Deloitte: Can You Still Do Those Things You Do?

By • Aug 18th, 2009 • Category: Latest, Pure Content


The drama continues at Deloitte. Their press release issued almost a year ago, in August of 2008, was a rare public acknowledgement by a Big 4 firm of what had been happening at Deloitte and the other firms, quietly, for at least a year – people were being cut and it wasn’t just for poor “performance.”

The Big 4 audit firms have been feeling the pinch for a while. The backlash against Sarbanes-Oxley costs finally caught up with them in 2006. Clients started taking the upper hand, controlling costs and giving firms ultimatums to get the same or more work done for the same or lower fees. No more 20-50% increases year over year. But the financial crisis hit already vulnerable firms, searching for the “next big thing” in XBRL and IFRS but only seeing regulator delays and clients resisting the pitch. By 2007, the beginning of the end of the mortgage origination firms, as well as ongoing poor results at such institutions as GM, (another Deloitte client), sent a signal that the coming recession would be a doozy, probably punctuated by failures, “sudden” implosions, forced takeovers by the government, and an ever dwindling number of companies with sufficient cash or credit.

Don’t ever let the audit firms, or anyone else, insist the stench of the failures wasn’t permeating the nostrils of a select few long before the fall of 2008, including the Big 4 auditors who are on the inside, on all sides.  It was the triple whammy in the spring/summer of 2007 of failures/bankruptcies at American Home, New Century, and Countrywide, as well as the nationalization of Northern Rock, that forced me to realize the roof was finally caving in on the housing bubble.

Jonathan Weil, Bloomberg August 15, 2007:

“Think about the poor schlimazels from Deloitte & Touche LLP who blessed the books at American Home Mortgage Investment Corp., mere months before it went belly up.
Five months later, on Aug. 6, American Home filed for Chapter 11 bankruptcy-court protection, still brandishing the firm’s clean audit-opinion letter. There’s a reason why you don’t see auditors pursuing second careers as tarot-card readers. They wouldn’t be very good at it…”

Failures and forced acquisitions were starting to shrink the Big 4 audit services market. It wasn’t just belt tightening due to the looming financial crisis, but because the number of very large financial firms with Big 4 auditors, in particular for Deloitte, were disappearing.

By March of 2008, we had a crisis, even though it took the September meltdown for anyone in authority to admit it.

The firms, in particular Deloitte, saw it coming, felt it acutely, and began to act.  Deloitte’s August 2008 admission of almost 1000 cuts due to economic circumstances was a watershed event for me, not only because a press release was issued, but because Deloitte PR gave me an exclusive statement on the actions.

Unfortunately, since then, even though Deloitte has continued to cut and make other changes such as finally slowing the recruiting pipeline to adjust to the new reality, they have not been as vocal. Maybe they think transparency did not help their image or morale. Maybe the volume of cuts became too frequent for public relations to keep up with. Maybe Deborah Harrington is busy responding to other Deloitte crises such as the Parmalat suit and preparing communications related to their acquisition of BearingPoint’s Federal Services consulting practice.

That doesn’t mean that the cuts and other human resources actions have stopped or subsided. On the contrary. With the recent loss of United Airlines as an audit client, as well as the effort at absorption of the BearingPoint professionals, new cuts and “rightsizing” are likely necessary. Those remaining are still waiting for official news of regarding promotions, raises and most likely announcements of “no bonuses.”

From a confidential source:

“People up for Manager have not received official communication and everyone is pointing their finger at the national office. It’s very late, even some Seniors did not know they were getting promoted until last week, and they found out because they were going to new Senior training this week. To put it in context, when I was promoted, I found out in end of May after the year end meeting for my office and went to training in August.”

And last week, professionals in the “Regulatory Strategy and Risk Services” line of business received this email from their Managing Partner Kevin McGovern:

“I wanted to provide everyone a quick update on our operations. Period 2 for us ended on July 25st and AERS (Audit and Enterprise Risk Services) finished ahead of plan by about $2M. Business Risk finished slightly below plan with hours being slightly ahead of plan and rate being the main driver of the revenue shortfall. Thank you all for playing your part in contributing to our performance thus far.

Over the next 3 weeks or so we will also reach a couple of Talent milestones that are extremely important – (a) communication on promotions, compensation and Annual Incentive Plan, and (b) goal setting which needs to be completed by the end of this month.

Now, as the summer comes to an end and we prepare for our annual busy season, we wanted to take a moment to communicate our expectations on utilization for all client service staff in Business Risk and Technology Risk, excluding Partners/Principals/Directors (P/P/D).

For our seasonal businesses we have to execute a lot of work in a short timeframe and in order to meet client demands we will expect all BR and TR professionals to work and charge 50 hour weeks beginning August 24th through March 5th (i.e., Period 4 through Period 10). This is simply taking what many of us experienced on a regional level in prior years, to a national implementation approach…what we need you to do, such as working closely with your Talent professional to adjust your personal schedule, and consolidating engagement team needs as soon as possible.”

Further details of expectations:

“..beginning in Period 4 through Period 10 (August 24th – March 5th) we will expect all Business Risk and Technology Risk professionals to support our operational goals by working busy season hours on all engagements possible. This will also allow us to more equitably distribute the work and project assignments across all of our professionals.

After considering the various legacy practices we have decided that during this period, each professional when assigned full-time to a client project is expected to work and charge 50-hour weeks. This is simply a consistent national implementation of what used to be multiple slightly different regional models with the objective of generating at least the same outcome on average across our practice this year as we have had in prior years. We realize that many of you will take some personal time off in Periods 7 and 8 and so our expectations for those weeks – typically 1 week in November and 1-2 weeks in December will be different.

…If you schedule less than 50 hours a week your Talent Professional will contact you to understand your situation… begin consolidating your engagement resource needs as soon as possible taking the 50 hour week requirement into consideration. ..not all budgets can handle 50 hour weeks, so work with the engagement P/P/D to consolidate work where possible, but this will be on an exception basis. If you plan to take PTO during the holidays please submit your request for approval as soon as possible so Talent professionals can place this time on your schedule. We would ask you to refrain from taking large extended PTO time during timeframes other than the holidays…”

Looks like a staffing firm to me. Do clients realize they may also see higher or compressed billing if they’re not on flat retainers? They will also see fewer people working longer hours in order to reach the utilization goals. Also more higher level staff will be looking for chargeable hours or perhaps doing staff work in order to attain those and therefore having less time to review work or, worse, end up reviewing their own work. Better scrutinize those invoices.

The reaction to these announcements by those in the firm I know has been a combination of disgust, bemusement, and resignation – not the actual kind, but the intellectual and spiritual kind, which is worse for a professional and for morale.

Some specific data that a source says was discussed on a recent call held by AERS leadership in the Northeast:
“1st years are going to get 1-1.5% increase from their base. No bonus (AIP).
2nd years getting promoted are going to get 2-6% increase. No bonus (AIP).
For seniors (and managers) who aren’t up for promotion: 1s and 2s – 1.5-3%. Those rated a ‘3’ are likely to get no increase.
Annual Incentive Program –
If you are rated a ‘1’, $4,500, ‘2’ $2,000, ‘3’ for the most part (~50%) will get nothing but are up for a possible $1,000.
New managers are going to start at approximately $80,000 with their raise. This is considerably lower than the average starting base of $92,000. No midyear adjustments. Also being discussed is the possibility extending the number of years before individuals are eligible for promotion to at least 3 years for senior’s and at least 6 years to manager, a change from 2 years and 5 years.. Deloitte partners are aware that new seniors are getting paid basically the same as 3-rated experienced seniors. The perception of those I spoke to is that experienced seniors who are 3 rated are angry because they’re performing as expected and getting the short end of the stick. In comparison all first years are likely to get a raise even though they are not that much more knowledgeable than a 2nd year. This jam-up is due to the fact Deloitte didn’t rescind the new hire offers in order to keep their edge on the recruiting scene and instead came back to them with lower salaries and sign on bonuses.  One interesting comment is that there are still individuals within the firm that were rated a 4 – not meeting expectations, that may have been kept around to fulfil staffing requirements.
It looks like Deloitte will be short handed on seniors and staff this year given the recent cuts along with attrition that will result from the annual compensation. As the e-mail that was sent out above describes, those who remain will be asked to work harder and longer hours to make up for the difference.  I was told that the number one and two driving factors for most people at this level is 1) the compensation 2) the dream of making manager and moving on… Something was also said on the call about shrinking in the upcoming year, but then the speaker would not comment on what this meant when those attending the call started asking questions. The speaker’s tone quickly changed into one of frustration at people’s questions and basically told them they are lucky to get anything in today’s environment while the competition is doing the opposite.

Since this reflects a call that took place in the northeast we can only imagine how it is for poorer performing regions.

Another source tells this story:

“I finished this past year with an overall 2 rating. I received a 4.5% increase in my own personal compensation. My office is considered a small to medium office (~100 professionals); however, prior to losing a big client and the recent layoffs we were much closer to 150.

The partner also told me that professionals receiving a 3 rating who were in a promotion year (at least at the senior level) would receive a 1.5-3% raise. But those receiving a 3 who were not in a promotion year would not receive a compensation increase this year. The firm strategically did not inform anyone on the staff of their compensation increases prior to the comp discussion for a reason. According to this partner, the firm decided that since so many individuals would not receive a raise in the current year, they would wait to disclose comp increases face to face. “

And to confirm my comments about forced ranking, another source gave this info:

“As for the “forced rankings,” there is definitely something to that. My peer group’s ratings were like this:
Of the total group as of six months ago,
14% individuals receiving a 2
57% individuals receiving a 3
28% individuals let go over the past 6 months.

Another group (currently being promoted to 5th year senior) were rated like this:

17% individuals received a 2
50% individuals received a 3
33% individuals let go over the past 6 months.”

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181 Responses »

  1. Deloitte’s audit practice relies on a small number of very large clients. For years this gave Deloitte a measure of earnings stability because big clients like Merrill, Bear and WaMu rarely changed auditors but the forced acquisitions of those companies gave PwC a windfall of new clients at the expense of D&T. Those clients aren’t coming back and D&T is now adjusting to the “new normal” of a smaller base of large clients, which means a permanently reduced headcount (at least in the New York region).

    D&T is at the point where entire offices depend on one or two big clients (the D&T Hartford office lives or dies on the The Hartford Insurance Co.). Any big acquisition or merger has the potential to trigger another wave of D&T layoffs.

  2. Thanks for a very insightful piece, FM. I can confirm much of what you stated in your post. As for the rest, I had to find it out, through you, via an anonymous source in my firm, because my firm doesn’t want to tell me yet. Go figure!

  3. OMG…I want to really thank you for getting this message out there…I have been preaching this same message to my peers for almost a year now and I was beginning to think I was crazy based on the blank looks I was gettign back from people. I am currently voluntarily resigning to persue a career elsewhere basd on the EXACT points you brought up in this article. I am a senior at Deliotte who will be up for promotion this Septemeber and I fall in that category of seniors with a three who are being promoted to 5th year senior. So basically I would have been getting no raise, possibly no bonuses, and more work…just as I expected and have been warning my peers would happen. Again, i can not thank you enough for writting this article and thank God someone has finally confirmed that I am not crazy :-) and sees what will be happening to our clients in the coming year.

  4. As far as I know, everything in this article is accurate…

  5. I’m curious how all this will be right sized in the end. Obviously, most people do not want to work long hours most of the year and unless you’re goals are to ultimately be a partner and look old before your time there is no reason to stay in public accounting in this environment. I liked the point the author brings up about longer hours potentially leading to seniors reviewing their own work. Perhaps they will not be reviewing work at all. I remember my days in public accounting where the pressure for hours and deadlines was heavy, it was not uncommon to have a senior tell you to tickmark as if you performed certain procedures, but for the sake of time and sanity to not perform it. And it is those seniors who find creative ways of getting the job or section in by the deadline (which was impossible to do the correct way) who were praised and given high marks. It is not always the case, but I did notice that more ethical seniors could be found in the under-performing rather than the over performing groupings. This is one of the reasons I switched to a smaller firm, and then eventually bailed from public accounting. In the wake of SOX, I feel like the amount of work has required auditors to focus more on meeting time budgets and making the audit profitable than actually opinioning on quality work. I didn’t work at a Big 4 firm, but it wouldn’t shock me to know they have the same problems. That clean audit reports are issued and then the Company goes bankrupt is not the shocking to me, as I can image that innocent corners were cut all over the audit in order to meet unreasonable pressures to perform. Garbage in, garbage out.

  6. As someone from Regulatory Strategy and Risk Services I can tell you that general morale is low and people are definitely not happy. People are sitting tight and polishing their resumes.

  7. Nail on the head:) LOL

  8. I hear this is making the rounds within the firm…all I can say is thankfully I’m out of there, the partners spend more time squabbling and worrying about gossip than focusing on business, their logic for promotion and employee retention is backwards. Well, they made their bed, so now they have to lie in it.

  9. Can somebody enlighten me regarding the distinction between “working” and “charging” 50 hours a week? The reason I ask is because, in all my years with the Big 4, I can count the number of weeks I worked LESS than 50 hours on the fingers of my hands. And I charged most of those working hours somewhere, to travel time or firm G&A or to training or PD … sometimes even to client work! So the big deal to me would be if somebody told me I had to charge 50 client-billable hours a week, and then work as many hours per week as that would take (likely about 80, I reckon). Can somebody translate and tell me if that is the new requirement, or what?

    Thanks!

    — Tenacious T.

  10. @TT

    I am assuming they want 50 billable hours. Otherwise the dictate would not be a PIP (Profit Improvement Plan.)
    fm

  11. Good post. I see nothing inaccurate about it. Regarding the 9 month “busy season”:

    “This will also allow us to more equitably distribute the work and project assignments across all of our professionals”

    What a joke. Do they honestly believe people are stupid enough to believe that reasoning? For the entire year before I left D&T in March (my position as ERS Manager was “eliminated”. That’s a whole story in itself) they were pushing people to charge as many hours as possible on engagements. They were pushing to staff unqualified people on engagements to get them chargable and of course there’s the “move work up” scheme. Push work that you would normally do in the fall up to the spring and so on. How long can that paperwork shuffle go on? You can’t do work a year in advance. It was like watching the CA government trying to balance the budget. Guess what D&T, as big as you are, you still can’t put the square peg in the round hole.

  12. @TT and fm

    Yes, it is definitely 50 billable hours.

  13. Its seems as though D&T is struggling the most out of the big 4 in new york city since the crisis began in 2007.

    One would think excellent leadership could have lessened the likelihood of the disaster that has occurred.

    It seems to me that ever since GW and EM got there posts around 2007, wfc has suffered.

    Im sure there getting a nice bonus and some additional units in the coming weeks which they will do all they can to maximize the value off thru Memorial Day 2010 (realigning, lessen 401k match, extend busy season). There be resending the same emails they sent out last yr on goals, expectations, utiliztion just changing the 08 to 09. Good luck to those still standing.

  14. Tenacious Truman,

    Your insticts are correct. Charge 50, work 80-100.

    MrCPA

  15. All,

    Thanks for the enlightenment. To those managing engagement budgets predicated on a 40-hour work week, good luck to you. Better start moving the realization rate down now. (And be prepared to get yelled at for doing so!)

    Glad I’m out, is all I can say.

    — Tenacious T.

  16. Oh great…an “eat hours” mandate!!!

  17. Good grief.

    I look over my shoulder and shudder. This is not the Deloitte I worked for.

    Has a staff memo ever said more clearly “Only the truly insane need stay; If you want any scrap of a life, please leave now.”

    And yeah yeah yeah “professional life” and all that. I’m a professional now. I’m paid as well as I was in the Big 4. AND I make it home by my daughters bedtime 19 days out of 20 for story time. And for the years I didn’t I have only regrets.

  18. Extremely interesting article… would this type of activity be consistent across all of the big four, or just D&T since they have a few large clients?

  19. FM, as someone works for AERS, I can say that you are 100% accurate here. Just want to add a few points:

    Other than 50 billable hours, it is also mandatory to “give” 5 -10% of engagement hours to our Indian “coworkers”. We were told to be “creative” in term of what we can outsource. For most of us, having this India “branch” was a mistake from the beginning. They hoped this was a cost saving move since the Indian staff can do the same work at a much lower rate per hour ($40 – $60 a hour). However, over the past few years, the results were not as good as intended. So instead of admitting the mistake and shutting it down, the leaders now “order” all the audit engagements to come up “5-10%” of work and outsource them to India. We (the manager and partners in US) are being evaluated by how many hours we give away. How ridiculous is that?

    On top of that, you have the fee cuts from the client, and “being efficient” requested by the audit partners. So before any work starts, we know we already lost 25-30% of the budget. Same audits, to be done by less people with less hours… Take a wild guess, what will be consequence?

    Deloitte, this is the beginning of the end…

  20. I’m sad to say that none of this is really new – maybe more formal / national than it has been in the past, but more of the same. I am surprised that people are surprised at it to tell you the truth. The directives to “be creative” to use R10 (we were not allowed to mention India) and to carve out time have been around for a while in the Northeast – my experiences were very mixed. Some great quality people, but shipping work that relies on judgement, intuition and dealing with clients to be done remotely just doesn’t cut it IMHO, no matter how good the people at the other end. But wait, since SOX, auditors don’t need any of those skills. Silly me. As long as you check the box you are good. Sadly (again!) there are many who joined the big 4 post SOX who have no idea what “professional skepticism” or true auditing really means…..although with the SEC’s new focus on fraud you bet there will be more training courses with the bouncing balls and gorilla. (that box will be checked by DT)

    I am personally so happy not to be there any more after my position was also “eliminated” – I’m happy to be working fewer hours under less pressure for more cash in a more interesting role. I’m lucky though – even though it took many many months to get my current role, I know others who are still on the search…. Good luck to everyone who is still there – looks like the 12 month busy season is nearly on you – you just have to find work to do for those 50+ hours now – if you still have a client left…

  21. I’m in the Pacific Southwest region and I too can confirm that I received no bonus and no salary increase. Also, can confirm your post is right on. Never witnessed so much backstabbing and ugliness going on between so called “professionals.”

  22. let me clarify my post…I didn’t get a raise/bonus and didn’t expect one. But, i did expect better communication from leadership. I continue to be embarrassed by the lack of leadership in my local office. Just tell all threes they don’t get a raise/bonus and spare us the awkward meeting with a partner to tell us yet again how your unit value is also lacking as you play with your keys to your BMW. I’m over it. Once the economy picks up and I can find any other job than this…I’m so out of here. You may have me hostage now, but not forever. Karma…

  23. Experienced senior. no raise but a little bit of AIP. The partner told me that even top performers only got as much as 3%, so it sounds like your source is right on. The annoying thing is that everyone from first years down to new managers essentially take on a new role, but no is getting paid anymore to do it. So every role is getting paid less than the same role in the previous year.

    Concerning hours, I haven’t heard anything about mandatory 50 hours yet, but my job is budgeted for 50 hours a week starting in the fall. that is consistent with last year, but it didn’t start until October or so, and doesn’t look like it will start until then this year.

  24. Well, take the “D&T” and replace with “PWC” in the article, and you have pretty much the same story lines. Exception, PWC actually has a scheduling tool that tracks whether advisory consultants have scheduled enough hours to justify their “salaries”. Each consultant is ranked againsts his or her “peers” and each time the schedule tool is opened, the metrics are displayed (“you have not met your expected hours for the period”). Although consultants are not hourly employees, they are being treated as such. Management does not have to send out letters mandating 50 hour per week chargeable hours, they have an automated tool that does it on an individual basis, and then places hours results in the automated yearly evaluation process.

    As far as annual evals, raises, bonuses, it appears that those who are on track for promotion receive the highest scores. Those who have been with the company for years and have performed consistently at levels 2 or 3 can now be ranked “less than expected” with no prior indication (even though the evaluation process is supposed to be year round). Once a “less than expected” is given, can the unemployment line be far behind?

    All the monthly glad handing rah rah meetings held by the firm can’t change the overall tone and feeling of a pervasive need to look over one’s shoulder.

    I guess all the big 4 are the same.

  25. @24 I wish you hadn’t described the scheduling tool used by PwC… I bet somewhere a Deloitte partner is rubbing his hands in glee and requesting the same system for Deloitte… possibly with the option of counting keystrokes to ensure staff are chained to their laptops.

  26. BTW, the title to the blog entry is great. Based on some of the answers in here, that will be the question down the road. Can we continue to serve our clients well? What’s the long-term impact on human capital?

    To the firms – don’t write these angry comments off. There are some very smart, talented people who are hurt by the process, and no matter how many talking points we get about the economy, people are moving into greater responsibilities for less money. The partner/director ranks aren’t just for cyborgs willing to take any amount of punishment for 12-15 years, leaving dignity at the door. You’re marginalizing people who’d be excellent in those future roles.

    I understand partners are taking a big hit, and the response is to realign the firm to bring in these same levels of compensation from the post-SOx years. And of course we should structure our business for the task at hand, we’d have nearly universal agreement on that.

    But this is an honest question, not a soapbox rant, is it really fair to build that expectation into the partnership model from here out? Will we feel the pain until you get back to your 2006 levels? Or are your salaries being “right-sized?” by the mighty free market? I would love to see the relative compensation of partners/directors to staff/seniors in the 1980s and 1990s compared to now. Then compare it to inflation. My hunch is that the rich have become much, much richer. If your relative service is that much better, you have earned it, and kudos to you. If not, you are unjustly screwing those of us on the lower rungs (and our clients) on unethical and immoral grounds. Just sayin’.

  27. HereNow @ 24,

    I heard that the PwC tool also compared actual hours charged to scheduled hours, and that staff who deviated by more than 10% from the schedule were called on the carpet. It was supposed to keep people from gaming the system by scheduling themselves on jobs full-time (to keep from getting axed) but then having availability after all (surprise!). Scheduling accuracy was yet another metric to be discussed at annual review time. Is that still part of the deal?

    Just wondering.

    — Tenacious T.

  28. @TT

    The scam of measuring staff and seniors on scheduling proficiency and “actual to scheduled” is that they have no control over either. When the staff and seniors sit in pool of resources, selected based on location, past experience, likeability, and whim (who wants to travel and hang out with whom, etc) , it’s not their fault that a client changes their schedule, existing team want to hoard hours, or something gets done faster than it was expected to because there was too much padding or not enough experience brought to budgeting it.

    Staff and seniors should be judged on objective criteria of how well they are learning and performing tasks and skills needed to eventually supervise others and make judgements. Unfortunately politics, personalities and engagement economics often play a larger role and screw otherwise worthy professionals out of a fair shot at success. Maybe the problem is the perverse definition of “success” that has crept into the Big 4 culture.

    Francine

  29. TT@27 – D&T sends out a weekly “Scheduling Compliance Scorecard” which shows you schedule to actual billing deviations (positive and negative) and then total deviation for the year. This was newly implement in FY09. Some individuals with significant deviations are called out to “discuss” this with partners and or resource management. Just a sidebar as this sounds similar to what you have heard for PWC.

  30. Tenacious T @27,

    When I was PwC they did compare charged to scheduled hours. Talk about a big mess. Since these were two different systems, they had to work it out on the fly, but still sent out the emails telling you that you are not in-line with your peers or schedule and telling everyone they were working out the bugs.

    I would schedule myself for three months, and then update it on a daily basis (something they looked down on) to just to keep off the report. Some of my friends were told to stop doing that since they should know their schedule. So you are to work on job X for 10hrs, but you are need to work on proposal Y for 6hrs and are told mid-morning. So you would be non-compliant since you did not work 10hrs (char). And the deviation report was for +/- 10% so if worked OT you were in trouble. so some people would only char what was in the tool so they would not be on the report.

    I think you need to monitor schedule to actual, but come on… that was a bit too much. Partners did not have to follow this rule and one of mine would just charge his time to different client codes each day. When I looked at the WIP and he had 20 hours and during the same period I had 10 hours and he never was on-site or reviewed any w/ps….what a place. I like the people I worked with, but the politics got old too fast… so I jumped to a different big 4… yes more of the same, but seems better now.

  31. I see another round of Deloitte layoffs coming in a couple of weeks. A lot of people are going to be DVST8D.

  32. Tenacious Truman…you are correct, the PWC scheduling system compares actual hours to charged and if you are off by more than 10% in 3 of 12 months your evaluation is affected and you receive e-mails from HR. If you are off one month you receive an HR e-mail at the end of that month. Wonder how they can take salaried employees and count their hours and compare to “peers”, and penalize for not working enough hours, especially since the policy is not applied across the entire firm, or even the entire Advisory consulting group. If the hours worked are monitored and employees cited for not working enough compared to “peers”, then aren’t the employess effectively “hourly” employess subject to overtime pay? Or am I just not seeing the world right because of PWC jello obstructing the view?

    Guess this got off topic from the original thread and I apologize for that.

  33. Quite a post! Since I am not working for Big 4 now (although I started in Big 4 a couple decades ago) I can’t comment directly on the veracity of the facts presented in the post or the comments thereon, but I would say, it is eye opening to read this post in conjunction with your post today in Going Concern, The Top 10 Reasons You Still Wanna Work for the Big 4 http://goingconcern.com/2009/08/the-top-ten-reasons-you-still.php, and I highly recommend Comment #17 above from “Ex-Deloitte, Ex-PwC Consulting,” particularly the last paragraph, as required reading for all (you can generalize as to what it is you don’t want to have to regret, but the self-examination/thought exercise of living so you’ll have no regrets – always more difficult to do in real-time vs. hindsight – is a worthy exercise to consider).

    Secondly, as to comment 9 above from Tenacious T about whether 50 billable hours routinely translates to (or is code for) 80-100 actual worked hours, and the related responses thereto, if I were a client, I’d be equally concerned about the flipside, i.e. 10-30 actual hours worked being billed as 50. This must be where folks like Ron Baker of VeraSage Institute are coming from in their arguments for value-billing vs. time-billing http://www.verasage.com, although I can also sympathize with the challenge of keeping a staff of literally thousands productively employed with attention to quality, and constraints in terms of sheer manpower (person-power I guess), supervision, and various other internal and external constraints.

  34. We just had a yearly wrap up meeting at GT and they were slowly introducing 2 new items. One was a monthly excel sheet sent to each staff with their required charge hours and their actuals, they said this was for our own benefit so we could track how we are doing (methinks this justifieth future layoffs) and 2) they had some vague comments about outsourcing some work to other countries. I think the latter is what some of the big 4 have already done, in that some work has been outsourced to India for cheap labor…

  35. @28

    Fm,

    First post here. Enjoy the blog and the Big 4 commentary even though I left it all behind earlier this year. Although I mostly agree with the spirit of your post, I never thought of the system as particularly unfair to staff. It certainly imposes an additional administrative burden on staff through Directors (which one can argue whether is reasonable or not) but I do believe it helped with staffing efficiency. If someone’s schedule (or client’s needs) changes at the last moment, no problem, the staff member is simply expected to promptly adjust their schedule to indicate the change.

    This has its benefits–I often found myself looking for staff for small projects here and there and invariably everyone showed as being 100% committed. In reality, when the utilization reports came out it was always clear there were staff that were available. The policy of requiring everyone to update their schedules regularly helped identify who was truly available and who was not. (At least in theory–it never seemed to work quite as well as I would have hoped.)

    -ExPwCer

  36. @35 Ex-PwCer

    Thanks for reading and thanks for commenting.

    I have no problem with the process. Scheduling, recording forecasts/assignments and updating when changes occur is just good business. A professional services firm can not run well if you don’t know who is where and how many hours they are charging. Whether billing is hourly, value-based or fixed/retainer, it;s what tells you as a firm whether a person, engagement, client, practice, solution, etc is profitable.

    What I object to is staff and seniors, in particular, being judged on their utilization and ability to forecast utilization when they have no control over their scheduling or the client schedule They only have control over doing well when assigned and doing the things that make them “assignable”. Wherever I worked, it was pretty obvious, pretty quick who the people were that no one wanted to work with. We didn’t need stats for that. What I saw at PwC were partners and managers who did not know the staff because they were never out at the clients. They had no direct criteria to judge their performance. They depended on gossip, innuendo and professionals no more than two-three years out of college to tell them how those newer staff were performing and to make decisions about who was assigned to what job.
    Francine

  37. The issue with PwC is the excess admin- there are portfolio managers watching schedules, HR just do nothing but can people.

    I mean why have a portfolio manager and an HR person- what a pointless waste of money when people are getting laid off and working ridiculous hours

    Yes there is that tool, “you have not met your hours” BLAH, I go to work, get the not for profit clients stay at work 80 hours, but because of tight budgets have to eat them- ridiculous!

  38. […] machine tweetmeme_url = ‘http://www.accmanpro.com/2009/08/20/deloitte-welcome-to-the-machine/'; Francine McKenna has done a bang up job analyzing the problems Deloitte faces as it moves into the busy season. As I read through the […]

  39. I’m not surprised. I’ve worked at a Big4 firm in Europe for more then 26 years and have had these discussions numerous times, crusis or no crisis. As long as bugetting is driven mainly by the earnings partners wish to have, in stead of by (reasonably estimated) available hours and reanoble rates, this will not change. It needed a crisis to make things more clear!

  40. http://askm-videos.blogspot.com/2009/08/modern-slavery-accounting-style.html

  41. So I got to thinking about how Deloitte could require 50 billable hours per week from its staff. And then I remembered post #418 at this thread: http://retheauditors.com/2008/09/deloitte-the-worst-may-be-yet-to-come/. That poster asserted that Deloitte had budgeted partner unit values at $970, within 3 percent of the goal of $1,000/unit. Now first, I understand the difference between budget (which drives draws) and actual (which drives final compensation). But I wondered if there wasn’t a link between the budgeted unit values (which “made the partners happy”) and the mandated 120% staff utilization? I think there is such a link.

    Suppose you just “separated” a huge chunk of your staff to cut costs. But you didn’t really address the number of partners that oversaw the engagements. Sure you may have gotten rid of some partners, but not enough to keep your “leverage model” where it needs to be. It’s top-heavy, with too many partners given the remaining staff. And without staff, whose hours drive a large slice of firm revenue, forecasted revenues are down. You have too many partners for the smaller size of the firm. But that’s a situation that cannot be discussed. Pretend everything is normal and go through the normal budget process, whistling innocently.

    You do the budget based on normal staff utilization rates (say, from 85% billable at 1st year to maybe 65% billable for Sr. Managers, Directors, etc.). Figure in 50% utilization for partners (a huge reach right there because so many partners in “leadership” are zero utilized.) And then you realize that the result of that process is that budgeted partner unit values are down to around $700 or so, far too low. The numbers show the true situation for the firm, but they are unacceptable! They are far too low to keep the current leadership team in its positions; those are coup d’etat values, baby.

    Those numbers have got to go … so what do you do? Most of the revenue streams are fixed, such as those associated with audits. But on the consulting side, if you can increase utilization you get more revenue. This is particularly true with overtime because there are almost no additional costs associated with overtime … it’s pure profit.

    So you rejigger the budgets to show increased utilization, particularly in Consulting. But you can’t single out Consulting, so you mandate higher utilization across the firm. You also figure that with more audit hours being charged, the audit teams will find a way to pass on the increased costs to the clients — somehow. So it makes sense to budget assuming increased utilization across the firm.

    You rerun the budgets with everybody at 100% utilization for the rest of the year. Sure, it’s an impossible dream, but so are every years’ budgets. This is just more of the same. Everybody has become numb to the budgetary fictions, so nobody will question this year’s utilization assumptions. Anyway, with the new utilization assumptions, the numbers improve–but not enough. Not enough to keep the leaders in their positions. Gotta do something else.

    Suddenly, a lightning bolt of sheer genius! Rerun budgets assuming all staff is 120% utilized. Now the results look acceptable! Finalize budigets, implement appropriate monitoring to “incentivize compliance” with new utilization targets. Call it a job well done!

    Same budget story as every year, but just a bit more, right? Who’s going to complain? Not the partners, whose unit values are looking good. And the remaining staff knows better than to complain or to point out that the utilization assumptions are impossible to meet. Impossible doesn’t make partner!

    The partners are happy, and leadership keeps its position for a few more months. (Until the other partners realize that 120% is even less possible than 100%, and the pressure to charge billable hours results in timekeeping “errors” and inflated bills and litigation.)

    That’s how it breaks down, in my outsider’s view.

    — Tenacious T.

  42. Like DVST8R, I also heard that layoffs are soon to come. I will just be DVST8D if I get laid off.

    Let’s just hope that it’s not as extensive as before. That would be DVST8NG.

  43. @31 & 42 (devastators)-

    Please take your nonsense to another forum or blog. I (along with most here) appreciate the candid discussion about the Big 4 and our current job situations. I really enjoy reading this blog. Thanks all!

    BF

  44. Bryce,

    I don’t know what your problem is but I am just DVST8D by your comments. Here I am trying to give out valuable information to the blog readers and you just want to have that information silenced. I’ve kept quiet for a LONG time and I decided today that enough is enough and that people should know the truth.

    Good day to you sir!

  45. I know not long before I left, PWC was re-evaluating how they used the scheduling software, at least in my region. I think for Q4 of 2009 they were stopping the use of “scheduling” accuracy as a performance metric, because people were just “truing up” the software every Friday to reflect what they’d actually done that week—which would result in near 100% accuracy almost every time. This practice was endorsed by the firm, we even had a training that showed us how to do this. Guess a few months ago they finally realized that the software wasn’t being used in the manner it was intended, so they got rid of it as a performance metric. No idea if they did this anywhere else.

  46. ahh yes, the required overtime is finally being recognized as real problem isnt it. All staff and management are required to hit their utilization targets, but their are also OT requirements that are judged in annual reviews. In the annual reviews, the reviewers parse the OT into billable and nonbillable to see who the real revenue generators are. Presently KPMG andf E&Y are requiring 50 hour work weeks which deloitte and pwc management were more than happy to tell their staff about so it would seem that they were the “good guys”. What their staff didnt realize was that pwc and deloitte require at least 250 hours of OT, however just like all things big 4, if you arent well over that standard, there is no way you are getting a 1 or 2. the beautiful thing that pwc did this year with associates was reduce their raiting scale to a 3 point scale instead of 4. only 1st got bonuses where it used to be 1s and 2s would get bonuses. PWC only gives about 10% staff a 1 rating, so the bonus pool for associates was able to be much smaller than in previous years so they could take those bonus that would have been paid out to the 2s (now 3s) and dispersed them out through the rest of the staff classes. All promotees got 5% and non promotees got 0 on the raise. The partners at all of these firms are bright and shrewd business people. Unfortunately, half of their staffs will be leaving once the bonuses get dispersed in september. I will be very interested when i see how many from each firm are jumping ship and how that plays out for salaries of incoming people. Will the salary increase one expects when moving firms be dilluted because of the huge pool to draw from? or will these firms continue to reward those coming in from other firms rather than their own people?

  47. NE Shared Services WORD is that if you are rated: a 3 you get nothing (but I think the reality is you’ll get a 2% or lower raise and no AIP bonus); a 2 you’ll get approximately a 2.4% increase and maybe the same or lower in a AIP (bonus); and a 1 would get you a 3%s raise & AIP (not too many years ago these were the norm).

    At the same time you’re being asked to do your CED/SSLHrs on your own time, where possible.

    I’ve posted this next item before in a different thread: for those of us on the inside we need to take responsibility for our decisions to be on the inside – meaning: realizing and acknowledging that it is a partnership and the partners will be the ones making the big dollars, so, if profits fail and clients are lost, the partners still want their units to have a specific threshold value, and, that means they’ll work the staff harder and attempt to get more out of less.

    Years ago when I owned my own business and revenue slumped I held the same view. I looked to get more out of my staff rather than take a cut to my personal income. That’s not to say I didn’t take some cut, but I calculated that beyond a certain (lower personal income) point I was not willing to continue to own the level of responsibility and liability involved in the operation of the business. Eventually I decided to close down the operation and move into a position where I no longer had to own that level of the responsibility and liability. Since then my personal (salaried) income has immeasurably plummeted but my quality of life has increased to a level that is even more immeasurable in comparison, in my favor (reminding me of @17’s regrets).

    Here @Deloitte I’ve found that
    To some extent politics govern ratings (occasionally utilized in order to provide financial increases where management teams want to distribute them as opposed to where they might actually be deserved).
    In the past the good managers utilized programs like the applause award, etc whenever possible – meager mangers don’t appear to want to waste their time with the submission/approval process.

    OK, so partners own the company – they want to maximize their revenue potential – staff is left to dealing with politics and acceptance of these facts as status quo – or – they can leave

    Unfortunately, the present economy and job market doesn’t seem like the latter is a good career decision.

    So, in my view, though not what I’d like to see, those %s aren’t as bad when you realize the alternatives.

  48. My advise…(and I was laid off by a Big 4 a few months ago)…stay employed for the time being. Work the system, but start your job search now (i.e., it really takes about 3 months for you to understand the market and get the message about ‘you’ clear and understandable to employers.)

    I do, however, agree with several earlier posts about focusing on what you enjoy. Do that…use your Big 4 time to take from them the skills that you need to be employable forever. Use them, and get out when you can at a premium. The ‘Partner’ track ain’t what it once was. Indeed, my experience since ‘Enron’ is that most Partner-candidates in my Firm have opted to leave rather than get stuck with a bill-of-goods for all the past wrong-doing of the previous administrations.

    In summary, consider your Big 4 experience as a stepping stone rather than a career. In my opinion, there’s no future in these organizations. It’s a trap. If you stay, you’ll only end up devoting your entire life to an empty dream that will ultimately completely compromise your humanity and morales (and more likely than not, completely make you a stranger to any family that you’ve created for yourself.) I’ve seen it happen too many times.

    If you enjoy what you do, and you can get yourself outside of the Big 4 system, then guess who wins?….you do and the client does. Win-win for you and the client….and a big lose for the Big 4 who’s ‘leader’s’ will probably never understand why the world turned against thier greed, short-sightedness, and feelings of entitlement (no matter how many bodies they’ve left behind.)

  49. @Deloitte – thanks for the posts, I thought your insights on the forced rankings thread were particularly interesting.

    I think we ought to look deeper into some of your points re: the partnership model. First off, the raises should not surprise a whole lot of us insiders who see the struggles of the business, and it is in all of our interests, not just the partners’, to run a healthy, sustainable organization. And when you were self-employed, of course you had to draw a line in the sand, and decide that you needed a certain level of income to continue to put up with the headache.

    My concern isn’t that the partners make rational choices under these premises – it’s their judgment in reaching their conclusions on an acceptable income threshold. Of course you ask more of the staff, and you do more with less, etc. So for example, we started seeing layoffs early last year in some offices. Then a few more, then some drastic cuts you didn’t think were possible at this point. Here’s the thing – other than our poor FSI folks, most of us have the same clients to serve, and we have a duty to keep that work at a high level to support our fees, and ultimately, partner compensation levels. And as I have pointed out, I think some partners expect to ultimately rebound to SOx levels, and unless we get IFRS rolling I don’t see what makes that a reasonable pursuit.

    So you inevitably reach a point where a cut might increase profits but will hurt the long-term health of the firm, because there are other considerations than this year’s income. It’s those “other considerations” that draw a smirk but are every bit as important for making this firm the place we claim it is. And yes, the oligarchs have us by the unmentionables, and it’s “take what we give you or leave,” but that doesn’t make it right.

    It is a self-perpetuating process. “A” Employees will put up with any level of grief, many in the hope fo eventually joining the profit-maximizers. “B” Employees have read that ingrate Upton Sinclair, and might expect a little more, not all of it unreasonable. We chase some of the “B”s away, though many of them would be great partners, and we’re lead almost exclusively by “A”s. It’s an oversimplification, but it’s why management can be so numb to disgruntlement down in the ranks, and perhaps why they handle it so poorly.

  50. Francine one comment on the comp call. The question was asked about new hire salaries and the answer provided was that unlike the other big 4, DT would not recind offers nor lower salaries. Therefore the offers extended a year ago in a booming economy would not be changes due to recesion. Thus current 1st years are going to be paid less than in coming 1st years. I think this move summarizes a major problem at DT. Prioritize public image over their current work force. DT has the ability to recruit great people who are extremly talented and hardworking, but can’t retain them. They are burned out from rediculous deadlines and eating hours ( so glad everyone who has finally commented on that). I see a major problem with morale of staff and seniors (what’s left of them) and it is really sad.

  51. @50s comment that “Thus current 1st years are going to be paid less than in coming 1st years. I think this move summarizes a major problem at DT. Prioritize public image over their current work force.“ is ever so similar to something I’ve experienced here @Deloitte.

    I was once told I would be downgraded so that someone else could be upgraded, so that they would get a bigger year end increase – in order to adjust their salary to a proper “market” level.

    My response was that I understood what they were doing, accepted what they were doing, but wasn’t overjoyed about what they were doing.

    The way I saw it was that I worked my ass off and I should be properly compensated. I have empathy for the lower salaried individual, but, I am not sorry for their economic situation, nor apologetic for my self-viewpoint. If they worked at the same level of productivity that I did then they should be similarly compensated. If they didn’t – then they shouldn’t. Regardless of my personal wealth, life style, discretionary income/dollars, their situation shouldn’t alter that I get properly compensated.

    Given my position and having no insider info other than what I think, I strongly believe that raises will be less for longer term staff so that newer staff can get some raise dollars so that big daddy D looks good to the new staff.

    The question goes beyond “is that a valid model?”

    In my view it is not, but, on the other hand there’s the situation in which, in order to keep up with the marketplace, onboarding salaries are increased to a level where a new hire could be making more out of the gate than someone that has been @Deloitte for years?

  52. I have to vent. I am so very frustrated at the current push to use DT India. I know this was Owen Ryan’s baby before RChannel came to be and now he wants to further his plan to line the partner’s pockets by outsourcing more and more technical work out to a country where he can pay his people half of our salaries…but someone needs to speak up. Ata point in time when our country is suffering to find employment for everyone and we are killing ourselves trying to figure out how to pay for the homes, cars and healthcare of everyone who doesn’t want to work…how can it make sense to be farming honest work out to another country??? It benefits the partners monetarily in the short run, but it is killing the spirit, morale and heart of the firm in the long run. It is slimy and unAmerican and we should sell Region 10 to the highest bidder. I won’t even report problems with my machine anymore because I loathe caling 2222 for tech support. I fix it myself or go to one of my IT professionals in person. Soon those poor people will nto even be needed.

    This is not just a Deloitte problem, it is nationwide. American’s really are demonstrating their ignorance more and more by electing officials who want to print money to pay for socialism and blindly applauding as our own companies farm out the work to 3rd world nations. Soon we will be so dependent on others we will collapse like a house of cards. It is painful to watch.

  53. R10 staff wish they were paid half our salaries

  54. First off you need to keep in mind that the staff of R10 are actually US employees. Then you have to understand that their salaries, although far less than US standards, aren’t as low as expected post benefits (R10 style) and the fact that competition for staff in India is fierce (especially for previously trained staff – people who have had their Americanization lesions, etc…)

    Then you have to look at it through the eyes of a partner who realizes that the great deal isn’t so great so they better make the most of it, probably for two reasons: 1.) to get whatever return on the investment that they can, and, 2.) so they don’t look like miscalculating fools (Ok, maybe 3.) is they feel that they need to keep up with what others are doing).

    Companies like Dell learned the hard way but seemed to think that they could admit their error and continue with business as usual and no one would be the wiser.

    @Deloitte you have a 20/80% chance that you’ll get a US call center staff (that’s the 20) answering your call or a R10 one (obviously the 80). I’ve found that usually the R10 one will have to either forward your request for assistance to your local IT staff (in which case you might as well just go their first – which it appears @52 has already now done), or they will send a request for repair to a back office US National IT staff person who will fix your problem (generally if this is what your issue requires your local IT staff person will have to do the same thing – only you’ll be talking to someone that you can develop a relationship with and go to for quick responses to your questions).

    Originally the R10 staff just opened tickets, collecting data on the reported issue and passed them to the appropriate local or national team for further corrective action (to some extent they have gotten better at providing workable solutions but it seems that it’s a hit and miss chance of getting someone who knows what to do or someone who will try a whole bunch of things that they are reading out of the system in an attempt that one of them will actually do what you are looking for. With the latter I get the feeling that they are in a job security state of mind attempting to justify the need for their positions by trying everything they can rather than tell you it is something that can only be resolved by a hands-on technician (or a reimage). The few times I was off site with no chance of returning to the office for some time and called connecting with an R10 tech I disconnected at the point where they had wasted so much of my time that I would have been better off just going to sleep and forgetting about my technical issue.

    Having said that – I am only talking about technology related incidents/calls – Tax, Audits, etc are completely different and usually there isn’t someone local to go to – your basically passing workload on so that the partnership can attempt to recoup on the investment. . I do not have any insider information but I believe that the savings has shrunk to a point where it is not as cost effective as originally planned.

    In some cases the trade off is one of equal mediocrities. Look at DCS. Deloitte developed the department throughout the US as the local areas of delivery for a service where one could get the hands-on type of support required for graphics, publishing, etc. eventually relocating operations to R10 but keeping printing local. Frankly, I never used the local publishing end of the operation, and self created all of my materials, utilizing the printing part of the operation for my multi-copy printing needs (I found that I would only get the job performance that I wanted if I hand-walked my project thru the system – which included passing it thru the publishing part to the printing part). So for me all that has changed is I do not have to hand-walk projects thru publishing to get to printing anymore and can just hand-walk them thru printing alone. ‘m still hand-walking to get the product I want.

  55. Ptrs, principals, and directors push a special button (I think 7) so that when they have computer issues, it does not get directed to region 10. The support for the PPDs is really good.

  56. WIth all the bad things being said about Deloitte, what would you recommend a new hire do comming out of college?

  57. @DT #55 – they need it. Even in the “technical” areas, it appears that to be a partner you have to forget all previous PC skills you once had. :D

  58. @56 Words of advice for young people:

    Possibility 1: You’ve got a job in a firm whose brand will *probably* look good on your resume in 3/4/5 years time when you’ve had enough. Suck as much juice out of the experience as you can. Work the crazy hours, figure out who butters your bread and do all you can to help them. Never pass up a chance to learn something, or to grab another experience in another industry or another country. If you take that route, book 2 week holidays in an organised fashion a fair way out and take that leave. When you’re on leave, get some distance from the job, turn off your blackberry and think “how much longer can I do this”. Then throw yourself back into it same as before. The day you go back to work, figure out when your next holiday will be and book it right away. Don’t sweat salary, who’s getting more/less than you, don’t benchmark yourself to your peers or do anything else that will do your head in. Because ultimately it *will* do your head in and you will burn out. Take what *you* can get out of the experience and work out who your mates are.

    Possibility 2: Drink the Kool-Aid. Abandon normal life. Make partner.

    That’s just how it seems to me.

    There’s a lot wrong with the model, but with luck on your side and the right leaders nearby Deloitte can be a great place to work, learn and grow, just like (I assume) the other three. Just don’t forget yourself.

    Thus ends the lesson!

  59. #58 – Bravo, very well said.

    56- I complain on here (and to colleagues) a fair amount, but I’m still in the Big 4 for a reason. There are quite a few positives, exploit them but never lose sight of the big picture of what is important to you. If there weren’t compelling reasons to stick around, we wouldn’t put up with the garbage we’re complaining about.

  60. I am going to start training very soon. I have so many questions on how to be successful in the big 4. What do you think is a good approach for success in the first year? Is it really about just working the crazy hours or are there some insider tips that you can give me that will help me learn how to navigate through the waters of a big 4? I ask this question because I see that a lot of people say that there is a lot of politics that is involved with being successful, and that doing good work is not enough for success. So, how do I approach the largely political environment in way that will make me successful? If it is kissing a**, can you explain what you mean by that? Can you please give me some information about how to take on the social environment and how to work with my superiors and peers? With that said, I am willing to do what it takes to be successful, so if I have to kiss a** I guess I will.

  61. new hire @ 60 —

    First I think post #58 hit it on the head. “figure out who butters your bread and do all you can to help them.” As a new hire, you are going to want to work well with a number of folks, from seniors up as high as you can reach. Ability to get the job done and work crazy hours without complaint is key, but so is the abiltiy to network well with those around and above you. Make a lot of friends, be flexible on scheduling, and join some office/firm initiatives. I think PwC has a staff committee on what a great place it is to work at PwC — join that. Offer to help clear some conflicts or relationships for some work (and try to get some sales credit for sold work if you can). If you are lucky enough to get staffed on a large, long-term engagement, find little ways to be useful, from ordering lunch/dinner to making copies to running errands. This one associate I remember took the time to pick me up at the airport and get me through client security — and I made sure to say thank you in front of the senior manager. Little things accumulate.

    Also, don’t miss all-hands meetiings and other opportunties to connect with people, especially if you are off on an engagement and out of the office most of the time. The biggest mistakes I ever made were people mistakes, the numbers always seemed to take care of themselves. Finally, don’t forget to kiss up to HR/staffing, so that you get on some good assignments. Make sure your strengths are known (but don’t brag, because you’re a new hire).

    That’s enough. Hope it helps.

    — Tenacious T.

  62. How can this firm be professional when senior managers are found in the morning passed out on a lawn chair due to drinking during national new hire training?

  63. new hire @ 60. The days of the pwc winning and dining you are over. No more steak and lobster w/ red wine, cheesecake or port. Welcome to being the waiter around 6pm each night and making sure that every one gets what they picked off the menu ($12 a person is the average for dinner per firm policy even though the client ends up paying for it). If the menu u picked is no good, this will adversely effect your rating. When you are done w. dinner get ready to do some face time. i.e. thumb twiddling. Leaving before your senior and especially the partner will be highly frowned upon. If you smoke, stop. 1. you may stink up the audit room (then tend to be small) 2. your co workers will start adding up the minutes you are gone (3 ten minute smokes = 30 minutes a day, 2.5 hrs a week) your co workers will want to leave that much more earlier than you so everything balances out. Also, no more Friday nights out, u will need to work Saturday even if all you do is order everyone’s lunch. your absence will be frowned upon. you will not be able to take any days off until maybe good Friday even that will be frowned upon if you have to get a Q out. No more superbowl parties. you will work during pregame or be on a plane to next client.

    Coming out of college, this is the best opportunity. Make the most of it, pass your exam, and leave a week after u make senior and the bonus check clears.

  64. Thanks for the responses. I certainly appreciate all the help.

  65. public accounting is tough because the industry is tough. i think the problems are with the industry, not the firms…..

  66. the industry has been tough over the years because of the increased oversight and regulation….which is due to past audit failures caused by______

    take a wild guess

  67. new hire @60 –

    Others have said this slightly differently: Get a mentor ASAP – If your @ D do it officially, thru the website. – If the mentor isn’t working for you get a different one. – Having someone higher up then you who looks out for your well being is the best way, at a big4, to ensure you have a career as opposed to a job.

    Next: join as many initiatives as possible – @D it’s all about BRGs – get in a few – find out which ones have impressive well connected partner involvement and do as much as you can on that team to shine and stand out.

  68. @67 what is a BRG?

  69. i had a mentor, but they don’t seem to care. is it hard to find someone who is a good mentor?

  70. I really want to succeed. Is it possible for me to bring in a blow up mattress, so I can live at the office? I figure this way I will receive the highest ratings because I will have the most billable hours, and I will also save money on rent!

  71. A mattress at the client site will only make you vulnerable to comments from your client behind your back. Just as the audit team says the fixed asset person is a real idiot, the fixed asset person calls the debt person and they say the same things about the auditors. Since you are new they will treat you with little to no respect, they may even kick you out of their cube every once in a while. Having a mattress on site will make you look like a dope. Where are you going to shower and change clothes? (i once had a senior that wore 3 outfits Mon – Sat, the white sweater had the same stain on in at the same place for the entire busy season) Then if you sleep at the client and charge 18hrs a day, you will be deemed inefficient and have killed the budget, then when you do the math and calculate your hourly pay you will be demoralized to realized it is well below min wage.

    Face it, you will never get all your work done on time, there will always be more and more review notes until sign off or other staff work for you to complete since they rolled off. (Isnt it amazing how when the client wants the signed opinion the next day, there seems to be no review notes all of the sudden and they get that signed opinion while the numbers are all over the place, especially the cash flow??, Always fascinated me!)

  72. @68
    BRG is a D&T acronym for Business Resource Group. The general idea is to get together with people of similar interests and network. I would imagine PwC has something similar.

  73. Few points from a veteren. Strategy is set by a few indivduals at each function and executed by regional leaders (comprising of functal and underlying service lines). Remaining 90% of PPDs are following regional initiatives with little say. The tone is deafening – increase margin (via R10), increase personal charge hours, increase utilization, increase rate, bill & collect, sell/retain businsess … or else. This is the busines of our business. Further, the management information systems are disconnected and not providing encouraging, let alone accurate information. The number of PPDs at the top will not stay the same given the current situtaion (eliminated, reduced units,etc.). That said, most PPDs will say they absolutely love their client and technical challenges – but hate the business aspect.

  74. There are two separate audit problems that will eventually converge and increase the risk of audit failures for the Big 4 in general and D&T in particular: (1) a vast increase in the volume of non-value-added procedures (i.e. checklists and the like); and (2) smaller budgets.

    1) INCREASE IN NON-VALUE WORKPAPERS: Over the past 5 years I’ve noticed a drastic increase in the volume of cover-your-ass documentation going into audit files. In the event of a future lawsuit the firms need to document that they considered every possible risk and why they feel their audit approach is reasonable to address those risks. The problem with CYA work like this is that (at least at Deloitte) it now takes up 50% of the audit budget on some engagements. We used to have one planning summary document, now we have three. We used to have one audit summary memo, now we have three and each one has quadrupled in size and this is true of almost every document that goes into the audit file aside from the actual substantive work. Every year the amount of time spent on check-the-box workpapers and checklists increases, which reduces the amount of time spent doing actual audit work. And this is very dangerous because of…..

    2) SMALLER BUDGETS: Clients are pushing back on budgets so we now have fewer hours and those few hours and increasingly spent on CYA documentation and disclosure rather than actual auditing.

    If you ask me this is a recipe for audit failure.

  75. PJ Fry @ 74,

    I would also add 3) lack of expertise and experience, created by RIFing experienced staff, creating working conditions that incentivize staff departures and burn out the survivors, and the use of individual compensation as a retain/fire criteria.

    — Tenacious T.

  76. I would argue the Firms are getting better with regard to risk//quality review. Have you not noticed the number of “mandatory consultations” increasing over the past 18 months? Or the use of subject matter resource (SMR) teams? I’ve definitely seen a concerted effort for more engagement teams to reach out to Firm designated specialists to ensure the accounting is appropriate. And I think that’s a great thing. Both from an audit team perspective and risk management. After all, isn’t that what we all want anyway? Of course we’re too far on the totem pole to have much say in staffing – but what’s done is done. How can we be better auditors? I really think we’re getting there…

  77. @ 76 – My experience with SMR reviews is that they consist of a 15 minute conversation between the audit partner and the SMR partner. They usually go something like this: “did you document your understanding of [insert industry specific risk] in the form 2330?….OK, good”.

    I don’t take much comfort from that exercise.

  78. @ 76.

    I thought like that for about 5 minutes and then I realized it was because people in these technical teams (not at D so not called SMR) have nothing to do as they are not advising on mergers/acquisitions/transactions any more.

    So keep them busy – have them charge a few hours to the audit code.

  79. The big D was named the #1 best place to start your career by business week: http://images.businessweek.com/ss/09/09/0903_places_to_launch_a_career/2.htm

  80. business week lacks credibility – they seem to be paid to print those or perhaps they do their surveys through management nominated individuals….

  81. I know some Partners who are SMRs who are so just to look good on their Partner Evals and not due to their knowledge. some of these consultations are a joke! as some one said above, its just CYA documentation…with the latest Deloitte fad about cutting budgets every year, recipe for audit failure has been cooking for a while now. some of the client budgets ahve been reduced 20-30% every year..after a few years, guess what….no more budget, but again everyone needs to be utilized, firms need more billing, and the blah – OXYMORONIC! no new sales, budgets of existing clients cut and year long busy season hours expectations – wow- did someone in the strategy department miss their required annual firm paid checkups? how about cutting the pay of the partners and managers who cut the client budgets (which in turn reduces our billings)? at many clients, it was also noted that the clients never asked for the cuts, but these “client fee pressures” were in fact a tactic to reduce tax and ers hours so the audit folks could have more hours – talk about internal competition – or going to the dogs? ( but i love dogs)

  82. talking about sales etc I spoke to a former colleague who is one of the DT BDMs. His sales target increased by 75% this year (I forget the exact number but that’s the ballpark) – in this climate, how’s that for motivating?

  83. - not in touch with reality ..er- pardon me, but this is dumb

  84. who is the mole within?

  85. ex-DT @ 82 —

    See my post # 41, above in this thread. Raising sales targets by 75% is consistent with budgeting utilization at 120% (or 125%). If the sales people don’t increase sales, then how can utilization double? It’s all internally consistent, so it has to be reality, right?

    And all will be measured on the ability to achieve the budget metrics.

    Insanity is a disease one gets from drinking too much firm-flavored kool-aide … or so it seems to me.

    — Tenacious T.

  86. Deloitte still has some BDM’s? In my experience they never really fully utilized them except for Consulting and then still under the watchful eye and arbitrary judgement of the client partners. No team selling approach there. Or at PwC, EY or KPMG.

    Any info on this? I would think their high salaries (the model in the audit firms is low commission, high salary given the vagaries of what the partners will allow you to work on and take credit for) would be a major target for the cost cutters.

    Inquiring minds want to hear from the BDMs or former BDMs.
    Francine

  87. Last thing I heard, they had certainly thinned the BDM ranks. My view of the BDMs was in AERS and I saw their use being varied – some partners embraced them wholeheartedly, others because they were told to. Some basically ignored them and effectively competed with them for sales.  What astounded me was the duplication of effort, data, tracking, sales leads across even the small view that I had.  Client / target lists, spreadsheets, meetings had so much overlap and reinvention it was crazy. With some individuals having more of an industry view, and others a functional focus there were regular discussions of the “what do you mean you are talking to my target client?” type….. I’m just glad it’s not my world any more.  The BDMs that I saw tended to be more organized, disciplined and professional in their sales approaches, while it was the partners who would grab onto any floating twig and grasp it like it was the next SOX wave.  I saw / heard directives from partners to staff to read up on IFRS (despite not being in a related functional area) as IFRS was going to be the thing that we were going to sell…..crazy and zero value to clients.

  88. Most current partners and directors are just as afraid of losing their jobs as the staff. The ones that I have spoken to are doing everything that they can to up their numbers. Back stabbing and cut throat activities are rampant. I really feel sorry for the few new Partners and Directors that will enter the practice without a book of business. In the past, a piece of the pie would be carved out to sustain a new partner and allow them to grow the business. Now everyone is holding on to everything they can.

  89. My understanding is that from now on the position of Partner will be a rare prize granted to those who have a proven track record of bringing in new business. For all those super technical audit senior managers who suck at selling they get the Director title, which will become far more common than it has been in the past.

    And as the Director ranks begin to swell in the upcoming years expect to see the same forced rankings that we’ve seen at the staff level, which of course will lead to Directors getting canned.

  90. Thanks for shedding light on this-this kind of UNREALISTIC expectation of hrs will continue so long as the focus is on billing/hrs and not the ACTUAL task performed.

    Many auditors work on restatements and quarterly filing where they “allegedly” work 16 hr days, Monday through Sunday….the realty is that

    4 hrs was usually spent of Face book,
    2 hrs to decide on lunch and dinner,
    3 hrs to pass the lunch and dinner menu in the afternoon and evening respectively
    4 hrs to eat lunch and dinner

    Only 3 hrs is spent on actual work…can u blame staff and senior who have come into a culture where more hrs means you are hardworking?

    I worked on many an audit that could have been completed in 1 week…instead it was done in 3 months……of course this allows the senior manager and insecure manager to show up at their Monday morning meeting and proudly proclaim “Our teams are working really hard” to the partners.

    Like most professional services firms, this kind of “intellectual dishonestly” is legitimized. Fortunately,this way on doing thing is going to be ending fast…R10 anyone?…more later

  91. I know of jobs billed but not worked similar to the above story, but not to that extent. There are some businesses that give the auditors, internal auditors, etc access cards for both convenience and to track time. Although that is an ineffective way of tracking time actually tracking time worked, it shows that some do doubt the invoices that they receive. There are consultants companies go to for help in reducing the audit fee, as part of negotiation, these consultants should also help with time verification, etc since there is rampant fake billing, which is essentially, fraud.

  92. That argument would only hold if the consultants/auditors were only billing the hours they physically spent at the client. We all know that there is legitimate work done, much to our chagrin, at home on nights and weekends when we’d rather be doing anything but looking at MAPS or reading debt documents – so while in theory “policing” via keycards might catch the lowest employees, and cheapest, most mgrs and above spend oodles of time outside the cube farms working on their clients…

  93. Thus, why key cards do not mean anything, but they show distrust by the client, which is already bad. Secondly, we all know time is billed when it should not. That is not professional.

    Find me an article about blah blah, takes 5 minutes or less. Ok staff, go bill an hour for PRD research.

    Manager: I am sorry so and so, I am busy on this and that and have not had time to get to working or planning the project your staffed on today.
    Staff: So what do I do?
    Manager: well its 12, ok leave at 7, surf the internet and make it seem like your working. Bill a full 10 hours for the day so your utilization will be good an so i look good. Have a great day.

    Senior: Ok don’t forget to take care of your billing.
    Staff: Ok, lets see i have worked around 32 hrs this week doing BCC testing for Client A
    Senior: Well lets see. You are required 10 hr days, so bill 40 and have a great weekend.

    Some projects are worse than others and some projects obviously cannot handle this careless billing. But in the end, this is still fraud. those extra 7 hrs at a blend rate of say $200 is $1400, and that is just day 1. One can say the hours eaten on other projects cancel each out, but in the end fraud is fraud

  94. Most audits are fixed fee. So on most audits, regardless of time you “bill,” you’re not actually billing the client. You’re just affecting the rate per hour. Kind of hard to call it fraud, except to the extent that overcharging your hours is defrauding the firm you work for (they think they need to have 5 staff employed to meet all the hours worked when in reality there’s only work for 4 staff).

    Separately, what engagements are you on where a manager or senior is telling you to just charge away? Due to the fixed fee nature of most audits, the pressure usually goes in the opposite direction (you have 10 hours of work? that’s nice, just charge 8).

    Advisory would be different but hey, the site is called re: theauditors.

  95. The above mentioned was for internal audit transformation work. I read the contracts for those 2 projects and i understand how the billing works. One contract was for 250,000 and the other for 300,000. Simple numbers. The first had blend rate of $187 the other of $194. Both contracts stated that the fixed fee is a best estimate. This leaves room to increase the fee which actually occurred on the second project. final charges ended up being slightly over 400,000. The amount of work the estimate was based on did not increase. I know what was done on this project in relation to billing and it is sad, and worse the client has signed for another year at a new rate of $238.

    PRD work is not billed to the client, it was used as an example of what i currently see going on elsewhere

    Again, the examples were based on work for internal audit. The projects are cosource and consulting projects.

  96. The Deloitte layoffs of 2008-9 were the perfect white collar crime. Nobody internally cares to talk about it anymore and if nobody is talking, it did not really happen. So it goes.

  97. @96, in the last few days, Deloitte has posted a number of tax positions on indeed.com. Strange how they had the massive layoffs less than 6 months ago, but are apparently hiring again. Query whether the postings are really intended to gather intelligence about the other firms. By getting resumes of employees of the other firms and “interviewing” (i.e., squeezing them for juice), Deloitte gets to find out what the other firms are doing. Based on the searches hitting Francine’s blog on Oct 20th (which she posts), it still looks like the Deloitte guys are fearing an upcoming layoff.

  98. @97 — that so funny… doing intel via an interview process… can’t stop laughing.

  99. Interesting op-ed by Tom Friedman:the last paragraph hits home……audit robots anyone?

    http://www.nytimes.com/2009/10/21/opinion/21friedman.html

  100. @100 — I think what Tom Friedman is trying to say is…we are seriously screwed and there is very little we can do to reverse this tidal wave except write articles about how hard it’s going to be to try to. To put the article back into a Deloitte context, when the next wave of layoffs come (guessing it’ll probably be March again, even though I have already heard of a few new isolated cases — can’t determine yet if it’s a start of wave though), even at the staff level, the people who aren’t constantly trying to distinguish themselves and stay relevant, even if only in appearance, are going to get the axe again. Personally, I think 10% unemployment is here to stay. $12 trillion national debt and projected trillion dollar deficits for years is already leading to the systematic debasement of the dollar and the general uncompetitiveness of the labor force in the wake of the Asian onslaught will render us weaker and weaker. Many of the people I’ve heard leaving D have made essentially lateral moves (i.e. senior to team lead, manager to manager) into industry, albeit with slight pay bumps. In this new economy, Big 4 auditors aren’t getting the red carpet treatment anymore.

  101. I wonder if they really plan on another big wave of layoffs or if they just plan on working people into the ground, keeping raises as low as possible and hoping attrition takes care of the downsizing for them. That way they avoid the negative PR and they avoid severance costs.

  102. exatamundo!..well said

  103. I’ve heard there’s another round of cuts going on now at Deloitte, in particular focused on visa holders. Houston has been hit, for example.
    Francine

  104. @FM
    Any news about service line or any of the Midwest offices for D&T?

    Word on the street is that E&Y tax has started some layoffs today. At least four 2nd years let go from friends I’ve talked to.

  105. Tom Friedman, should try working in auditing/ accounting before he flipantly throws the profession to the robots. There is lots of qualitative, subjective aspects of the job.

    Every high school senior should be forced to read Tom’s book “The World is Flat” before they waste tens of thousands of dollars on a college education in a field that is going away.

  106. @106, that article didn’t even have the word “auditing” in it. Friedman simply wrote that you can’t get by by being an average accountant, lawyer, assembly line worker etc. anymore because of software and robotics advances and outsourcing (i.e. global competition). I say, no crap, captain obvious. “The World is Flat” is also not some epiphany either. The message it puts forth is something most people should have known for the past 15 years if they just followed the news. Even still, the rapidity in which Asia is catching up is alarming. China is now expected to overtake the U.S. in nominal GDP as early as 2030. Even a few years ago this would have been difficult to imagine, but with the debasement of the dollar, more likely it will come even sooner.

    Now, auditing certainly has “qualitative” aspects and maybe even aspects that require acute decision-making skills. But is it a really such a sophisticated profession that D’s 3,000+ rank and file partners should get hundreds of K’s in payouts annually…I say probably not. This is why PPDs are pushing AERS India so hard in order to control operating costs and fighting tooth and nail to maintain their way of life despite “17%” U-6 unemployment.

    http://www.bls.gov/news.release/empsit.t12.htm

  107. @106 – Friedman did no such thing as throw the profession to the robots. He referred to the “average” worker and listed example including accountants, His comment has nothing to do with the accounting profession. He is stating that as a culture we cannot expect the more repetitive and less innovative jobs to stick around at the wages they have — because they can be done by cheaper foreign labor or automated. The degree to which foreign workers and sutomation will take away jobs remains to be seen. I have seen all kinds of cycles in this and similar areas. Examples:

    1) in the 70s and 80s people used to say programmers would not be needed in 10 years because of self-generating code (e.g., the job could be automated). All that happened is that programmers now use a variety of languages and tools to build systems and applications – rather than just using the standard programming languages.

    2) the was a big movement in the 90s to move in-house IT departments to contractors. In time they learned that they needed the in-house knowledge of their business processes and dedication to their systems. They have been returning to in-house IT departments, but the model isn’t exactly the same as it used to be.

    3) in the 90s the idea of client-server applications was touted as the replacement for mainframes. Mainframe became a bad word. Well, mainframes are still around. Further the client-server concept was drastically revamped and ultimately turned into thin clients connecting to large central repository servers (maybe not IBM mainframes – but functioning the same as that mainframe). So instead of a mainfram with dumb terminals, it went to a server with thin clients.

    So Friedman is predicting changes due to cheap foreign labor and automation — there is nothing new in that. He is right that these forces will impact the job market in the US. He is correct that Americans will have to re-tool and adjust to the new model. But if we learn from history — the changes won’t be so dramatic that Americans will not have jobs or the accounting profession will be automated (which he did not say it would be). Is it true that our American education system is failing our students — probably more right than wrong. But that isn’t news. The thing he points out is obvious — that there is change in the job market and the education system produced people to meet the old market conditions… so the current group of working people need to evolve some (the older ones have done this numerous times and can do it again) and the current grads are going to be hurt some. But the education system will adjust as well,and the world will not fall apart.

  108. @104

    fm, how is it that companies in general (not just the big 4) go around targeting groups for layoffs (e.g., after reading various posts on this blog and analyzing the aftermath of the 08/09 layoffs at Deloitte from the inside, it strongly looks like a lot of minorities, visa holders and single mothers were let go)? Do you know how one could get the EEOC off their behinds to look into this (or maybe you know a labor lawyer who can post a guest entry on the blog)? Any pointers will be much appreciated.

  109. @JB

    It takes a village… Basically very few complain, sue, or otherwise raise a stink. Hell, most don’t even try to negotiate their severance or even know what they deserve legally. If there were a group who would go and all file complaints at the EEOC, they would investigate. If there was a group who wanted to explore a suit, there are attorneys ready and waiting. After all, the wage and hour suits are looking quite successful. Typically accounting/audit professionals are afraid of blackballing and retaliation in future employment. Unless they are ready for that challenge, personally and financially, most don’t bother and the firms are counting on this. Visa holders are at a distinct disadvantage because they typically have to leave the country quickly, especially now.
    Francine

  110. […] fewer clients to call these days anyway. Maybe instead of the CEO of the global firm calling, the local partners should have shown some spine, such as with Bear Stearns and Washington […]

  111. The management at Deloitte is nothing short of incompetent and out of the touch with the staff at the firm. In April’s town hall meeting Owen Ryan stated point blank that he did not care if talented people left the firm and that if you wanted to be paid in accord with the market Deloitte is not the place for you.

    This firm has been hemmorraging talent and while a few talented partners recognize the fact that morale has never been worse and everyone intelligent is leaving as soon as possible. Deloitte is already a shell of itself and only heading downhill. I would not recommend this firm to anyone for perspective employment or hiring for outside consulting services.

  112. I just had 4 seniors resigned this week. When the economy is doing better, everyone is jumping the ship. I heard that they are still kicking partners and directors out…

  113. The AERS practice in the Northeast has effectively imploded or been outsourced to Indiana. Once another round of 3% raises this year on top of nothing last year only the poorest of the poor will remain at DT.

  114. Walking around D&T WFC office and appears another round of DT layoffs is in the works.

  115. Care to elaborate on that last comment? Do you know of actual layoffs or just rumors? Audit? Consulting? Tax?

  116. The new modus operandi at Deloitte is the smart people leave; the dumb ones make Partner. Owen Ryan sharpening his axe and have to make the partner units number despite most Partners not justifying anything.

  117. Silly, D&T is losing people everyday. Why do they need another round of layoff?

  118. D&T needs to pay bloated Partner salaries for $1000 unit when unit values are grossly overvalued for the minimal level of competence provided. Will have to fire staff to support these units. A D&T consulting unit at my present company and an embarressment for how dumb the Deloitte people are. Would recommend firing them and withholding any remittances.

  119. @113: I had no idea costs were so low in Indiana…. ;-)

    Before I left DT, senior managers / managers were being asked (not quite required but close) to ship work offshore to India. My experiences with the quality were mixed at best. In my view it’s another step (along with SOX testing) to removing audit skills, judgment and professional skepticism from the audit process. “done the audit? Check”

  120. I think all 4 firms are in bad situations with the top population of managers, senior managers not having actual skills but checked all the boxes and stayed the required duration to get promoted regardless of the promotion being warranted.

  121. I worked at 3 of the 4 Big 4 audit firms, and quite frankly the caliber of people being employed by these firms now is an embarressment It is partially due with the fact that the pay is to high at the partner level and to low at the associate level – but the line staff I deal with on my job are awful and I would fire them all if not for that fact that most of the good employees quit and the underperformers remain.

  122. Was at a client site and where the client contact read this memo. Asked point blank about Kevin McGovern, his blatant overbilling, and if this was inplace on this engagement.

  123. @Anonymous 122

    That’s thrilling!

  124. Priceless. The Corp Controller ex-D&T fired in the 2008 massacre when Barry S. tried to trim the fat and get himself down to size 40 pants. Client asked how Kevin McGovern was not in jail for his blatant over-billing practice. D&T Partner actually acknowledged that Kevin McGovern probably should be in jail although would have said anything to end the conversation.

  125. Wow. That firm is really a mess.

  126. Managers are basically being forced to ship the work off to India- a portion of the year end evaluation process includes what percentage of their budgets have been given to India, those who have shipped more work over will be rated higher.

    There is such a shortage of staff, that entire projects are being given to India. I know of a few 600+ hour projects that will be done entirely by India. To me, not only is this bad for building client relationships (how good of a relationship can you have, when the entire project is done via conference calls and email?!), but I wonder when it will get to the point that the PCAOB starts commenting as to how effective our audits really are with so much work being outsourced…

  127. #126 – absolutely agree on your last point. I cannot see how you can do many audit procedures without sitting in front of someone and talking face to face. Working remotely, regardless of how good the staff are is not a way to do a quality audit.

  128. It seems like a just a matter of time until D&T has another major violation. This firm has cut costs to a minimum so there is a no oversight and internally everyone knows it’s a free for all.

    Additionally, with the continued off-shoring to India and increased focus the firm will most likely continue to reduce headcount as a way to generate internal profitabliity. The partners realize its so much cheaper to send work to India why do we need professionals in the USA.

  129. #128. Not just professionals in the US. The entire Deloitte OIM operation (40+) in Czech Republic has just been told they are all to lose their jobs with everythinh going to India. Ongoing projects (designed to protect Deloittes ‘good’ name) and support desk all axed.

  130. i have seen a spike in linkedIn connections in the last few days – wonder if that’s a sign off more cuts at DT……maybe just coincidence….

  131. From my Twitter stream this morning:
    Deloitte is being investigated by Czech anti-corruption police? Not good for the “leader in public sector consulting.” http://bit.ly/bgdpaP

    http://twitter.com/retheauditors/statuses/17489992062

  132. I’ve been doing a lot of linkedin these days, #30 …. could also be a sign of people prepping to voluntarily jump (like myself ;))

  133. Things must be tough at D – partners are hawking senior manager resumes to clients….

  134. Seen a barrage of Deloitte resumes in circulation. Most of the Deloitte people have seen consulting at my company are below average (probably straight D’s in community college) and didnt think their were any compentent employees left at D&T.

  135. 134. Assuming you are a client, I’m disappointed to hear those comments. I would strongly encourage you to express these concerns either with your procurement office or directly with the partner. These situations are not taken lightly and you should demand to see the resumes and credentials of the resources proposed.

    Regarding the competency comment, you may want to question the motives of your source.

    As a quick background on my situation (not audit), I’m looking to move outside of the firm as well but for personal reasons

  136. D&T STL is losing the few decent people yjay have stuck around because of what the Firm has done in the past couple of years. They are now giving new managers 1’s and 2’s to keep them happy and make sure there are still people to send out to clients. It is sad what happened to this Firm.

  137. Regarding my earlier post, I didn’t mean to pick on the new managers. They are doing the same with a lot of other people that don’t deserve i t.

  138. People are leaving crazy in the NYC office. Keep in mind, people are leaving right before they are giving out the bonus and the raise. They could not even wait for another month. What does that tell you? A partner told me that they may give away good bonus this year so people will be happy. My reply was “seriously, you still don’t get the point, do you? People are not sticking around in big 4 just for the money, and today they are leaving because all the s**t you guys did to them in last 2 years”.

    I expressed this a few times on this blog. The problem at Uncle D is from all the so called leaders who made many bad decisions. They were panic and did not know what to do. If you don’t get rid of them and change the direction of the firm. The ship will continue to sink.

  139. The NYC D&T office and leadership is so bad that people aren’t even requiring raises to leave. I’ve known multiple people who have left for minimal raises 5% or same dollars, the morale is just so awful and the Partners have really stuck it to everyone since 2008.

    Not a surprise to anyone within the organization a good example of how to run an organization into the ground.

  140. Karma is a b!tch. What goes around, comes around. Its well deserved.

  141. Any confirmation to the rumor that Barry Salzburg was going to resign after his awful tenure as a leader of the firm?? Heard it from 3 different D&T people (including one Partner) so potentially some traction. He definitely should but…

  142. How are D&T raises shaping up and trying to gauge internal rumblings – have heard 4-7% range.

  143. @142, the question you should ask is this: how many people will be laid off or fired, in order to have the amount of money necessary to support a 4-7% range raise? Second, will Deloitte be able to sustain a decent raise in the future, given the current state of the economy and its reputation in the market place? Third, and most importantly, if Deloitte were a publicly traded corporation on the NYS exchange, would you use your hard earn money to invest in its stock?

    Public accounting firms (and corporations) are know to toss out the top dog/leader and blame such person, when things go south. Last question, how many of the corporations who have tossed out CEOs have recover and how long did it take such corporations to recover? When one’s name is in the mud, its so hard for that one to climb out of the mud and completely wash off all traces of mud.

  144. @143 D&T can only continue to blatanly overbill/overstaff its clients for so long.

  145. @144 it is surprising that DT has gotten away with it for as long as it has. In this economic environment, clients are watching their spending carefully, and the days of overbilling/overstaffing are likely coming to an end.

    Francine have you heard any rumblings about DT Tax in San Francisco? Judging by Linkedin activity, many seem to be on the prowl or recently departed — mostly for lateral positions. Are people being laid off or simply fed up and leaving for anything? It is quite interesting that for a firm that supposedly is one of the “best” places to work for women and minority, so many women and minority are leaving.

  146. @ 141 Ole’ Barry has been named 2010 Executive of the Year by ABA. Anyone ever heard of the ABA? It seems like when the reputations of anyone of DT’s mafia guns are questioned, the person gets named this or that by some unknown magazine.

    http://www.deloitte.com/view/en_US/us/press/Press-Releases/487f2e198a989210VgnVCM100000ba42f00aRCRD.htm

    One thing that DT does well is shameless self promotion. It probably worked well, when the economic times were good. However, if you sell but can’t deliver in the poor economic times, clients soon see through your games.

    If you check out the DT site, you’ll see lots of changes in Tax leadership positions, starting with the one below.

    http://www.deloitte.com/view/en_GX/global/press/ceo-communications/recent-news/abf114bc27903210VgnVCM200000bb42f00aRCRD.htm

    There are a few recent Office Tax Managing Partner changes too, and these guys essentially manage the income statement for each office. Query what happened to the previous OMTPs in such regions.

    One has to wonder what really is going on …

  147. The running joke around the D&T water coolers by the staff is the good people all leave, the bad people make Partner. Barry Salzburg and current leadership team certainly reinforce that statement.

    I’m waiting to get my 2% bonus this month and then joining the good people that have departed. This place is headed down with no upside in sight and the current leadership can cheer all they want about how this is the best place to work, but only they believe that (maybe not anymore).

  148. They did all the layoffs in past 2 years, now they are hiring again, given people leave every day as the market is getting better. Talking about good business sense, they first spent all the money on severance package, and now all the money on recruitments, just within one short year. Not to mention things like training, work quality, impacts on morale or all other good stuff. Someone above was right, based on my observation, the people who are leaving now, most of them are those top performers. Why? Because they are the most marketable ones, and they don’t waste their time going down with the firm. Does Uncle Deloitte learn anything from it? The irony part is that DT is selling services to teach other companies how run business… Speechless!!!

    September is coming, they will be a huge batch of people leaving after they get their $2000 bonus…

  149. Look at it like this…

    In NYC, D&T, PWC, and EY are the 3 main professional services firms. Lets say the top 3 banks in NYC are Goldman, JPM, and maybe Bank of America, although that can be debated.

    For someone that has been at their respective firm for 6 years out of college the bonus at the audit firms are approx 2-4k vs the banks which are 20-50k (which could be low for a top performer i think), while the hours are probably higher at the audit firms.. Does that make any sense at all????

    that doesnt even include the cocktail parties/ dinners that the banks have

    HELLOOOOOOOOOOO

  150. The pay at D&T NYC is nothing short of an embarressment which explains why that firm is only left with poor performers. You get what you pay for despite the fact that alot of D&T’ers think its a pay for performance firm (clearly not the case).

    It’s unfortunate as it used to be a great firm but if the firm were a car it would be a lemon with a new paint job. Looks good on the outside to the companies hiring D&T and the name recognition helps Deloitte get in the door. However once the staff (most of whom are unmotivated, checked out, or upset about how poorly they are paid) show up onsite, the clients no doubt feel like they were sold a bill of rotten goods.

  151. @Robert B – just goes to show how lame the accounting profession has turned out to be. With all the hours of schooling (for undergrad and perhaps grad school), plus all the skills we need to have “successful careers” that professors babble about, the hoops of fire you have to jump through to land a big 4 gig, the hours put in for that pesky test called the CPA exam, the hours demanded from us once were in the firms, and all the endless regulatory demands, you’d think our salaries will be comparable to those of ibankers, financial analysts, and the like…but nooo.

    50k starting for someone with a masters and the CPA passed…shameful. I shoulda studied engineering.

  152. @150, hahaha. A lemon with a new paint job!

    In the good times, the partners rake in the dough, and staff are compensated 8-12%. In the bad times, the staff get laid off or have their compensation frozen, and partners rake in less dough. Who made all the bad decisions? Who is taking the risk? Sure doesn’t seem fair, does it?

  153. My start class from 2008 is down to ~40% left (PwC)

    Increased hours required for practice development + whole new auditing system + more hours (due to those who have already jumped ship) + low compensation = Get out while the employment iron is hot

  154. At least Partner unit values are back up; which will make the D&T 3% raise on top of nothing the year before feel great.

    D&T Manager Floor is $82K for 6 years working at the firm in NYC. Only a sucker, or a fool with no marketable skills, would accept those wages.

  155. Agreed with 154 – and here in my large Midwest digs, the manager floor is almost 10K lower. As you say, “Only a sucker, or a fool with no marketable skills, would accept those wages.”

    Deloitte, you will do those things you do with fewer people. I would have stayed for 3-4K more, and I know you’ll spend more to replace me. Imbeciles.

  156. NO way!

    audit manager nyc 82,000???

    Disgusting, unprofessional at best

    A kick in the you know what

    82,000. Are you kidden me??????

  157. it was 94,000, 2 or 3 years ago and thats a fact

  158. It was 94K 3 years ago and thats a fact but has continued to decrease annually; while interesting the years required to make Manager have increased.

  159. @49 -50: I left DT because of brats like U. You get a BSBA in accounting and think you deserve more than Doctor pay. 6 snot nose years out of college and you barely know your job. What kind of experience do you have but Jaerger bombs on mom & dads college fund replaced by Uncle Ds client expense accounts? Accounting historically was not known for being a lucrative career, but a solid career (Scrooge & Cratchit come to mind?). Accounting a lame career? Ha, You want excitement, join the military. Lucrative career? Try acting, sales, professional sports or med school. All known for being lucrative. I highly doubt any of you would be making anywhere near 100/yr had you taken any of those paths during the recession. Oh yeah that’s right worst since the Depression. D&Ts biggest problem is they’ve not demanded more out of the whipper snappers before admission to the modern partnership. Now there’s a generation of spoiled 30 somethings filling the jr partnership with the ideal of hardwork as delegating real work to the ill-prepared child staff via their black berrys. Also expended too much effort trying to be “liked” by gen y, appealing to the psychie not training them, forming them to become respectable practitioners.

  160. @159, well said.

  161. 149, I hope there were other reasons you left than the ‘brats’ commenting here. Because you sound well suited for upper management. Your argument is about as sustainable as the current Big 4 business model. You get off track, because after correctly pointing out that many youngworkers are entitled and spoiled, you lump in a very real concern about pay.

    Here’s why I think your point loses traction – you describe the profession as a “solid career” for respectiable practitioners, which isfine. But you then blame the younger employees, who have watched the partners’ share of earnings rise disproportionately,while the lower level staff do more work with less supervision, as you hint at. And even when you criticize the partners, it’s only the “spoiled 30-somethings.”

    If anyone is to blame for the focus on money, blame the partners,even the fogeys who seem to be the last B4 employees you like. When you overwork smart, talented people (even those of us with lowly accounting degrees), there has to be some reason to stay. I imagine that drove your decision to leave as well, not just the brats.

    D&T has plenty of big problems, and one of the biggest is that leadership simply thinks the younger employees aren’t “grateful.”

  162. I think ex-dt3 may have missed my point. Look, all I’m saying is that public accounting pay is not commensurate with all the hours expected from us (unless you’re a partner as UDO pointed out). And don’t you tell me that PTO days make up for the low pay, because even if you’re on PTO you’re still chained to the firm via your blackberry. And especially in this economy where utilization is king, taking too many of your well-deserved PTO is frowned upon and could possibly place a bulls-eye on your back when leadership decides to roll heads. Umm so yeah…that’s what I find disappointing (and lame) about public accounting.

    If pointing out what’s known to be true makes me a brat…ooooh well.

  163. @161… Glad my reactionary comments are as sustainable as the Big 4 business model. Deloitte & Co. was founded in 1845. Solid evidence that it’s a sustainable model, firm and career. You, me the rest of us whinners visiting this site cause we left or want to leave will be long gone before the audit / consulting model crashes and burns. It’s a hierarchial fraternal model that forces you suck it up and stick around if you want to make it to the big payoff.

    However, look at 162’s comments – public acct pay is not commensurate with all the hrs expected. Really? REALLY? Don’t think that individual knows how hard work can get outside public accounting and certainly didn’t pay attention to their accounting instructors. At a whoppinng 5 yrs out of school and the perception is it’s down to a disgusting 82k when white collar jobs are being elimnated on a daily bases nationwide. AND @161 thinx the partners don’t think you’re grateful.

  164. Tell you what – show me the distribution of partner incomes compared to the minions from, say, twenty years ago, and compare them to the present. If there’s a disparity and partners have a larger piece of the pie, then it means either 1) partners are taking advantage of the ‘suck it up’ mentality moreso than in the past, or else that 2) partners are really just that awesome. And should be trying to get back to 2006 levels of compensation before paying newly promoted managers/whiners somewhere close to what they made four years ago.

    By the way, revenue is flat or even increased in some regions. So life may be hard for the firms, but not as hard as they want you to think (except when they tell you your comp numbers). So spare us the lecture. Show me the data and we’ll talk.

    P.S.- A British bank of (I believe) several hundred years was brought down by a 26 y.o.trader. Things change.

  165. It would be beneficial if Deloitte paid different across offices. 82K would be great in the St. Louis or Portland office; but in the NYC office (with significantly higher cost of living) its not nearly enough to save money etc. It’s an embarressment and the D&T performance is comparable to the pay; which is why anyone with 1/3 of a brain no longer is around.

    D&T is a shell of itself, but at least the overpaid partners continue to increase unit value despite doing next to nothing in regards to sales, thinking, generating new business. Anyone who believes otherwise is either a D&T Partner or an idiot.

  166. ex-dt3,

    You seem to be hung up on this 82K figure. With the cost of living there 82K in the New York City region is comparable to 52K anywhere else in the country, which is hardly a king’s ransom for a finance professional with “a whoppinng 5 yrs out of school”. Expecially when you consider the 70-hour work weeks during busy season.

    You sound like my grandfather when he hears how much something costs today. “$2.25 to ride the subway? That’s outrageous! In my day you could get from Yankee Stadium to the Bowery for a nickel.”

  167. I’ve never received more emails from D&T people leaving the firm. This place is indeed a lemon with a new paint job.

  168. I always welcome the annual email I receive from Kevin McGovern (see above) this time of year to remind me to continue to overbill the client for a minimum of 50 hours a week, regardless of how many actual hours worked, or receive a notice from HR for non-compliance.

    With the new extended busy season of 8 to 9 months, this should make for quite a basket of overbillings which will no doubt flow straight to the Partners.

  169. Compensation Update:
    Mid America Advisory (Technology Risk)
    Rated 3 YE, 5.2% with 2% Bonus 5th year Senior

  170. Anyone care to share what is going on with D’s tax practice in Dallas?

  171. Deloitte begging people to stay due to mass defections. Now aggressively counter offering but everyone knows this place is an absolute disaster.

    The only real strategy is to blatantly overbill and hope the clients dont notice along with the fact that most of the staff are almost incompetent (couldnt find a job anywhere else). Why the management Jim Q, Barry S. have not been replaced is beyond me.

  172. Two more key leadership defections this week and staff morales continues down the cliff.

    D&T Partners playing spin game that things are ok. “We’re the Yankees why would anyone leave.”

  173. deloitte is apparently giving raises next week to audit staff in US to keep people??

    i guess theres a mass running for the exits//

  174. The Deloitte leadership should write a case study entitled “How to MisManage a Firm”. Deloitte would be a prime example and the Deloitte Partners first hand knowledge of how they mis-managed Deloitte; would be valuable so other firms do not make the same mistakes Deloitte has made.

  175. Honestly, if I were a client of Deloitte, I would make a serious assessment of the audit relationship. The morale at Uncle D is so low, and people cannot wait to get out there. I don’t know how they can go through the coming busy reason. All the good staff/managers have left or on the way out. Even they could get in all the new hires on time, who will provide them with adequate training ? How could the client expect a firm like this to do a decent audit?

  176. Any confirmation to the rumor of Barry Salzburg getting his stomach stapled in effort for DT to trim some of the fat?

  177. […] about Deloitte and about Barry Salzberg as Deloitte US CEO. They were especially numerous during the period early 2008 to late 2009 when Deloitte was cutting staff and partners left and right in response to the economic conditions […]

  178. […] Unfortunately, the Big 4 and next tier are still cutting, as evidenced by news on this site and consistent reports on re: The […]

  179. […] 8. “PricewaterhouseCoopers is all about you. Your personal and professional development, your achievement, your life long learning, your individuality and your choices. “ Actually, PwC is all about PwC. […]

  180. Rumor of DT cutting hundreds of tax people (including partners) recently – can anyone confirm?

  181. @71. .. wow , you nailed it — that’s EXACTLY how it was for me at PwC … back in 1989!

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