with decreased headcount, we’ll have to work more anyways, and perhaps that will bridge the gap. Two things – first, I’m willing to bet some of you do the same jobs only with more hours, and second, if that new work is necessary, is forcing the minimum hours up really necessary, especially when most of us work more than that? I’ll bet you a week’s salary that the effect is to charge more than you need to during down times, lest you fall behind in the utilization race.

  63. Hey HK –

    I’m in my fourth year at a Big 4, and a little baised, but I’ll pitch in.

    First, watching friends get laid off and fringe benefits go away is frustrating, but ultimately, I still work here for a reason. Tons to learn, great people to work with, a very diverse mix of clients. I’m at a ‘disgrnutled’ phase of my career and I still think those things.

    I would say doing a year as a senior gives you good experience, leave any sooner and you start from scratch in most cases. And every promotion thereafter opens more doors. One of the nice things is that you’ll have friends who leave and friends who stay, and you’ll get both sides of the story. As far as sectors, I think doing a variety of clients and industries is best, you’ll find out what you enjoy, and you’ll get to work with more people. Couldn’t tell you about the smaller firms, but best of luck to you. Things are bad, but they’ll get better. Count on it.

  64. @HK

    Two years ago people probably would have recommended specializing in financial services. Look where it is now? HA. I mean, FS covers insurance, banking, investment management, etc. I think it’s what you enjoy and where you want to end up after you leave Big 4. If you want to work in a manufacturing environment then specializing in FS might not be the best bet.

    As far as how long should you stay – as long as possible? I think once you make manager (5-7 years) if you aren’t wanting to stay for partner you could go ahead and leave.

    The upsides to smaller firms – they actually care about their families and having a life outside of work.

    You get (or used to get – all firms are cutting back on expenses) amazing training. And the resources are unparalleled.

    I ran into a friend from college today – who is a recruiter – and they said if I were to get laid off from my Big 4 and wanted to stay in public – it wouldn’t be a problem for me to get another job and relatively quickly. Just wouldn’t be at a Big 4.

    My college friend asked me today – I know you’ve only worked for Big 4 “A”, but which do you think is most conservative [with their diligence in following the standards] and that she used to think it was DT. I replied, “It really depends on who you work with and if they take their job seriously or just want to get ahead; so the firm doesn’t really matter cause there are ethical, hard-working people at all of them.”

  65. @HK

    1) The Big 4 provides you with a big name on your resume, and the possibility to meet a lot of different people in different industries, depending on what clients you end up working on. You might end up meeting a future employer (working in-house for them) or future client (as an advisor or consultant) on one of your Big 4 audits.

    How long should your stay be – it depends. What you end up auditing in your first few years may or may not be something you like, and you don’t always get a say in what industry or sector you want to work in; often you’re assigned to what’s available. Sometimes you get bored with what you’ve worked on for a while, and it can take time to get into something you want to specialize in. Sometimes you get bored with what you specialized in. (And the other nasty thing all of us are dealing with, a bad economy and getting let go, before you learn what you want to)

    2) Mid-size & small shops – there’s pluses and minuses, depending on the industry you’re interested in, and what you do or don’t want to learn.

    Mid-sizes concentrate on “mid-size” clients – where client revenues run in the hundreds of millions. There tends to more privately owned clients than publicly-traded clients. A lot of wholesale/manufacturing/retail, fashion, professional services, some non-profits. Some service line specialties, like advisory/consulting, but tend to be small. You mostly work in audit OR tax, rarely both.

    Small shops concentrate on the small clients, where client revenues run up to a few million. Mostly private or non-profit clients, including mom & pop businesses, non-profits, government agencies, sole proprietor businesses. B/c clients tend to be less complex, you’ll end up doing the entire audit by yourself, and likely, the tax return right after – so you’ll end up working in audit AND tax.

    There’s a lot to learn out there. I’ve met managers from who’ve never dealt with anything related to Sarbanes-Oxley, but can tell you all about pension auditing. There’s partners who don’t know how to do a corporate tax return, but can tell you all about derivatives, hedging, CDOs and CLOs.

  66. @55 – listen to yourself. You are not providing evidence of specific instances where someone has targeted someone for layoff based on some personal vendetta. You indiate that the economic downturn is an “excuse” and imply that the real reason is some personal attack. If you haven’t noticed the economic downturn – you are really blind. It is indeed real (or did all that money I lost just disappear momentarily and it is really sitting there just not on my statements)? Here’s the way things work — people are selected for layoff based on various criteria that are generally legit. But because the world is so litigious and people like you are full of delusions — they have to protect themselves. So they document what they can and they try to document measurable things. Measurable things are generally relating to utilization, T&E practices, attendence and the like. The real reason may be poor performance or attitude or more subjective things that are valid yet hard to prove in court. They appear two-faced… but they are forced to be this way because so many people are going to sue them even when they are completely above board with their process. Most states are at-will employment, but that does nothing — because most people are in some minority and can claim they were abused. But are they really so abused. It isn’t that pervasive. What you discuss is the exception not the rule. It happens, but one instance here and there does not a pervasive pattern make.

    What is pervasive — young kids who feel so entitled to things they do not earn. People who want more than they are entitled to. People who live beyond their means (oh yes — those are the ones to get us in this mess in the first place). And people with egos that are so inflated that they have lost touch with reality. No wonder companies have to protect themselves. I recommend you focus on working hard and doing well — and stop worrying about what everyone is going to do cause they unfairly want to harm you. Make it so there is not reason for them to harm you.

    As a general rule — you are not that important that they are scheming against you. No employee is that important.

    What am I drinking — generally I prefer diet soda.

  67. wow – did I touch you at a sensitive spot? This is an open forum to voice your thoughts, concerns. So be careful not to provide names, etc ( sorry – I know that’s what you are looking for based on your response)

    I always love a healthy debate – and some of your points are well taken since I personally know that’s true as well. It takes grace and humility to accept other person’s views when they are right. But notice the difference – You don’t seem to see the other person’s views. My speak was about the exceptions becoming the rule under the excuse of the downturn…not that I was blind to the downturn nor that people who are poor performers not deserving to be laid off…so leadership is in the know and is watching what some people do…

    ..and thanks for your personal concern towards me…I do well, thank you.

    …also, I hate spelling errors, but I can understand if they are accidental, deliberate or you deliver poor quality of work. But when you are educated and working at a big 4, and yet don’t know how to spell words, I cringe..

    ..and hey, you probably need to chill out a bit – quit that diet soda for a day and take to some alco- perhaps some hard ones might do good..

    Save the more acrimonious responses, I will be away on vacation for a while….

    Livin’ La Vida Loca

  68. no @67 I have zero interest in names, and ,no, what you say isn’t upsetting at all. And yes, I can hear things when they are actually said in a constructive manner (as some of your recent post does). As for spelling — I assure you that I am in full command of the English language and an excellent speller – who has to look up words from time to time. I may not be the best typist… and as this is a conversational, blog I simply do not have the time or energy to iron out every typographical error here. If it bothers you that much then I suppose it isn’t worth entering into a debate with me. If that is the best criticism you have of me — then I am doing pretty darned well.

    I do see your point of view, but I challenge the language. I agreed with you above that what you claim can and does happen. I just challenge the intent and purpose your language seems to seek. I suggest that you do not live your life based in these exceptions — but focus on the bigger picture. I agree that you have shown some grace and humility… interesting that you do not see it in others.

    As for what is a sensitive area — it is that I do have concern for you and all people who speak the language of victimhood. Defensiveness, being stuck in the past, paranoia, and self righteousness are difficult behaviors. These are things that we all have to some extent, but are often heard loud and clear on this blog. If you wish to enter into a debate, I am ready and willing to hear and listen to your points. Let’s talk rationally. My personal goal — I’d love to learn how to deal with and mentor people who speak and behave as you do — for I have many in my practice who are not as successful because of these behaviors. Due to anonymity here I can try things I might not try with those that I really interact with. My hypothesis was that if you push back with similar emotional and harsh language then they be able to hear you better than if you continue to stay constructive and calm. I think you proved this hypothesis to be correct. Sorry that you were an experiment.

    As you seem to suggest that HR and partners and such are so much out to get young staff, I would like to tell you a true anecdote of how some things are working at my B4. I spent 4.5 hours last night dealing with sr management making inflammatory accusations about a young staff member. This staff member is not the shining star among all staff, but is a hard worker who wants to and tries to do an exceptional job. But as a performance manager I am tasked to challenge not just his/her performance, but also the nature and intent and alterior motives of the managers providing the feedback. In this 4.5 hours I pushed a partner to defend the managers and/or staff member. I have at least another 5-10 hours of time that I will spend vetting out the truth (and the truth is a fluid thing that I can only hope to gain concensus on rather than prove with certainty)… and making sure this staff member has a fair appraisal. And it takes a lot of physical and emotional energy to do this work — which is totally not chargeable… and so I have to stay up until 4am finishing off my work. This is more the norm of how people are appraised during performance reviews. Yes, people talk about the staff and they do not all have fair or honest opinions… but the system that is in place forces the management team as a whole to impose that fairness at some point in time. Some performance managers may let it slip by them… but most do not. If they aren’t good at this kind of thing they are not selected as a performance manager.

    I apologize that I made a couple typos at 4am after spending 4.5 hours of non-charge time dealing with potentially inflammatory and inappropriate reviews made about an average staff member who is working hard. I’d think maybe my actions are way more important than a typo. And I apologize in advance for typos in this post — I ask you to trust that they are typos and 99.9% of the time I do know how to spell the word.

    Enjoy your vacation.

  69. PS.. @66. Sorry, but due to medical conditions, alcohol is not an option. But then again, alcohol doesn’t solve a thing. But suggesting a harmful drug to anyone might not be the best alternative. I prefer to talk to sober people myself. Then again, whatever I opt to drink would be the incorrect thing in your mind. But I take the tit-for-tat… a joke for a joke. If typos are your pet peeve, the encouragement of the B4 to create and foster an alcoholic culture is a pet peeve for me. It isn’t the most mature part of the culture.

  70. Tony, Robert & Lime: Thank you for taking the time and responding to my questions. Your inputs are very valuable and helpful. There is a lot of clarity in my mind after reading your comments.

    If anyone else have any comments to add, you are most welcome.

    Thanks for your inputs.

  71. what is a performance manager? is it another name for HR at your big 4? truth is the only certainty – can consensus (you had a typo) not be obtained of lies?looks like you had a rough week. hope you are able to enjoy the easter weekend.

  72. It is just a manager who monitors your performance.

    I admit… not a typo — I have the census bureau in my past and thus I tend to spell it that way. What was a typo was the missed word I noticed later. I thank you for catching that. I will work to improve on that word.

    I like your question — I think that lies can contribute to the consensus. But the point is to have all parties with divergent opinions in the process… so that you minimize the lies. Listen to people one-on-one so they aren’t influenced by the others, and listen to them when they have to say things face-to-face. Things will change. But what about the issue of people lying to themselves? We all do it — way more than we think we do. I really like the paradox of your thought. But I suppose in the end I do not believe there is any absolute truth… it is all about perception and it is all relative. I understand that through police studies they have found that when interviewing witnesses to crimes – they tend to recount very divergent “truths” about the exact same incident that was witnessed. That is when you are an observer only — it gets even more messed up when you are a participant with a vested interest.

    In the end, the review process is a series of growth points that we each need to take advantage of. Sometimes we learn that certain people reviewing you are people we do not respect. Sometimes we learn that we need to face something in ourselves that we may not want to face. But we do have to work with the perceptions of others. If the perception is inaccurate it doesn’t matter… for if time and time again people have this perception of you – then you have to deal with it. A one off situation may be different, but look at the trends in the review comments you get. If the same ones come over time and from different people and in different companies — then there is likely some truth in it. If it isn’t true – it doesn’t matter, because it is how you are perceived and it needs to be addressed.

    I look forward to hearing about my next grammatical, typographical or spelling mistake… again, if that is the best rip on this post, then I am doing well

  73. In some instances, the review process is helpful. In some cases, if you keep hearing the same thing over and over from different places and different people, there could be some element of truth to it.

    Unfortunately, a lot of people can’t help but have the perception that the whole review process is a way for people at the top to legally, distract from their own shortcomings and incompetence. This perception is definitely more pronounced lately, with financial pressures and layoffs.

    There is also always a lot more going on than what’s on the scorecard. What about managers who bully seniors into giving staffers lower reviews, under threat of a poor review for “failing to follow direction?” What about managers whose own professional actions and behavior are later found to be illegal? What about the cliquey seniors, managers and senior managers who want to get rid of a senior who doesn’t engage in the outings as everyone else, but is a fine worker? People who do the reviews can, and have the power, to manipulate, spin and ultimately lie to themselves and everyone else about what they “perceive”, to justify their review.

  74. @ 72, no one cares about typos. we arn’t writing reports here. although by your posts, it seems that you may have missed the informality idea of the comment section on a blog.

    In general you people are much too paranoid and tend to over think things way too much. Be glad that you have Big 4 experience on your resume. Most of the kids graduating college now are going to be waiting tables for a few years until the economy rebounds. Keep your head down and go about your business. The ride has to end sometime, as most of us realize that becoming partner is slim when we enter the game. Crying about the partners isn’t going to help any. Were you expecting them to be concerned about you? If the business model can still be viable but more profitable for them with layoffs, then why wouldn’t they do it? This blog is getting depressing.

  75. Yes, depressing, but real.Talking of viability of the business models- I am sure there are way too many partners, and some of them just enjoying the ride and taking home lots of dollars. There should be a freeze on new partners until things improve, while also reducing the number of partners. To be fair, there should be a complete promotion freeze as well in the ranks. It makes no sense to promote people and add to the overhead expenses when we are laying off people to cut back on expenses. For those who at risk of leaving the firm if they do not get promoted, well, we should let them.There is no guarantee they won’t once promoted. As some one else mentioned in one of the above posts, no one is indispensable. Else, we would be back where we started soon, failing to see reality, just like those forecasts..Have there been any shakedowns in leadership at any of the Big 4’s? A change of guard, is in order. Change of leaders at every location, profit centers, and areas including non-client service.The old guard is needed in the field more- time to put words into action. A fresh start, a fresh outlook, a brand new thought leadership, a brand new Big 4 that also values its most important assets – its people and their knowledge, where politics and old boys/girls networks are not rewarded, but merit and knowledge is. A professional services firm run by professionals in each function. Amen!

  76. This is so sad, I am trying to image what these people felt.. it must have been a mix between anger, incomprehension and feeling of betrayal.
    Your suggestions are very bright FM.

  77. Rule #1 – If you are at a client site, you bill the entire time you are at that client site (excluding lunch). It’s rule #1. Anything less, will leave your manager pissed that your utilization is so low. If you go to a client site and there is only work for 5 hrs – but you are there from 9am to 7pm (because leaving earlier makes you a slacker) rest assured that 9 hrs are charged to the client. Why? Because you are physically at that client. You aren’t on the coach watching TV. You aren’t working somewhere else. That client is paying for the privliege of being able to walk in and ask you a question at a whim’s notice. The facebook/CNN/ESPN filler time is all part of creating a “work/life” balance. Argue all you want that only 5 should be charged, but that’s not how we roll. I even had a partner tell us that if we’re thinking about a client issue than we should charge that time. Good thing I can think about clients while poking friends online.

  78. People getting fired / laid off everywhere. Public accounting firms are no different. This is why it’s important to be good at what you do.

  79. Agreed,but you have to be more than just good.Anyone in a job that can be “comoditized” is not safe in the new world order and that includes auditors.

  80. […] last week, I gave you a survey of the actions being taken at the largest audit firms to address what they see as a downturn in their business and a […]

  81. @32 – see what 60 wrote (007CPA) – it explains what you missed when you misquoted Business Week “Big 4 still touted as the best employers to work for? are they on crack or are they paid by the Big 4?”

    No, they said “best place to launch a career” – as 007CPA says, get in, get out, enjoy the ride. “Work for” would imply staying forever. It has its upsides, but as you see above, not everyone’s into that.

  82. understood – but Best places to launch your career- for how long? new campus hires are getting laid off within months or by end of the year by when they can get a “performence” based lay off…

  83. @74 what is depressing for you? Is it that you believe the whining and complaining and are angry with the firms and the partners? Or is it that the people on this blog represent the people that are employed by the B4 and they do not seem to be the best and the brightest?

  84. @73 – one reason that many managers (not just one) are involved in the review process, and even staff opinions are brought into the process, is so that individuals and specific cliques cannot wield enough power to do unfair damage. One day you will be part of the review process (sorry if I am incorrect in assuming you are not involved now)… you will be surprised how much more fair it is than you think. The secrecy of the discussions creates these suspicions.

    Self-awareness is really an important trait for people to gain — if one’s self image is not in alignment with the feedback they receive there may be many reasons. Consider protection of that self image (aka ego), different corporate view/values implying a poor fit with the corporate culture, inability to listen. Conspiracy, while theoretically possible, is unlikely in the vast majority of situations.

    More likely than conspiracy is that the office managing partner may not be a good manager — in these cases the review process may not be run properly and young managers never learn how to review and how to be self aware of how they contribute to the situations involved in the review. In reality, during the review meetings some people are better reviewers than others, and some are more consistently better than others — better doesn’t mean give favorable reviews… it means give fair reviews that help their reports grow and improve — and they hit that mark more often than not. Only giving favorable reviews is not a service to an employee — it is necessary to guide people to improve and grow… usually this guidance is perceived as negative feedback when it isn’t.

    What is more common than managers ripping on staff is that managers are uncomfortable giving negative feedback and they avoid it by either providing a one-sided positive review or not providing the review at all. This is just as much a disservice to the staff member as is making up negative feedback.

    My best review experience involved providing a very negative review to a young person, who after taking a breath and listening carefully turned it around and found it to be a real growth experience that set him on a path that shaped his life in a much more positive way. His ability to deal with it constructively rather than in defensiveness and anger really was amazing.

  85. @77 – sometimes a client does pay for you to be available at a moments notice and then you are correct. Don’t know that this is appropriate for audit or not, but it does seem to be the practice in audit. It isn’t the way things work in other practices. It probably works better in audit as many of these jobs are fixed fee rather than billed by the hour. Going over budget on fixed fee jobs hurts the partner’s profitability but does not impact the client. In that case, charge for being there cause the partner asked you to be there. But if the client pays by the hour, then the partner needs to manage time such that the client isn’t paying for empty time, and you aren’t doing a lot of empty time. It is often possible to sit at client site A yet do some work for client B. If that is the case, you charge time to client B for the time spent on that work… you cannot double charge. Contingency fee jobs also work a lot like fixed fee in terms of charging for empty hours… it only hurts the partner not the client.

  86. 84 – Rippping a ‘young person’ because you have a small member doesnt make you look good regardless of how they took it and turned it around. It just makes you an ahole

  87. 77 & 85 – Bill according to your company’s policy, but definitely give frequent updates to the manage or partner, especially if there’s any indication that your time is not being properly used: if you need more hours b/c the testing is not going well, if you run out of work, if you’re not getting the paperwork support or management support you need, if you run into a roadblock, i.e. a crucial client staff person can’t help you b/c of leave, vacation, disability, inaccessibility to files, etc.

    It’s not uncommon for clients to balk or push back about the final bill. A manager of partner nervous about losing a client will sometimes go after seniors or staffers, with the accusatory spin “Well then, why didn’t you tell us earlier about XY&Z?” or they make people adjust time sheets and eat hours. Protect yourself and make it the manager’s or partner’s problem that the budget and your time is not being properly managed and utilized.

  88. Here we go again-the TIN GODS of Big 4 Audit….dude get a life,you are just a frekin Auditor! In the years i spent in Audit, i noticed that alot so called “seniors” and “managers” have rather grandiose notions of who they are and their roles-hey 84,your job is not to bilittle or bully your staff,or play silly psychological games when it comes to giving an honest review.You are not BETTER or SMARTER than your staff,you simply started earlier.

  89. preach on!! you hit the nail on the head!

  90. The Big 4 and other national and regional accounting firms are going down. A new book (“Age of Indulgence”) exposes the fraudulent billable hours and expenses that accounting firm employees pass on to their clients. Here is a link to the book on Amazon.com: http://www.amazon.com/Age-Indulgence-Greed-Accounting-Created/dp/144212945X/ref=sr_1_1?ie=UTF8&s=books&qid=1240521519&sr=8-1

  91. @ Teddy. 52 pages? Is that a typo on Amazon? I guess there just wasn’t that much to write about huh?

  92. It was interesting to read and I decided to comment. I was one of the laid off from the Big four. I experienced ugly office politics, saw a* kissing and did not try to fit in by stalking seniors, trying to be funny or letting everyone know how long and how hard I worked. Yes, I was upset and mad when they laid me off. I was absolutely sure that it happened because I have a family and a small child and I was not willing to put 15 hour days. Ineffiency was driving me crazy and I thought that it was unethical to bill clients for the work not performed. However, the client did not have a budget, so we took advantage of it. Anyways, besides all the negatives there was a good part to it. I learned how to handle stress, deadlines. I learned how to teach myself a lot of things. Whatever comes to me next will never ever be so bad. Now I can take anything.

  93. @86 – first… nothing about a member is applicable. In my experience, men who make such comments have particularly small ones themselves – and women who make those comments are bitter. Second, you missed the point because I did not go into detail. While I don’t think your tone or comment deserve that detail – I will provide it to see if maybe you can show some humility. First, the negative feedback was not mine. I have the responsibility to gather all feedback for my reports and put it together. I deliver the feedback to the staff member. In this case, I also pushed back at the director who gave the feedback and raised the questions to the partnership. I spent the better part of 3 days working through this review with all people involved. Part of my job was to help the staff member hear what was said, and understand what it means and how to work with it. I managed to get the director to be more realistic and more well-rounded in the review. And I mentored a young person who was devastated by the review to learn from it and find a way to improve and grow. So, I did not rip on this young person, nor did the young person take it well and turn it around. Someone else ripped on the person, and I helped this young person to learn how to read it and what to do with it that will help in the long run. I also challenged the reviewer to ensure the final review was fair and constructive. I wish you could talk to the staff member — if not for me the experience would have been exactly what you think it was. Having a good person to manage the performance process made the experience a positive on in the end.

    @88 – the review was honest and while somewhat rough, the comments were fair to make. But I offer to you that providing guidance, indicating ways to improve, informing people when they go astray is not about being a bully or being smarter. With experience there comes some wisdom – and that has value. I suggest you think about your parents. Barring the case that you have deadbeat parents – it was their responsibility to tell you no – don’t touch the hot stove. Not cause they are smarter, but because they had experience and wisdom. It was their job to tell you when you were driving 100mph down the highway that you were doing wrong, and the fact that they have known people who died in car crashes is experience that gives them the position in life to judge you if you do that. People will review others at all work places — it is the way it is. They are mentors and they are guiding you. If they do not provide the negative feedback they are doing you a diservice.

    As for age being all there is to it — my manager is younger than me. He has more experience with my firm and in the B4 business than I do. He has different life experiences that he brings to the table which can be beneficial to my review. He has positive and negative things to say. He doesn’t always deliver the review well… but he tries. I don’t agree with everything he says… but I can always see why it mattered. Not all managers are good at it. But you need to know that a negative review isn’t about being better than, or smarter than, or bullying. It is more about being helpful to and compassionate regarding a person’s situation – and helping them move forward in as best a way possible.

    To both @86 and @88 – I can only assume that you resort to name calling and empty words of anger because you know that what I say is true. Maybe you have gotten a poor evaluation and are unable to listen to it and get the messages that you need from it. I advise you that you can disagree with the review and still learn a lot by taking the opportunity to understand the reviewer and challenging yourself to figure out how you contributed to their impression and how you can avoid contributing to that in the future. All your life you will have a judge — your parents, teachers, managers… but in the end they are mentoring and guiding you. The ultimate judge is yourself. If you do not listen to these judges, if you dismiss them outright as bullies who have no right to provide feedback — you will not go far. There will be times they are wrong… but I encourage you to at least listen and take it seriously. The draw your own conclusions and see how you can become a better person as a result. There are several feedback points I have had in my live tht I have rejected — but more often than not the points are true, and I need to turn them into how they apply to me.

    And finally to @88 — I’m not an auditor. There are other practice areas in the B4. And to the others who will guess – I am not in HR and I am not a partner.

  94. @83 – PS – is it ripping a young person because I have a small member when I have to advise the person that they need to actually show up at work… what do you say when someone routinely comes in after lunch or not at all… and gives no notice about it? Is it ripping a young person because I have a small member when I have to tell someone that they neglected to perform a task, or they made serious errors in their work? Is it ripping this young person when I discuss with them how they could come in late if they informed people of why and when they would arrive? Is it ripping on the young person when I discuss with them how they can QA their work so that the mistake will not happen again? Is it ripping a young person when I offer to review their work or provide OTJ training even though I cannot change the engagement? Is it ripping a young person to explain that a director has an impression that they are not trained in finanace, and when we discuss how to get the training and how to address this director’s perceptions (which may be accurate or may be false)? Is it ripping a young person when I have to tell them that yelling at a co-worker is never an appropirate behavior and when we discuss what triggered the event and how to avoid it and handle it in the future?

    It sounds like the only things that you feel are acceptable in a review are glowing statements about how wonderful the staff member performed. Maybe it is the small membered man who cannot take constructive criticism. If the criticism you get is not constructive or fair or appropriate — don’t come yelling at me… I did not do your review and you cannot judge me unless and until we have that relationship.

    And to answer the question — I do not have a member. And my size in any other areas is not at issue.

  95. Everyone understands according their own situation. Maybe 83 was doing his/her best and the reviews indeed ripped him/her apart. From my own experience, I know how these reviews can become subjective and that big 4’s are loaded with politics. If you happen to be unlucky and work with someone who will for no reason hate you, then the reviews will suffer. Luckily I had great friends who told me to just brush off the reviews and remain confident in my abilities. And even though I did that, the damage is still there, there are situations where I start doubting myself just because some review comments are lingering in the background. I do understand the importance of constructive feedback, but more often than not we hear about the instances of destructive feedback at these companies. Especially when they want to get rid of their excess work force. Unfortunately I was among those who had great reviews during the engagements and out of a sudden received something completely different during the year end review. It was plain and simple: the company decided it needs to start cutting its work force.

  96. Reviews are subjective — there is no getting around that and never will be. It is also always true that reviews may serve a purpose other than constructive feedback. It is possible they serve political motivations. All that is true. But you should still listen to those reviews… you must acknowledge that the review process is necessary and the reviewers have the responsibility and obligation to provide the review…but ultimately you have to decide for yourself what to take away from it. Be careful though — doing your best isn’t necessarily good enough. It may be that your best will be good enough at a different company or in a different career — but the standard isn’t about doing your best. The standard is about doing your job. Negative feedback can be devastating — the key is to deliver the feedback in a constructive manner. Sometimes people need to be ripped apart (if ripped apart means telling them they are not meeting the job standard) — sometimes that is a good thing for a person. Sometimes it isn’t. Good managers know when to do what. As for being hated — we are never loved by all we work with. We have to deal with the people that hate us and the people we hate. That is a trick — but it is something we have to do.

    I have experienced all the things people talk about here… getting great reviews and suddenly being fired, getting terrible reviews, having someone hate me and use their power against me, being falsely accused of things for example. But I have also experienced the people who think I walk on water, people paving the way for my career path, people going above and beyond to support me when I am down, and much more.

    It is all part of the process of gaining experience… and with experience we all grow and mature.

  97. I agree with you that the feedback needs to be provided in a constructivbe manner. Maybe whoever is providing it should ask the other person what is the best way to do it in order for the feedback to be effective. However, not many managers are also good psychologists. And I don’t think that I have met any of them at the Big 4 that I worked.

    I don’t think I clearly understand the standard of just doing a job. Is it putting 80 hour weeks and then letting everyone else know about it? Because this was one of the effective standards by which people were measured. More often than not we were required to stick around because other team members were there and partners were watching. I completely agree with someone saying that these teams are very inefficient. I have experienced that. I also experienced teams taking advantage of clients without budget restrictions. I think it is very unethical.

    There were plenty of positive things that I got out of my big 4. First of all to be able to work under tremendous stress, also to be able to figure stuff out where there seemed to be no solution. It seems that I can take anything after what I have experienced. Luckily, my current job is far from what I had as I am especially blessed with the nicest managers and supervisors. If I had to do it over again, I wouldn’t regret the long hours and stress. However, I think that people who stick around for long are just plain crazy because there are way better opportunities.

  98. @97 – if you were responding to me (@96) — I did not mean “just doing a job”. I meant that there is a job standard and a job expectation — you are measured against that. That expectation may include something about hours, but usually is about skills (both technical and soft skills). The technical skills – like does the person know advanced functions in Excel – are easier to measure. The soft skills – like is the person a good teacher, a team player, or a leader — those are more subjective. But there are still some ways to measure them.

    You are correct – most “managers” are not “psychologists”. I would say that is because most people are not introspective. As a generalization, people like to pat themselves on the back and blame others. And yes, I have probably noticed more of that at the B4 than elsewhere. But one reason I see for this is that at the B4 they promote people very fast and people are managers at a very young age. There are things that it just takes time and experience to get… and many of these things you will mess up the first time you try to do it.

    I’m glad you found a job you like. I have found that I generally like any new job for 3-4 years — then no matter how good it was, I get disillusioned and start getting angry. Each person will have their own tolerances and preferences. I have had good and bad managers — my first 3 years at the B4, my partner was the best boss I had ever had… that is no longer true. But overall, I have only had 2 really good bosses – and the one here is no longer really good. The rest were mediocre at best. Look for the person who will develop you and help you grow. That person may also challenge you at times.

  99. I think you’ve either had an unusual experience at the Big 4 or have a selective memory of your time there. I’d say at least half the performance rating is all about how completely you give up your life during busy season (and outside of it, whenever the firm may require you to do so).

    Then again, you may have a point. In my performance reviews I received multiple comments about my superior Excel ability – the most complex functions I ever used were “vlookup” and “sumif”. I can’t be the only one to find it laughable this is what passes for an advanced skill in the Big 4.

  100. the problems are not with the firms… the problem is that it is a very hard profession…..it is client service focused and it is probably the most regulated industry out there (state society, AICPA, SEC, PCAOB, Peer Review, Internal Review)….. The regulation makes it harder, it makes the firms require more of their people and it makes everyone miserable…

  101. confused @ 100 —

    Let me suggest that you are, indeed, confused if you think over-regulation is the cause of the problems discussed on this thread or on this blog. First of all, asccounting is not the most regulated industry out there. Take a look at the Aerospace/Defense industry if you want a highly regulated industry. Second, many of the firms’ requirements come from their past failures to meet regulatory requirements, not from the regulations themselves. For example, most independence controls relate to past transgressions, deferred prosecutions, and/or consent decrees. If the firms require more, it is because they are required to do more in order to avoid monetary penalties.

    Finally, all the regulation in the world, and all the controls in the world, don’t prevent all the misdeeds — just ask Deloitte or EY or PwC about independence issues that “slipped” through their control systems, despite hours of mandatory training and all the confirmations and all the registration of personal investments.

    So, if the regulations are not the root cause of audit failures and morale issues, what might the root cause or causes be? May I suggest a couple of areas for your consideration?

    1. Failed leadership. A leadership team more concerned about maintaining current year income than in doing the right thing for the clients. A leadership team more concerned about maintaining their positions than in doing the right thing for the long-term interests of the firms. A leadership team selected not based on demonstrated leadership skills … and with little or no accountability for decision-making once annointed.

    2. Failed evaluation/promotion process. An annual evaluation process that is not only susceptible to undue influence, but actually designed so that partners and other influential people can override the objective evaluations and rankings, often in the name of maintaining the “leverage model”. An annual evaluation process that lacks accountability for the persons giving the evaulations as well as those determining the rankings. A promotion process that rewards conformity and looks and smoothness, and downplays (or downgrades) technical competence and speaking-out for quality and questioning of leadership decision-making. A promotion process that ensures anybody with any leadreship characteristics never makes it into a position of leadership.

    3. A culture based on greed. Unbridled, limitless greed, hidden by a lack of transparency so thick that even most insiders have no visibilty into compensation practices. Aided and abetted by a system that emphasizes individual salary discussions while ensuring the individual employee has little information and even less ability to push back on inequitable situations.

    In a nutshell, confused is where the partners want you to be. It makes it easier to maximize your productivity while minimizing your ability to evaluate what’s really going on. Reading this blog helps you move out of confusion. Talking to other people helps move you out of confusion. Reading article and books helps move you out of confusion. Listening to the internal firm messaging? Not so much.

    In my opinion.

    — Tenacious T.

  102. @99 – not selective memory at all. You are right – vlookup and sumif are laughable as advanced skills. Take a look at Forensic – you might find what they do and the culture to be a bit different.

  103. @101 – your message is the same all the time. I see you have put a ton of thought into it and done a lot of research. I respect that and will admit outright that I have not studied up as much on many topics as you have. I also respect your thought process. That said, it seems that you leave out some important aspects to the story as you draw your conclusions. Consider the following:

    1) Greed – yes it has issues, but it is what the American culture and capitalism are based upon. I have a socialist streak in me, but when you come down to it, there is truth in the capitalist model in which greed provides motivation for innovation and progress. I do not see the B4 being based on greed any more than any other firm I have worked for – and I have worked in several industries for large, medium and small firms. I think greed alone cannot be the problem. I suggest you look at greed when it lives in an environment such that you advance your own wealth only by suppressing others — that kind of greed is the problem, not all greed. If greed exists in an environment of teaming where all succeed together and the success of one is the success of all (including the engagement team, the practice, the firm, your clients, the stockholders) then it isn’t really that bad.

    2) Review process – the B4 process is not unique and has not failed. Some people who participate in that process may have failed. Objective reviews are not a realistic possibility — it just isn’t possible. The very definition of review involves opinions made by some people about others — and those opinions will involve some degree of subjectivity. The way to remedy that is to include many people in the review process, to require reviewers to defend their positions, to seek out peer review, and to be sure to value many types of skills. Some practices and some regions surely do better at that than others. I have seen other comments where you have explained what you have done to assist people in the review process — those behaviors are part of the process and that is the way it should be. I know that I disagree with many promotion decisions made at my B4 – but have had that experience at many other companies as well. I cannot accept that the review process (even as you have described it in several different posts) is failed.

    3) failed leadership — this comment is identical to the greed comment. I think that the issue is that at least at my B4 the leadership do not really reward effective teaming that produces quality product. I have seen these failures on several levels. In some cases they do not want to have a team member utilize others with their specialized skills (manager or peer review) because they do not want to put more names on the bill to the client. This same behavior causes scheduling and morale problems because people get stuck on a particular engagement and we do not cross-train so that we can effectively use available staff as appropriate. Another situation I have seen is rewarding individuals rather than teams in such a way as to almost encourage people to sabbotage each other. That statement is stronger than what occurs – but what does occur is people do not contribute to the team unless there is individual reward.

    Your comment on conformity and rising to the top only if you fit the mold. Again – this is the nature of business. If you feel your business model is working then you want to promote those that fit the model and that would be those that look and act like you. So, the premise you are really proposing is that leadership should consider that their model isn’t working – and as such they should consider looking for people with different viewpoints. I would agree that this is not only a good thing when the model is failing – but is healthy diversity at any phase of the business’ lifecycle.

    In terms of leadership not rewarding people who speak up with different views or challenge the work product — my experience is that those who challenge do get ahead. I have seen what you refer to – but it isn’t the majority of the people I work with. The key is to speak up and have a healthy disagreement – but in the end, if you lose the argument you must let it go. If you have the discussion several times in constructive and healthy ways — things will eventually sink in (assuming you are actually correct). Always give the loser a way to save face too.

    I am certain the things you observe do happen. I just cannot agree that you are placing the blame entirely in the right place. Change is evolutionary, and you can have an impact over time.

  104. @103 and @101

    Great discussion.

    I would give one little piece of information to support the conformity principle at the firm I think is the worst. Professionals from PwC visit this site on a daily basis more than any other identified host IP address, but you hardly ever see them comment. I have had more personal attacks (they don’t get posted) and negative reaction from that firm and their professionals than any other. I also have more sources at high levels there than at any other.
    Just sayin’
    Francine

  105. Anony @ 103 —

    We’re going to have to agree to disagree.

    It’s important to distinguish generalities from individual examples. When I say the evaluation and promotion process has failed and has been designed to fail, that’s simply my overall opinion based on many years of observation and participation. Your posting of some vague counter-examples — “some practices and some regions surely do better at that than others” — doesn’t really do much to change my opinion of the overall process. Counter-examples only undercut general characterizations if they represent a significant part of the transaction population. If not, the generalization is still valid even though there are one or two exceptions.

    (I just made that last bit up, but doesn’t it sound authoritative? Can you tell I used to write expert reports for the partners?)

    And, as I’ve posted before, the fact that evaluations and rankings are manipulated is a shame–it’s not a good thing. If I learned to work the system to help my protege(s), that doesn’t mean the system was well-designed or served the needs of the partnership and the staff. But we’ll just let that one go. My other opinions are also not changing based on your posts, but I respect your tone and I’m glad my thoughts sparked your comments.

    Not to be socialist or anything, but isn’t the Hegellian dialectic a wonderful process to participate in? (Y’all can google that for CPE credit, I think.)

    Finally, as I use a consistent nom d’net it’s easy to say my “message is the same all the time”. Yet I don’t know who the Anony posters are, so I have no way to know whether we’ve engaged in discussion before, or not. If I repeat myself, it may be because I don’t know if the poster has read any of my previous comments.

    Enjoy your weekend!

    — Tenacious T.

  106. @TT – I have discussed with you before and I know you would prefer I provide a handle. I am not ready for that. But I have volunteered before that I am not an accountant — I am in forensics. I do believe that there is a huge difference between the audit practice and forensics. For example, in forensics it is desirable that you challenge and question things. That is what we do (and our lay off list would include the people who do not challenge upward). I think the reason I cannot yet agree with you is that I have experience at 8 non-B4 firms (not even in financial businesses per se)… and the issues you raise are no different anywhere. It is always true that the review process involves subjective evaluation and that playing politics influences that process. I do not play politics well – BTW. You refer to your “learning to work the system”, whereas I view that you have learned how to play politics when it is something you believe in or something that serves you in some way. Both reasons for doing this are fine…and it just shows that the system works because it allows you to participate in this way.

    I realize my counter examples are vague. Let me say this about teaming… I believe that in an effective team multiple people work with each other and share knowledge about the work and can become somewhat interchangeable (thus allowing managers to schedule assignments easier). While one person is providing support, brainstorming, and QA – the other is doing the bulk of the work. If we team well, we have many people working across many engagements. But at my firm each engagement becomes encapsulated. They do not want too many people’s names on the bill, they believe that the manager in field A is competent enough to QA the technical skill that may be in a completely different area (example – an accountant QAing a technology person for example). As a result, the individual leading the engagement is rewarded rather than a team that has a responsibility beyond the one engagement.

    I believe that this isolation of credit by engagements leads to the type of greed that causes you to have your opinion. I am trying to be too philosophical I suppose… but greed by definition isn’t the problem. It is that the greed in combination with individual competition results in people looking out only for themselves and their engagement — rather than the longer term practice development and overall quality across engagements. Honestly – I think it is the reward system which credits individual utilization and managed revenue that causes people to focus on these shortsighted goals which is the problem. Why not reward managers that run a team and keep the team busy over many engagements throughout several years — that encourages long term team development. The way it is, people are rewarded for keeping several people busy on a particular engagement and so they have tunnel vision on individual engagements. This does not encourage developing staff — it encourages managers to play favorites using only the ones they do not need to train. This does not encourage career development as managers just want the person to do the same thing as they did it well in the past and they don’t care if the person is happy long term as their job will end before they have to address this issue.

    My experience may be different because we have jobs of various durations – many that are smaller. We have jobs from $10K to $110M… some may just be 20 hours assisting an audit team, others 1000s of hours over multiple years. I think audit jobs are longer on average, and more predictable.

    As you think my examples are anecdotal and that this is not enough to sway your years of experience… I generally feel the same about most of the posts on this blog. I am not questioning your experience, I am asking you to look one step deeper… is it the greed that is the issue or is there something else that is the root cause of these behaviors.

  107. @fm — interesting about PWC… I would have expected you to say Deloitte. What I don’t understand though is are you saying:

    1) PWC folk don’t post due to pressures from above that they need to conform and thus cannot even engage in this discussion
    2) PWC folk attack you personally and are so entrenched in defending the B4 and minimizing you that their stance shows conformity
    3) both
    4) neither

    Regardless – I did not expect that it would be PWC. On the other hand I have seen many complements on the blog of how PWC is forthright with their employees. So maybe they conform for good reason (i.e., PWC has it right – so it is worth conforming and defending).

  108. @107

    3) Both
    But actually I’m looking for more input and feedback on the phenomenon.

    You missed the part about all my informers and off line support from current and former PwC. They have it no more right than anyone else, in my opinion. But what they do do well is provide incentives for employees, more than others not to talk. That may be a carrot or a stick. That”s what I’m curious about.
    Francine

  109. @fm – still interesting. I know nothing about PwC — so do not assume I am making any comment as such. But my wild a** guess is that companies really don’t care much about something like blogging… and would not give any specific incentive to blog or not to blog. But companies do have a culture and they may succeed at creating a culture that encourages this behavior. The only cultures I can think of are successful brainwashing (I don’t believe that though as a company that large cannot possibly win the hearts of all the employees and any company larger than say 10 people certainly has many unhappy employees), or a culture of secrecy (seems more likely)… actually I cannot figure why that pattern would happen at all. I don’t believe that any B4 would have happier employees (as I said earlier — take any company and you’ll get the unhappy), I don’t believe that a company that large wouldn’t have people interested in blogging, and I don’t believe a B4 can create any incentive plan to stop their participation. So, I don’t get it either.

    Let’s go a step farther — and I do not know this to be true — it seems that Deloitte posts the most. Why is that? Is that phenomenon any more or less a curiousity? Is it even true?

  110. First up, I’m posting from Australia, where aspects and characteristics of the firms may display local variations.

    Second up, I was in consulting at both (which Deloitte called “consulting” and PwC called “Performance Improvement”) rather than audit. Again, “contents may vary”.

    However: trying to keep it as non-inflammatory as possible, going from Deloitte to PwC, from “Manager” to “Senior Manager” (actually the same thing as D didn’t do “Senior Managers” in consulting then) I found:

    — All the time I spent at Deloitte working with Consultants and Seniors on how to do the work better, I found myself spending with my “Sales Coach” at PwC.
    — The Senior Consultants that worked on my jobs at Deloitte called me by my first name when they answered my calls. The guys at PwC answered the phone “yes, boss?”
    — The Gen Y-ers at Deloitte wanted to know what I could do for them when they were working for me (got pretty depressing). The Gen Y-ers at PwC would complain if there wasn’t some way they could spend all night doing all my work for me (depressing from the start)
    — The consulting partners at Deloitte were career consultants and technologists. Half the PI partners at PwC had started in audit
    — At Deloitte my peer (senior) managers were my friends. At PwC they were anything but.
    — The Senior Consulting partner in my office at Deloitte stood up in front of the firm and said “any Manager or Director who asks anyone to eat hours will get no better than an MSE rating this year” (a “4”). At PwC I told Seniors and Consultants to book the hours they worked. They looked at me like I was nuts.

    I lasted a year at PwC but it was that year that showed me what Big 4 partnerships were “really” like. At PwC the stakes were higher and everyone really played for keeps. No tears, and no bitterness. The place just wasn’t for me. But while I was there, it scared me rigid.

    I could have been seeing stuff that I had missed at Deloitte because I had good relationships there. Maybe they were really the same. They could have been and I just missed it.

  111. @110 – sounds like a culture of fear. I didn’t think there was anything, even fear, that could change the Gen Y-ers in such a dramatic way. Wow.

  112. The most views are probably coming from PwC as they try to monitor the lay-off situation more closely. We’re the only firm that hasn’t done significant layoffs and everyone knows they are coming.

    Out of my starting class, one has left and two have been let go. Rumor is at least one more is going to be let go. That’s only 20%, which is what I believe is the historical rate. But in this environment you can’t continue to support that number. Audit fees are being slashed, as firms come in with unsolicited bids of 40% fee reductions in some cases.

  113. @111

    One of the most interesting things I’ve observed is that Gen Y and Millennials that are at the Big 4 (top schools, top grades, been told they are great for a while) do not fit the stereotypes most repeat when talking about those under 30ish.

    They may be constantly with IPods in their ears, never satisfied, always questioning, thinking they can take over the world and very connected to each other and the world via the internet, but they are still accountants and auditors. They’re generally risk averse, surprisingly often politically and socially conservative while embracing green and doing social good. (Man do they get excited about those service projects at the firms, although I think it’s more to show how good and what a team player they are than out of sense of altruism because most of them would not go to with me to a White Sox game or bar on the south side of Chicago unless it was the St. Patrick’s Day Parade.)

    At PwC, I also noticed this fierce competitiveness to be the one staying the latest, taking on the most extra admin projects in the “Great PLace to Work” committee meetings and very ready to show off any or all closer connections with a partner such as living near them, taking the train with them, having had lunch or a coffee with them or being spoken to less than perfunctorily once or twice. They would stab each other in the back for extra hours and none of them wanted to take any interns on their projects the summer I ended entertaining and keeping busy the majority of them in our office since my assignment was an inside one. Why not take on interns? They took away their billiable hours and they might look smarter. I heard it with my own ears.
    Francine

  114. @fm – I have witnessed all those behaviors in the under 30 crowd. I find the volunteering for the social committee stuff intriguing… and didn’t notice the pattern until you mentioned it here. I know my generation doesn’t care about those things at all. I thought their generation was thinking it was a perk and really liked the events. I also notice the “whats in it for me” attitude. As a performance manager I have had to have these talks over and over again. While I agree with looking out for #1, I try to explain how they should blend the “whats in it for me” with the “whats in it for the firm” attitude. You don’t get something without giving something. The idea of paying attention to both sides of the equation is hard to explain to them. I have gotten a couple of them to turn the corner… and they are going to do real well.

    That said — I also mentor a 30-something (so funny I called him that — when I was 30 something that show was on TV). Anyway, he is all over “whats in it for me”… and really sees everything others do as hurting him. The victim mentality is a challenge for me to work with. Actually I get it – but you just have to move past it and take responsibility for your own career. But this guy and a few others are all about where can they travel to, how fancy can the hotel be, I must fly first class, what’s the fanciest restaurant and most expensive bottle of wine, etc. Worse than that though is that it translates to how can I get others to do all the work and I get credit for it. And if the other person actually does get recognition — why am I being treated so badly. These behaviors are often observed in the 20 somethings.

    I like the angle you take on explaining that group — it is showing them more in a brown nosing way than just a self-centered way. If that is the case – their brown nosing techniques are pretty good… they play the politics well. It is the self-centered part that is harder for me to work with.

    So I realize we are generalizing – but it i fascinating to see the generational differences. My generation had its own challenges — thinking we could change the world and being idealistic.

    Your mention of competitiveness is interesting to me — I continue to think that the individual competitiveness (internally competing within our own engagement teams) is the worst problem at the B4 — and is the root cause of much of the other things noted all over this blog.

  115. @114

    A narcissistic personality is a narcissistic personality, no matter what industry. That’s why in the presentation I made at MACPAS on careers, I mentioned that one of the issues firms are facing is that top students went into accounting during fat SOx days because they thought it was the hot, high paying, easy job they can do for a few years, go get an MBA, and then make big bucks as a consultant or investment banker. The problem is not some generational thing, it’s that they just don’t have an interest or aptitude for the job, nor do they have 6the right temperament. It’s all opportunism with no feel for the vocational aspect, the service to the public interest aspect. http://retheauditors.com/2009/06/careers-in-uncertainty-mckenna-speaks-at-maryland-cpas-business-expo/

    I actually buy into the “paying your dues” approach to this profession. That’s why I liked KPMG Consulting/BearingPoint. It was a meritocracy. I paid my dues, worked hard as an experiencd hire, and became their first female MD in Latin America. The problem is that the way the firms are run now, there is not only not a guarantee, but there is a pretty high likelihood that you will get screwed for working your tail off unless you “brown-nose.” It’s something between just plain sucking up and pure self-centered cutthroat behavior. It’s delusional “me, me, me” behavior that is exhibited everywhere and in all industries by spoiled brats at every age. My advice is to set parameters then kick their tail out if they insist on being professional pigs.
    Francine

  116. @fm – I think KPMG advisory is much like the meritocracy you say consulting/bearingpoint was. This is probably why I commonly disagree with many of the posts here. I agree with your post @115. I just do not have the power to “kick their tail out” and it is frustrating when the partner who does is not in agreement with my views. I know I am not always right — but I do notice that while our office managing partner is generally fair, he is also sometimes swayed by non-meritorious behaviors (such as a good flirt).

  117. […] back and taking it anymore.  Clients exerted pressure, budgets were cut, teams were made lean, and reductions in force occurred, in bigger numbers at the others until now, but at PwC all along. They cut worldwide, like a […]

  118. Hey Guys

    Thanks for the useful information.

    I am a first year at a Big 4. I have a feeling I might get laid off/fired due to my first performance rating which was below average. However, I have been a high performer my whole life and was top of my class in college. Its hard to understand exactly how depressing this situation is when you have prided yourself on always doing your best and being one of the best. I should mention my low rating was not due to work quality/skills but more related to politics/a few people disliking me and/or my personality.

    My question: What are my options if I do get fired? Is it even possible to get a job in industry or something else? I just cringe when I think about this……………

  119. I forgot to specify that I am in audit and should be done with my cpa exams by the end of this year.

  120. @ 113

    Francine – First, I find your blog fascinating and even though I don’t always agree with every one of your posts – I still enjoy reading them on a daily basis. I just wanted to say that even though I live a few blocks from Wrigley, am generally satisfied with my Big 4 job and gave up my thoughts for world domination years ago – I’d go with you to a SOX game or bar on the south side any day.

    I also find it hysterical that after about 5 posts the topic you “blogged” about becomes a memory – perhaps why I keep reading everyday….

  121. @iPod Staffer

    Thanks for reading. It’s not necessary to agree with me. In fact I find debate and honest disagreement intellectually stimulating. I don’t know everything. I’m just one of the few who knows as much as I know who’s wiling to say it under my own name.

    Good to hear you’d be willing to come to a Sox game. After the game last night, I have high hopes. Maybe a re: The Auditors Sox outing? Only the dedicated readers have to show up.

    There are a lot of people who only read the comments and not the posts. That’s ok. Whatever entertains, informs, helps. I’m here for you.
    Francine

  122. I’m beginning to turn. Generally I feel the posters to this site are skewed in an extreme way that is inappropriate. But the comment has been made many times that the employees are suffering for the sake of maintaining partner comp. I don’t mind that we should all share the pain of the recession — partner comp decreasing, employee benefit reductions and layoffs, etc. But our partners are taking a 25-30% cut in comp and now there is honest talk that we have to protect it from decreasing any farther. The reason given is because if it goes lower we will lose partners.

    Now if things still looked bad I could understand this argument more. We need the partners with the good networks who can sell work. But in the past 6 months our work load has done nothing but increase. My team, while slow for May has been running pretty flat out since Dec. We are tired and overworked. It is taking a toll on us — physically, morale-wise, and so forth. And the next 3 months appear to be getting even busier. Due to attrition we have less staff, but we have several new hires come Oct. This may not be enough.

    So here’s my beef — if the world was still looking dismal then I understand tightening the belt further with cuts in our perks and expense policies. But given the light at the end of the tunnel is there — why not take the hit in partner comp and let the employees feel good about the effort they are making to save the day? Why anger them when they are the ones who are saving the day now. At a certain point the partners should be pleased to see the recovery coming along and take the hit and lick their wounds.

    That said — it could be that our practice area is going gung ho and the other ones are still in a poor position. But then where are the staff that are not busy — why aren’t they coming to help us? We help other practice areas a lot.

  123. The comments on this site are frequently unrealistic, perhaps. But inappropriate? Why, because we owe some kind of loyalty not to advocate for our interests in a public forum?

    It seems you still see the firm as some kind of team. That you’re all on the same side. Perhaps if you recognized the reality that this business is every person for themselves you wouldn’t be surprised you’re being overworked or that cuts continue despite the end being in sight. I’m certainly not surprised that would happen. Knowing these firms, I’d expect it.

  124. @123 — come on… give a person a chance to express themselves and stop trying to play amateur psychologist. As for the word appropriate — certainly anyone can have their own opinion and express them on a public blog. Maybe a better word would be “flat out wrong”. most comments on this blog do not take responsibility for themselves and blame others before they realize that they themselves are not perfect.

    As for the rest — there are NO layoffs coming in my team. We have had a lot of attrition. We will likely have a couple go for performance issues — and I am very aware of who these people are and why… and it is performance and not an excuse. We ARE hiring. The reason our employees are sometimes feeling mistreated is because the audit teams are struggling and whatever rules the partnership makes for audit are the same rules that apply to the other practices — even if the other practices are not having the same issues.

    As for being overworked — here’s the deal… it is a good thing to be needed and wanted… it is a good thing that my team has the appropriate and necessary skills to move the firm forward. It is a matter of time before we get things under control again. We need to stop the people from quitting and hire more… that simply takes time. And for your information — we have not had lay offs in my practice in my office.

    My complaint is simple — the tone is treating us like we are children. But what is the problem there — most of the employees in the firm probably behave like children. The number of people I see who waste company money and do not spend company money wisely is outrageous. So, the fact that partners have to put out rules to try to train people on how to watch their expenses is to be expected. But for those of us who actually do spend next to nothing compared to others — having the firm tell us thay are going to dictate how we are to save the money and take the decision making out of our hands is just not a good thing.

    So, while I would like to see the partners take the hit and look to a good year next year… I would also like to see the employees make wise decisions regarding expenses — and most of them still do not. I can also blame the firm’s culture for encouraging employees to think that they are entitled to a life of luxury when it comes to living on the firm’s dime (or the client’s dime). this is a complaint I have had of employees for a long time. But why does it surprise me that people treat money this way — this is why we are in the recession afterall… because most people have no idea how to manage their money and they allowed people to steer them into major debt that they cannot pay off and so on and so forth.

    Maybe I wasn’t clear about why I am a bit frustrated — it is due to recent announcements regarding expense policies that are finding new and different ways to save money. I don’t mind cancelling the Xmas party. I don’t mind paying for only one of the PDA or cell phone (should be the case anyway), I don’t mind that we cannot use a car service anymore (again we never should have in the first place). But taking away lunch reimbursement while on travel, and telling us that we cannot make proper decisions on flights (that they will just give us the cheapest one regardless of carrier and time) — these things take away our ability to maximize the savings to the firm and benefits (i.e., frequent flier miles) for us. But I know too many people who simply do not book flights in a smart way — so I guess I see why they did this.

    So your comments are just wrong — I am not overworked because the firm has laid off the people I need. Further — I am not surprised at any of this… and I know that partners will protect their comp. So do not assume my earlier post has anything to do with being shocked or surprised. Thanks for your post — it reminded me why I will side with the firm or the partners over most of the people posting on this blog.

    And for your information — if everyone in the firm is not on the same side — then that is a problem. Being on the same team doesn’t mean you don’t watch out for yourself… that is always true. But the only way to get out of the business mess we are in is for people to be on the same team. As long as you work for a firm you are part of that team — you can either be a constructive member of the team helping it out, or you can hide and hope to stay along for the ride, or you can fight against the team. If you are fighting them — you might as well quit. But know that the next place you go will be the same story.

    Perhaps if you realize that there is a company culture and a company strategy — and that all companies have such a thing… then you will realize that people who are out for themselves are the problem. You need to align with the company in a way that also meets your personal needs and goals. If you cannot do that — quit, you don’t belong there… find a firm where you can do that.

  125. @124, I agree with what you say about the sense of entitlement exhibited by people who live on the firms (and ultimately the client’s) dime. I well remember a senior manager saying to me “There’s more than one way to make a bonus: you just have to run a project. Or work on the right one.”

    But you know what? This sense of entitlement was set by the partners’ behaviours. When the partner came to the project we were out late, guzzling pricey wine and living it up “Having fun and celebrating” etc. When I made manager I saw what happened with the receipts from those good nights, and how the client *always* ended up paying. And all around me I saw the analysts and consultants learning how things were when you work at the big 4: money to burn.

    So — no wonder that people don’t manage their expenses well. In my experience the tone is set at the top.

  126. @125 — I agree and I think I noted that in my earlier post. The expense entitlement is at least partially and probably primarily set by the tone of the partners. I have seen partners who do not set that tone though. And… I have seen staff set the tone for themselves. I prefer not to give examples as that will give me away entirely. But it is not a one way tone for sure. We have 4 partners — 2 are always preaching and practicing frugality… and have done that before and during this recession. 1 simply doesn’t care and is probably somewhere in between. the 4th is generally a big spender… and I never approved of that. So, I see your point and I think the old school, good old boys, do set the entitlement tone at the top. But our newer partners do not do that. I can also discuss 2 other partners for whom I have managed jobs — they too are frugal. So, in my experience the tone is more frugal than excessive on the spending.

    That said — people should be responsible to themselves. This means that just cause the partner is doing something wrong doesn’t mean you have permission to do so as well. I could not look myself in the face if I did a lot of the excessive spending that some people do around here. And using the partner’s behavior as an excuse for your own bad behavior can only go so far (and that is not very far at all). So while I agree and understand your point on tone at the top — I can’t say that I accept this gives permission or excuses staff from their behavior.

    For similar reasons — can we blame the mortgage broker for steering so many people wrong. If a mortgage broker approves me for a $2M loan I am smart enough to know that I should not take out such a loan. Was this broker wrong — yes. But I would blame myself if I had taken the loan out. The analogy is similar. If a partner approves that I use a 5star hotel costing $500/night when there is a quality hotel nearby for $150/night (not a dive) — then the partner is wrong, but I am just as wrong (or worse if the partner did not know all the options and all) if I take advantage of that approval. It all comes down to the two wrongs not making a right thing.

    If we, the employees see problems with the partnership (as are so often stated on the blog) then it is our responsibility to rise above it and do a better job than they do. This is how change is effected… not whining and blaming.

  127. @125 and @126

    I agree that ethical and appropriate behavior starts with the individual. I could leave it there were it not for the fact that we are talking about licensed, accounting professionals who are supposed to operate under a code of ethics, especially with regard to relationships with clients, that goes above an beyond what any specific firm or partner in the firm requires. And then there’s the fact that the partners are the owners of the firm. As owners, their example goes a long way towards setting the tone for what is and isn’t appropriate especially for less experienced professionals who may not have a view to agreements and understandings and billing arrangements with clients.

    Finally, if all of the firms had not been caught at one time or another with their pants down overbilling clients for T&E, especially government clients where it’s a big no-no, http://retheauditors.com/2007/08/ibm-pwc-settle-kickback-allegations/
    I would be more forgiving of the “well, everyone does it” and each partner can set their own tone, approach. Add to that my experience where passing through inappropriate expenses to clients because the clients themselves can;t expense them any more, think strip clubs, and ‘Houston, we still have a problem.”http://retheauditors.com/2007/09/enron-the-beginning-of-the-end-of-accounting-scandals/

    Francine

  128. @fm — I agree that experienced professionals, and especially those in this field, should set a good example. I agree that the employees have a responsibility as well, and I see how improper training (from those experienced ones) may set them off on the wrong foot. I would hope their parents and teachers gave them a better start before they even got to the working world though.

    I do not doubt that the strip clubs and outright improper expenses can and does happen — although I have never seen it. Maybe being female I wouldn’t. I was invited once, but I am confident that was on personal expenses. I did not go.

    The only thing I have seen is expensive wine, expensive restaurants and expensive hotels — where there were better choices to be made. And even at that — I have seen this rarely and usually on the firm’s dime not the client’s. I still think people do not spend company and client money properly — but I haven’t seen it as outrageous as you have.

  129. @128

    Any kind of extreme profligacy is inappropriate, especially on the audit side. It doesn’t fit with our image as accountants, financial professionals, trusted, independent and objective. As a partnership it may be flouting IRS rules. Spending money on a T&E basis on partners personal peccadillos rather than paying them out in partner profits that are taxed as partnership distributions is cheating the tax man. Excessive partying and activities that cause discomfort and feelings of pressure for some members of the staff put the firm in a precarious legal position and open it up to liability, which is not good for anyone. Finally wasteful spending translates into higher overhead, higher fees and eventually the kind of reactive cuts and layoffs we are seeing now. Don’t tell me that there wasn’t a lot of high on the hog living during the golden days of Sarbanes-Oxley.
    Francine

  130. @fm — I agree that this translates to higher standard fees/overhead. I agree the B4 standard fees are way too high. As fo high on the hog living… I haven’t seen it at the level you portrait. I have seen an annual conference with more partying and wasteful spending than I prefer to see. Other than that — it has been minimal in my practice — in ALL years. I can’t tell you there “wasn’t a lot” of it. I can just tell you that what I have seen in 8 years isn’t warranting the criticism you have given. My experience is in a small group in one B4. And even at that — I still do not approve of the amount of it I have seen. And, other than an occassional expensive meal… I have never seen it while doing client work — only for internal events. Some of those are partner funded as far as I know.

  131. The fact that we are discussing such different experiences re partner behaviour, profligacy etc, shows that in this, as in so many other things, individual partners set the tone without reference to anything but their own moral compass. And these are as varied as their abilities to grow hair, or pick a nice tie.

    A lot of the people learning the ropes are kids still fresh out of university, who’ve done nothing much but grind through books their whole lives and are now having their own moral compasses set by the “real world” they encounter around them. Add to that the fact that, as we all must acknowledge, the majority of B4 partners get to be partners because they can sell work and deliver profit (and not much else).

    We can all probably remember ethics briefings and ethics initiatives at the firms we work(ed) at. We all probably have different opinions about the degree to which they were “just lip service” and once again that comes down to the behaviours of the partners we worked for. They’re just people, and their personal set of ethics wasn’t the reason they made it. Surprise surprise really.

    As Truman notes all over this site — it’s about greed. Greed is the oxygen of the firms. If it makes you feel a bit sick you need to get out. Just my opinion!

  132. @131 — don’t really disagree with you. Would like to add though that those young college grads should have had their moral compass firmly grounded by their parents and their teachers and their church/synague/mosque leaders and their girl/boy scout leaders and the adults in their neighborhood and their friend’s parents… and you get the picture. The have been in the real world for nearly 20 years. In the working world they just get a new perspective on things.

  133. @132.

    Sure. I think we agree. Everyone has accountability for their own actions. You express the sort of values that I like to live by. And I admire you for (presumably) espousing those values within a Big 4 firm where they’re not exactly fashionable, even now (in my experience, and from what my friends still inside say).

    BUT. Those grads we’re talking about arrive (with whatever values their upbringing has resulted in) in a “working world” that is particularly all-consuming — the working world of the “Big 4 firms”. In this world the firm *is* the world and you spend at least 10-11 hours a day there, being fed continual rah rah about how great and valuable and significant PwC/EY/Greendot/KPers is. You are surrounded by people who outwardly espouse this groupthink and rigid set of norms.

    As one of those grads you will notice the massive disparity between your salary and charge out rate. You will note your utilisation % and do some quick math. And when the Grange Hermitage starts flowing you may make an erroneous conclusion about who’s paying. You get used to a certain lifestyle. I read above about other peoples’ experiences with profligate and not-so-profligate partners. My experience: the latter was 1 in 20 of the former. And people didn’t like working for them because they didn’t turn up with a big team dinner once a month. Perversely, legendary dinners, paid for by clients, actually help the providing partners become more successful because they become the partners everyone wants to work for. Because they throw great team dinners.

    5/6/7 years later you make manager and you realise who really pays for all of that (if you didn’t before). You figure out what’s been going on. And then you make a choice. One choice might lead you to partnership. And you know what it takes to be successful, and attract the “best” people to your jobs.

  134. @133 — yes we agree. I think I may be an anomoly, but I came to the B4 in my 40s and have had many other jobs before. I am a performance manager – and as I guide the young college grads I encourage them to observe what happens around them and listen to all sides of the story and arrive at their own conclusions. I include opinions of co-workers and the corporate group-think in those things they should observe and evaluate and weigh against their own moral compass. If we don’t do this then we aren’t helping the next generation to think for themselves and to grow into adulthood. I have been told that the young college grads appreciate this attitude.

  135. I can relate to one of your points.

    I was hired this past summer at a next tier firm to start fall 2010. But will not recieve my salary untill September…

    they have me over a barrel

  136. I was recently given an offer at PWC in their audit department. I also received an offer as a financial analyst at a digital media company. The financial analyst company pays $10,000 more, but does not have the PWC name. I ultimately want to wind up in corporate strategy / M&A, not accounting. Do you think that an audit job at PWC is a better way to get my foot in the door to the financial sector or should I start at a no-name company doing something more aligned with my ultimate interest? Please note that there is little upward mobility at the media company.

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