Warning: Violence, unsavory language. Watch at your own risk.

Robert DeNiro as Al Capone in The Untouchables:

“A man becomes preeminent, he’s expected to have enthusiasms. Enthusiasms, enthusiasms… What are mine? Baseball! A man stands alone at the plate. This is the time for what? For individual achievement. There he stands alone. But in the field, what? Part of a team. Teamwork…”

It must be heartbreaking to one day feel you’re part of a team, a big wonderful, eminent, respectable team and the next get cold-cocked.

Two new Big 4 lawsuits – one against Ernst &Young and the other against PwC – reminded me how many times professionals have written to say their firm had just knocked the stuffing out of them.  They had been fired suddenly or a student’s offer was pulled at the last minute.  They were crushed.  Humiliated.  Confused.  Betrayed.

Ms. Yunjung Gribben, 43, is the lead plaintiff in a class action lawsuit against EY in California. Ms. Gribben says Ernst & Young offered her a job with a starting annual salary of $50,000, then pulled the offer, after she graduated, because of “a couple of C grades she had received in accounting during her senior year at CSUF.” Ms. Gribben says she graduated from Cal State Fullerton with a 3.6 grade point average.  The case seems to be more about age discrimination – she says younger candidates kept their jobs – than it is about contracts.

The suit claims Ernst & Young offers job contracts to graduating college seniors that “compel” them “to work for EY to the exclusion of all other employers,” but allow the company “to legally renege or cancel the offer of employment” if the senior does not maintain a vague “strong academic standing.”

I’ve written about the one-sided contracts and the high pressure recruiting tactics of the Big 4 audit firms at re: The Auditors.  When the economy started to turn in 2007, the Big 4 began to slow the pipeline of recruits by offering fewer internships, offering fewer interns full time jobs, delaying start dates, and rescinding offers for vague, supposed breaches of their one sided agreements.

Candidates felt helpless since, like Ms. Gribben, once they had decided amongst all offers – many of the best students used to have a choice of all four of the largest firms and more – they were left with few choices if their selected firm reneged.  Not only had the other firms moved on and given their slot to someone else, but the taint of having their offer fall through intimidates many students. Complaining might end up on their “permanent record” and “blacklist” them for the rest of their career. Many were locked in a stasis that sometimes only corrected itself after a call or email to me.

I have spoken to former Big 4 partners. They tell me getting fired after twenty-years, their whole post-undergraduate degree career, is like getting whacked in the knees with a baseball bat.  One day you’re leading engagements at prestigious Fortune 500 clients, smoking cigars and drinking single-malt scotch at parties, buying the McMansion in a “better” suburb and putting the BMW in the driveway and the next day you’re putting a profile together on “Linked In” and setting up an LLC in case you have to do independent consulting for an extended period.

Colin Tenner is suing PwC in Ireland for disability discrimination. Mr Tenner said that after he had been mis-managed by PwC and bullied by a client, his health deteriorated, leading to medical absence from work. He was told that anti-bullying and harassment policies did not apply to him because he was a partner. Several senior firm managers told him that he was not protected by the anti-bullying policy because he was a partner.

I’m not sure what the law is in Ireland, but it would be interesting to see a suit like this go to trial in the US.  Typically they get settled, because the firms are so bad at handling these situations, there are almost always smoking emails and fat-head parters involved who don’t make good witnesses. Becoming a partner is no longer inevitable. It’s not about just looking good, doing good and getting along for long enough.  Somthign as innocent as looking at a senior partner or client the wrong way, losing a client, or being human is an excuse in these economic times to “cut dead wood.”  Interestingly, being sanctioned by the SEC is not.

What’s refreshing about these two cases, as sad as they are for me to read, is that these two professionals are fighting back, airing their own and their firms’ dirty laundry.  They’re adding to the dialogue about life behind the walled fortresses of the audit firms in contrast to the goody-two-shoes PR the firms spit out about charity, diversity, climate change and their own self-serving business forecasts. I’ve often said you have to be either very rich or very poor to hit back at the firms – enough money to weather anything they throw at your or nothing to lose if they do.

Take heed and act accordingly in your own professional life.  We may not see be able to see their true financial condition, but we are beginning to see their flaws.

This article was originally posted at Going Concern.com May 13, 2010.

This was originally posted  Going Concern.com on August 12, 2009.

…there’s definitely collusion/shenanigans going on amongst the big 4 for compensation along with extending dates for promotions. Ratings manipulation is also going on along with unfair treatment of those that tried to go above and beyond….”

Both Deloitte and KPMG admitted last fall that job cuts were made for economic reasons, removing the taint of “performance issue” from that wave. It’s a small thing, making up for over-hiring, under-managing risks, and sucking in new recruits only to cut them loose a year later.

But layoffs continue and are occurring in greater numbers at all firms. Are there still so many “performance problems?” How can a “business” that only hires top graduates, puts them through one, sometimes two, internships, an extensive interview process, and programs such as “Mass Career Customization,” still have so many “not performing” or “not a fit?” They’re trying to solve a leadership problem on the backs of their employees. For example, they hire, acquire, and over staff practices where there’s no long-term commitment and no shot, such as PwC’s return to systems integration.

Quelle timing!

Big 4 rates are high to pay for their mistakes and their overhead – mandatory training, generous benefits, empty offices, lobbying and political contributions. They’re higher because they theoretically sell a different product – better, better trained, supported by a global network of specialists, utilizing best practices and state of the art tools and methodologies. So who do you cut when “all the children are above average?”
The answer is: Compare everyone’s performance to each other, instead of to objective criteria.

It’s called “forced ranking.”

“Forced ranking is the antidote to inflated ratings and the failure to differentiate…While conventional performance appraisal systems may allow managers to inflate ratings…a forced ranking system ensures that distribution requirements will be met.”

“Distribution requirements” put someone at the bottom of the list each time. No raise, no promotion, maybe even layoff.

So what’s the downside?

“Forced ranking pits associates against each other…someone still must be ranked low, despite meeting performance plan goals…a dysfunctional and hyper-competitive workplace…demoralized staff and a mistrust of leadership. Discrimination lawsuits…”

The cut-throat, GE-style culture is now embedded in the Big 4. But is that good for their clients? Does it result in better quality audits? Not if you’re the one left behind doing more with fewer people for the sake of achieving partner payout targets. But, “It can’t happen to me because I’m not a loser.”

Until it does.

“Jim’s better than Bob but not as good as Anne.” In a nutshell, that’s forced ranking. Unfortunately, if they don’t get better at forecasting, engagement management, and mitigating audit failure risk, most professionals will end up at the bottom of that totem pole at some point, through no fault of their own.

This story was originally published July 29, at 21:35 PM CST.

In a move that was too big to hide, PricewaterhouseCoopers on Thursday cut between 500-800 professionals from its internal IT organization.

Bay News July 29, 2010: PricewaterhouseCoopers has announced that the company will be cutting 500 jobs.

Jonathan Stoner is one of the tax advisory and consulting company’s public relations representatives…

Stoner says the changes are taking place across their IT organization, of which the majority is in Tampa.

As of Thursday, there are 1100 individuals and they plan to cut 500 jobs, leaving the IT division with 600 employees. The company says the workers were notified Thursday afternoon. They haven’t been notified of any sort of severance package, but the company felt it was important to give the workers a heads-up and the time until the end of the year to apply for other open positions.

Multiple sources are telling me the number is closer to 800 and the reported 500 number is just and exercise in semantics.  The additional 300 professionals are those who will not be offered an opportunity to apply for jobs with the rumored outsourced services provider, Tata Consultancy Services (TCS).

Updated August 3, 2010: Based on later reports it looks like very few PwC professionals will be offered an opportuntiy to apply for positions with Tata.  Instead, PwC professionals in the affected groups are being told to apply for the remaining ~600 positions.  Decisions will be made about who will stay and who will have to go in December by the end of August.

Which US IT teams are impacted?

Our analysis revealed opportunities to share common approaches in Project Services, Infrastructure Operations ﴾including Data Center Services﴿, IT Governance and Process, Solutions Center, Program Leadership, Security and Enterprise Architecture. We will 1﴿ consolidate efforts between our UK and US IT teams, 2﴿ change roles and responsibilities of some roles to fit a sourced delivery model, and 3﴿ use a common offshore vendor, TCS. This will result in headcount reductions.

If my job is transitioned, can I go and work for the provider?

If your job is transitioned as a part of our move to a global delivery model, you may have the opportunity to interview for employment with the provider. There will be a very limited number of roles that will be eligible for hire by TCS. You should discuss this possibility with your coach. Though there may be such opportunities, TCS is not obligated to make any offers of employment to impacted individuals.

My sources tell me Tata professionals will be moving into the PwC data centers in Florida and Atlanta.  PwC will retain ownership of the data centers and equipment.

We just built a new Data Center. How does this affect it?

PwC will continue to own the Data Center and its equipment; however, the majority of Data Center operating roles, except Facilities, will be provided by TCS.

It’s a shame because Tampa professionals were asked to move to Atlanta barely two years ago, and hundreds of internal services professionals were forced to move to Tampa to keep their jobs a few years before that.

From what I can see, TCS does not have a service delivery center in Florida or Atlanta, another location where PwC recently unveiled a new data center.  So it’s not clear to me how this “apply for open positions” part will work.

It’s also not clear to me that, as spokesperson Mr. Stoner describes it, “PWC is making these changes as part of a thoughtful, strategic plan that will allow the firm to best serve its clients.”

I recently told you about PwC’s new joint venture in India to provide, for now, only internal client service support to PwC member firms worldwide.  The US firm is the vast majority owner.  I’ve also been told that PwC bought a firm in Uruguay last year and will also use that location to offshore client support and internal support activities.

Added July 31: In addition, BearingPoint Business Consulting Pvt Ltd sold substantially all of the assets of its global development center in India to PricewaterhouseCoopers. This asset sale was part of a larger Section 363 sale under the Bankruptcy Code in the U.S. The financial terms of the transactions were not disclosed.

Professional services firms, especially ones wracked by high litigation costs and lower fee income are loathe to spend money on internal activities.  That  requires 100 cents on the dollar bucks to come directly out of partner’s pockets.  My suspicion is that the Indian joint venture was a move by the US and the global leadership team (an extension of the largest, most powerful member firms such as the US and UK) to take money out of the hands of uncontrollable Indian partners. But India is not yet ready yet to take on what’s needed.

It may also be true that ambitious plans to cover needs internally via the Atlanta project and improvements in Tampa just got too expensive and took too long for the annuity income tastes of most partners.  PwC is shipping their employees off to TCS unless or until they can put the money back in their pockets with their own facilities off shore and leverage them for offshoring initiatives for clients as well.

Updated August 3, 2010: In any event, PwC admits, in an unprecedented press release, that there is no severance offered because they are giving professionals until the end of the year to find other jobs.

It appears based on sources reports that severance wil be offered to those who choose not to apply for one of the remaining PwC jobs and for those who are not selected.  This enhanced severance is, of course, subject to “satisfactory” performance at the firm’s discretion and requires employees to sign a legal release.

To be eligible for enhanced severance, the impacted employee will need to meet the following criteria:

1. Work until the end of the scheduled transition period
2. Maintain a satisfactory level of performance as determined by the firm
3. Sign and return an Agreement & Release in accordance with its terms.

Standard severance will be available to impacted employees who separate from the firm prior to the end of the scheduled transition period and who maintain a satisfactory level of performance as determined by the firm.

There’s a great new update on this story by Jeff Harrington at the St. Petersburg Times, Sunday August 8th. Read the whole story here.

PricewaterhouseCoopers has cultivated an image as one of corporate America’s upper-tier workplaces. Competitive pay. Great benefits. A perennial on Fortune’s list of Best Places to Work.

Human resources experts with the company have preached to clients about effectively managing workers and using layoffs as the last option in times of crisis.

However, interviews with a half-dozen current and former Pricewaterhouse employees support a different picture of a financial evolution within the company in recent years. The accounting and professional services giant, known as PwC, has quietly and methodically slashed hundreds if not thousands of well-paying jobs, offshoring many functions to cheaper labor overseas…

Last week was a very busy and very difficult week at re: The Auditors HQ. However, those of you who lost your jobs at PwC and other firms, or those who were left behind with survivor’s guilt, faced much tougher challenges.

Yes.

Look to your left, look to your right. You’re still there, but it’s highly likely that one of your colleagues will not be there three months from now. Not by choice. And not because anyone at PwC or any other firm is a “loser.”

Well, maybe there are some “losers”, but you’ll have to go back to my posts for that discussion.

The events of last week, including those that occurred in the world around us, have prompted me to formalize my Comments Policy and Privacy Policy/Terms of Use. These policies, to be honest, were always my standard operating procedure, but given the heightened and constant nature of the threats all around us, it’s time to commit them to print. I want you to know what they are, so you can act accordingly both on and off the site.

I started to see increased traffic on Tuesday of last week, after the blog post describing PwC Advisory’s planned staff cuts was posted Monday night. There was a considerable traffic increase over the typical run rate on Tuesday and Wednesday and then that rate doubled on Thursday and stayed at that level on Friday as actual cuts started to be reported both offline and online. I heard from multiple sources that the cuts were accelerated because of the blog post, which clearly upset some.

I also started to see more negative comments – about my decision to post the information, about my choice of visuals (which I now deeply regret in light of the Ft. Hood and Orlando incidents) and about me personally. I am a pretty good sport, but I will tell you… I saw some very ugly, very vulgar, very obscene and, in some cases, physically threatening comments on Thursday and Friday.

That had never happened before.

The biggest shock was that some of the most offensive comments were posted from the PwC network. When you visit this site, the web servers at our hosting service automatically recognize your domain name and IP address. If you are accessing the site from your company or firm network, the domain name and IP address will reveal nothing personal about you to me other than the IP address that you accessed the site from. But that IP address may be identified to me with a host or corporate name and location. It may be possible to obtain more information about users. That information is typically not accessible other than through legal means, but that is always a potential.

Late last Friday night, I accidentally posted an anonymous comment that made threats to PwC employees. Once notified of my mistake via another comment on Saturday morning, I immediately deleted that comment, issued an apology, then later deleted the notification and my apology, since the notification comment repeated the threatening words that the original poster did.

Later Saturday, I received a call from the Chief Information Security Officer of PwC US. In the spirit of cooperation, I agreed to provide PwC with the details I had for the comment that he felt threatened PwC employees. I also solicited his assistance in addressing the offensive and threatening comments that came from the PwC network.

I did this because I reserve the right to disclose user information to appropriate parties if I feel it will help protect and defend the person, rights, or property of re: The Auditors employees, any visitors to the re: The Auditors website or a company or individual that may legitimately feel threatened by anything posted on the site.

I will also disclose information to appropriate parties when, in good-faith, I believe that such action is necessary to comply with the law or to comply with a legal process served on re: The Auditors, to enforce this Privacy Policy or to enforce the re: The Auditors website Terms of Use.

I will also help identify persons who may be violating the law or the Terms of Use of re: The Auditors website; and I will cooperate with the investigations of any alleged illegal activities.

You should keep in mind that when you access the internet through your company or firm network or a public network or a paid ISP, you may be subject to monitoring or disclosure of your activities to law enforcement or others if you engage in illegal or threatening activities or violate your employer’s policies, subject to local laws and regulations.

I do actively not solicit tips or ask or encourage you to disclose confidential information or to violate any legal agreements that you are party to. I may, from time to time ask friends, acquaintances, contacts, and subject matter experts for verification, validation or elaboration of information I have obtained from public sources or that is based on my own experience. You must, of course, take responsibility for any information you provide to me or anyone else and for any and all applicable laws, regulations or contracts that information may be subject to. If I receive un-solicited information, I am under no obligation to determine its source or its legality. I may or may not be able to determine its veracity before publication and make no claims of such.

Caveat emptor.

In spite of what some might think, my goal is not to increase traffic to the site for traffic’s sake. The monetary and other benefits of that strategy for me are minimal. Instead, my objective is to provide useful information to inform your decision-making and to encourage sharing and discussion of relevant information within the community that has developed. That’s why the tone and spirit of the community is so important. Threats of violence, irresponsible obscenity, personal attacks towards me and others, or outing of anyone other than public figures and senior leadership of the firms and their clients is not welcome. These community standards will be strictly, and personally, enforced.

You will find a formal Privacy Policy along with the re: The Auditors Terms of Use here.

And although my Disclaimer is written in a humorous fashion, I’m actually quite serious.

I’ve just received word: There was a PwC Advisory partners emergency conference call tonight announcing upcoming involuntary staff reductions.

(This time the source is impeccable.)

New US Advisory Leader, Dana McIlwain laid out the bad news:  The time has come to cut. Average utilization is hovering at 69%. Cash collections are millions short.  Campus recruiting for Advisory has been stopped cold. Business sucks and then there’s the 800+ BearingPoint folks to absorb.

On November 11th the rank and file partners, fortified after training and coaching by HR via a webcast in the next few days, will chop 300+ professionals from PwC Advisory, at all levels, all geographies, all practices. Most have already seen the writing on the wall via forced ranking.  You are already on a “list” and I’m not talking a fun Twitter one.  You may be fighting it, thinking you can survive if you just find a project to take you, somewhere. You may even have been encouraged to go looking, just to be told, “Sorry, wrong number.”

Because that’s the way it works at PwC.  After putting themselves on a pedestal, telling the press and their peers at other firms they were better than everyone else, they’ve finally acknowledged that they have no idea how to fix the systemic problems in the practice, don’t know who will fix them, and don’t know when they will get fixed.  No amount of prancing around like pompous peacocks will change the fact no one is buying their act right now.

It can’t help that their Health Care Advisory practice was royally punked by Report-Gate. I never got an answer back from the PwC PR folks as to who, specifically, had the bright idea to whore themselves out for a few bucks to the insurance industry’s anti-reform lobby. This is the big time now and PwC was toast before the graphics department was done printing out those shiny booklets for the next conference.

It seems that none of the BearingPoint transfers-in will be cut.  That would be an admission of fault for a colossal, strategic mistake of going long systems integration consulting during one of the biggest corporate cost cutting periods in my more than twenty-five years of professional life.

And it looks like no partners will be part of the RIF parade, for now.  At least at PwC, they’re reducing those numbers by attrition instead – disgusted, demoralized, and defeated by massive cuts in compensation and shifting of accounts and responsibilities. All in the name of preserving the remaining spoils for the few at the top of the pyramid.  Just walk away with tails between your legs, fellas, and be glad you had the supreme privilege of working for Price, Waterhouse, Coopers, or Lybrand during your 15-25 year career. Oh, and don’t tell anyone. It would embarrass both of us and no one would be better for it.  There’s lots of CFO jobs around.  You may have to move your family to North Dakota…

Don’t think this is the last of the cuts at PwC. Once the rich “sons of a gun” at the top – more on that later in the week, including actual compensation figures – get a taste of blood, it’s easier and easier to justify anything to save their own skins.

They’ve done it before.  They have the playbook.

Let’s see how the PR guys spin this one…

Inside Photo Credit

Main Photo Credit

As I mentioned in my Twitters on Thursday, I had the opportunity to speak with Deloitte’s National Director of Public Relations, Deborah Harrington, on the phone earlier.

So E&Y, let me hear from you guys, please, to round out the info.

Dear Ms. McKenna
…the firms appear to be spending substantially less on new hire training. Uncle D., for instance, trained all new hires in a specific service line in Phoenix for the last few years at a swanky hotel/resort. This year, though, they are dumping us in god’s armpit: North Jersey. Ostensibly, it would seem, to keep costs down since most new hires are in the NE and it was the Midwest that was recently whacked by the “counseling out”.

Dear Reader,
Yes, this is aligned with the idea of fewer new hires too. Any word on any offers being rescinded?

Dear Ms. McKenna,
I’m a former KPMG employee as of the end of February, as I was hit by a bus when I entered the partners office saying that “due to the market change for our practice (Advisory), your skills are no larger needed, so we are letting you go.”

KPMG has been hiring left and right and promising that there is all this work in the “pipeline” in the last year, but you never hear about the outcome. They let me and three other people that I know of so far go and we have eight new college hires starting between April and August. We also just had four college new hires start as of last August. I do have industry experience and have been with the firm over two years, so I know that I have more “skills” to offer than any of the new hires and future new hires.

They have never been very good about the hiring process as it seems every time we did win a new client we need to make a mad dash so hire new employees to manage the account rather than use the ones we have locally or at another office. We promoted both managers and senior managers recently and if you ask me, we are way too top heavy and should have started to make the slashes there and cut some of the new hires. The real thing that pissed me off with the whole thing is that I was just finishing up on a client and they had the audacity to ask me to wrap up sooner and transition my work over so I could leave early that Friday instead of coming in on Monday. .