Follow-Up – PwC Advisory Services Layoffs
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.
Layoff Plans Are Announced By Pricewaterhouse and Scient
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.
Your evident anti-PwC (all Big 4?) bias makes it difficult to take your comments about them seriously.
“”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.”
“The 400 were forced separations; there will be voluntary turnover as well,”
This is why i hate PR idiots. When was “separate” synonyms for “laid off”. Or when was “separate” synonyms for “telling employees we will be laying them off and they have to pack their bags in a couple of days, and their families are doomed. Oops, LOL”.
This piece here looks like it came from the mouth of an economist with a PR degree:
“We’re in a slowdown, and we’re not growing as fast as we were, but fundamentally we are still a growing business.”
To fdefdffd: 2% growth is still growth.
PwC seems to have the worst ability of all the big 4 to manage staff. They either have an innate optimism or an inbred inability to forecast.
The result is that they are forced to pare down occasionnally when they get a little overzealous in the hirings.
This process, though, may also help keep their costs low. If you think of what a second or third year costs versus a new hire, they are saving a substantial amount per person.
Whats wrong with anti-PwC comments? Just because pro-PwC comments are jammed down your throat all year long doesn’t make yours any more “true” either. Don’t read the blog if you disagree.
Anyone out there have advice for those starting in September at the big four, (or in my case PwC specifically)? I’m about ready to apply to the GAO or the FDIC simply based on job security after hearing about all of this lay-off talk.
I tend to lean towards a bearish view of our economy in the coming months, and perhaps years. I have a feeling assurance and tax is not far behind SPA and advisory. We’re probably only in the 2nd or 3rd inning.
I’d say your job is relatively safe. Renegging on new-hires isn’t an ideal reputation for PwC to get out there.
Sorry, to add to that, just because you hear some bad news, its not a doomsday prophecy. Take it for what it is. The jobs for the Big 4 are out there; like another poster said the “SOX party is just ending”…
Someone made a comment that PwC would not “Reneg on new-hires”. Just for those who do not know, during the SPA layoffs many new hires were terminated. For example, the Atlanta SPA practice let go almost half of the new hires (this February) that were hired in September. Sorry for the not so great job security…
Re: job security. If you’re being hired as audit staff, you’re probably fine – it’s like a meat grinder, always needing more fresh kids.
If you’re going into the advisory, it depends.
What you’re seeing is PwC catching up to the other big 4, who all seem to have had layoffs in the past year. Anyone who didn’t do it earlier has to do it later. Seems like big P thought they would score some business but didn’t.
It’s not the only place with trouble:
If you do however, get an offer, you’ll probably be ok – after an event like this a hiring freeze is more likely if things don’t improve.
Actually, E&Y did not have layoffs, as they did not over hire during the Sox boom. PwC (as I am a PwC manager) over hired and then we did not win the work we thought we would (at least in SPA). In fact, we turned down a lot of work in the first few years of SPA and now it has come back to bite us, as we over hired each year based on forecasts that managers would sell ‘X’ amount of projects and Channel 2 work.
@anon – I have friends at all firms. Yay staying touch with university friends, I guess.
As a result, I do know for a fact that all had layoffs.
It was *not* necessarily in your region/country, but all did.
Thanks for the insights though. 🙂
These things happen in our line of work… in most every line of work. Demand for our services decreases, and we let people go. Its not unprecedented, and while 120 (Advisory) here and 120 (SPA) there are not small numbers…they are not huge either. I am sure more will leave on their own, or have already left due to poor raise and bonus last review. I am also sure that is part of the plan, so that we don’t have to lay off more of the people that really want to be here.
Those of us that remain will hunker down and ride out the storm and eventually we will find our next big thing.
As some said, these things happen, but PwC in the US does seem to be particularly bad at handling people ‘issues’. For one thing, it is incredibly offensive to its employees who were ‘separated’ to suggest it was due to performance issues when most of the people I know who were let go were consistently rated as high performers. Secondly, to pretend that nothing is going on and to try to keep these layoffs quiet insults everybody else at PwC. Of course the news spread like wildfire and more panic resulted through lack of information. And all that during a phase of ‘re-org’ focusing on ‘people’. How pretentious and hypocritical. But the major strategic errors the brilliant partners of the SPA practice made are starting to hurt them. Instead of starting with senior managers they let go managers. Several other high performing managers have quit since and many more will follow, including many seniors who are waiting to get promoted to submit their resignation letters. And these sharp and able partners are now left in the position of being stuck with a bunch of highly paid, vested senior managers that they cannot touch and a bad name in the market. Good job sirs and madams. Just sit back and watch the demise while E&Y take over what you have left in terms of status clients.
PwC Los Angeles is also going through “counseling outs”. It started in the beginning of February and so far, still continuing.