During the last two days, comments and traffic related to my post about layoffs in PwC’s Advisory Services practice have been huge. I am currently in NY attending other meetings and yesterday attended the PCAOB’s Standing Advisory Group meeting in Washington DC. More on that meeting later. But I want to make a few comments about the PwC layoff issue and respond to some questions.
First of all, this is a blog, not a newspaper or magazine. If I receive information from informants or otherwise informally, I am not in a position to call PwC and confirm the information.
Nor would I.
I look at the source of the information, look at my own experience and knowledge about the situation, and make a decision whether to post the info for your review and analysis.
I was interviewed by WebCPA on Tuesday, and that publication called PwC for confirmation. In that case, you had the opportunity to see my actions and a reaction to the information based on formal journalistic approach and make your own judgments. The bottom line is this process forced PwC to make a statement about layoffs, albeit through an “unnamed spokesperson.” You would have never seen any statments, let alone a press release, otherwise.
Secondly, please look at an early post I wrote about how layoffs are used in professional services where I cited the example of a previous PwC layoff. Both the approach to carrying it out and the communication were poor. The fact that they are both cutting people and communicating that nothing unusual is going on, is not unprecedented.
Let’s look at some of the excuses for layoffs made in the past, for example, by PwC.
April 12, 2001 The Scient Corporation and PricewaterhouseCoopers announced layoffs yesterday, and both blamed declining demand for their advisory services. Executives at both firms said that clients were narrowing the scope of projects requiring consultants, slowing their pace and canceling them outright…PricewaterhouseCoopers, which is based in New York, will lay off 750 to 1,000 people in its domestic consulting unit, or up to 8.3 percent of the 12,000 consultants based in the United States…The layoffs at PricewaterhouseCoopers, which is privately held, are part of the company’s efforts to eliminate consultants with skills that are not in demand, Ms. Eusufzai said. In today’s market, valuable skills include knowledge of strategy and e-commerce marketplaces, she added.
Scott Hartz, global managing partner for the consulting practice, plays down the significance of the 400 layoffs: “We did separate about 400 staff, but frankly that’s something we do every year — we go through an annual evaluation cycle, and adjustments have to be made.” Hartz does admit, however, that the 400 laid off were not the only ones to have departed. “The 400 were forced separations; there will be voluntary turnover as well,” he says. Hartz claims the economic climate is to blame for the layoffs:”We’re in a slowdown, and we’re not growing as fast as we were, but fundamentally we are still a growing business. I would acknowledge that as we started the year, we anticipated higher growth rates, and we found ourselves long on resources in certain areas that didn’t grow as fast as we guessed.”
In October 1999 PWC announced that it would eliminate 1,000 administrative and support jobs. All but 250 of the job cuts are expected to come from layoffs across the country. The remaining cuts are to be achieved through a hiring freeze that is already in place. The cuts come as PWC makes a push to boost its e-commerce consulting business – the firm has plans to invest $3 billion over the next three years in this initiative. After the July 1998 merger of Price Waterhouse and Coopers & Lybrand, company officials had indicated that no layoffs would follow.
Finally, PwC has now recently gone through at least four major staff cuts in addition to the one I reported:
1)The reorganization of their IFS or internal administrative staff which has resulted in involuntary terminations nationwide.
2)Reduction in staff, including professionals under the manager level in their SPA or Systems and Process Assurance group. This group is still part of the Audit practice and provides IT Audit and Security professionals (professionals with highly sought after skills by industry) to both the Audit and the internal audit and consulting practices at PwC.
3)Selective cuts of Managing Directors, Directors and Managers in their consulting businesses, due to “performance reasons, since the summer.
4)And now confirmed cuts across all Advisory practices and all markets of additional Directors and Managers, (official number at 120,) ostensibly as a result of the December mid-year performance evaluation process.
5)Additional rumored cuts, as reported by this blog, of up to 25% of all Advisory professionals across all practices and geographies, occurring at this time, one by one, two by two, but not in the large mass numbers that would attract attention other than inside.
My sources are both reliable and well placed. It is PwC and the audit firms’ practice, in general, to conduct such “reductions in force” in this manner, as we have seen them do in the past, rather than make huge announcements.
I stand by my comments that PwC Advisory is in trouble, going to be “turned-around,” and that cuts are part of that equation. Revenue is coming in at less than half of their goal per month and they’re not going to keep people around under those circumstances, given PwC’s own reporting of the dire, depressing economic outlook that CEO’s have. If the number is going to be only 120, then between the comments, the additional offline communications I have received, and all the recently cut PwC Advisory staff that have asked to connect to me via Linked In the past few days, I have probably been contacted by almost all 120 of them.