Deloitte – The Worst May Be Yet To Come

I’m reprinting, verbatim, a comment made this morning on the August 29th post, Update: Deloitte Statement on Layoffs.  Many people have asked me about the rules for public notice prior to a layoff.  I believe that notice requirements depend on the size of the cuts and their geographical concentration. Organizations like the Big 4 have an advantage given the dispersion of their workforces across multiple locations.  The rules are oriented towards “layoffs” in a particular plant or factory, per the typical definition of a “layoff”.  But it seems others have now done the research and perhaps spoken to counsel.  These are not layoffs, but reductions in force, cuts, terminations, firings.  

Ain’t no going back…
Text below comes from a comment posted anonymously on September 30th to my post of August 29th. I have added nothing nor have I edited it.  For the original comment go to the August 29th post.
US CEO Barry Salzberg sent out an e-mail on September 22 informing all US employees that there will be a “headcount realignment” due to the current economic crisis and that “some people will be leaving us.” (even though they have already performed a substantial “headcount realignment”)     

I think everyone on this blog knows that Barry didn’t send this e-mail out of the kindness of his heart to give his people a “heads up” about the “headcount” issue.

In my mind, this e-mail was sent out to comply with WARN Act requirements, which mandate that if you plan to layoff more than 30% of your employees, 60 day notice must be given. So, yes, more layoffs are going down. Since they are complying with WARN, this layoff could be much larger – possibly massive. In my mind, the next round of layoffs will be like looking at casualty levels in World War I compared to WWII. Image-conscious Deloitte wouldn’t have made such an announcement unless they planned to cut many, many more people and stay in compliance with WARN.

Merck sent out a similar letter last year, and lo and behold, 60 days later, a massacre occurred – massive layoffs were conducted.

Keep in mind that the latest cuts were not performance based – they were based on salaries and accumulated severance. Who knows what the criteria will be next time (late November – just in time for Thanksgiving!), but I trust the criteria will be similar.

So, if you get an e-mail that says “FYO9 Planning” – run the other way and don’t look back! Some useless person from HR will give you the bad news to justify their existence.





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  1. Anonymous
    Anonymous says:

    What I find disgraceful is that Deloitte can’t manage its own business properly yet it is supposed to be a trusted advisor to clients. If the powers that be had any understanding of th business model Deloitte wouldn’t be in the low morale, understaffed situation that it is in now. Many engagements are understaffed substantially(20 to 40%)… this hiring would have been great BEFORE busy season. The model of firing and hiring only works if you are ahead of the curve and in an industry that doesn’t depend heavily on internal training.

  2. Anonymous
    Anonymous says:

    Deloitte announced today no more involuntarily layoffs and to relax. Bring on the rain makers and the upturn…

  3. leaving DT
    leaving DT says:

    who announced that and where is it? my sources tell me that the reason mid years are not being discussed, is that legal is trying to build cases of potential cuts of certain people and they are taking their time disecting the numbers and the metrics for support of future upcoming cuts. They did that last year at mid year and they are doing so again. Watch out advisory and audit…just wait till March. I know Partners and Directors have had their mid years and most of them had at least a comment about being off track in some area….enough to support a potential layoff. Morale is so low, people are just saying “F” it. and not doing anything…waiting to be fired. the market is getting better and those still around are being called by recruiters. Any one heard anything similar or different?

  4. Anonymous
    Anonymous says:

    I did hear from a webcast that some senior partners said that there would be no more layoff. However, no one really believed them or was serious about what they were trying to say. We all believe, if Uncle D was set to lose another major client tomorrow, such as Microsoft or Boeing, they would cut more people without any hesitation. Given the reputation of Uncle D nowadays, I wouldn’t be surprised that would happen tomorrow.

    On the other hand, I know they lost so many audit seniors/managers during last year. Therefore, they don’t have enough people to do work during this busy season. I know a lot of audit staff have contacts with recruiters. When they find a nicer job, they will definitely jump the ship without having second thought.

    Tell me if I am wrong, and you have to be inside to feel it. The morale in the firm is so low. No one really cares what they are doing. It will be fun to see the PCAOB review this year.

  5. Anonymous
    Anonymous says:

    @leavingDT, what do you mean Partners and Directors have had their midyears and had a comment about being offtrack? You mean during their own midyears, PPDs made comments of their staff? If you don’t mind, what particular region are you talking about in terms of low morale and the potential cuts?

  6. leaving DT
    leaving DT says:

    I have heard from p/p/d’s who are friends of fine who said they have had their mid years…and they were told that while they maybe on track overall, they have certain areas where they are off track (i.e, utilization, sales, etc..). Since the PPDs know what that means since they are doing the same to the staff, it serves as just a reason for a potenial RIF if need be. These are folks in the Southeast…where morale is in the toilet in both advisory and audit.

  7. Anonymous
    Anonymous says:

    To echo 456’s point, people are essentially being set up to substantiate an upcoming RIF. Have you been told that you are (or are slightly) off track? Are you all of the sudden being excluded from meetings with clients that are assigned to you? Have goals that are impossible to meet being set for you to ensure that you never will be on track? Are you being told that more RIFs are coming, but no one (except “management”) knows how many and who? Have you received more calls that usual from recruiters targeting you for positions that are clearly beneath your current role?

    The firm would prefer that the pressure and stress would force you to leave on your own. They save on severance and can continue to pretend that they are not laying people off.

    Rest assured that the same people who are playing these games with you now will they themselves be targets in the near future.

  8. Tony Rezko
    Tony Rezko says:

    Based on the whisperings around our peering/rating process this year, I envision a more passive/aggressive reduction a la low ratings and raises at D&T and probably everywhere else, which will force voluntary turnover. Not many specifics have been given on the nature on the raises, other than “not as bad as last year, not as good as the SOX years.” That could mean just about anything, but I would expect a lot of people to feel lowballed based on the amount of additional slack we’re asked to pick up, and the firms’ unwillingness to address the low morale.

    There’s been some tweaking in the way teams are rating people, making for more “average” people with below-average raises. This is short-term thinking, and highly disrespectful to a lot of the people who’ve done a tremendous job in the past year given the circumstances. I have to think the Big 4 is going to lose more senior/manager talent than it expects (it’s already happening in my office).

    Wonder what the chances are that I”ll stick around to do the work of 1.5-2 people for a 4-6% raise? Whaddya think, partners?

  9. Billy Jean
    Billy Jean says:

    My prediction on raises – average raise will be 4%. top performers will get 6%. Bonuses will be about 1/2 of what they were at the peak….

  10. Departed
    Departed says:

    They delibertly lowered all competent performers last year in ITS without any reason so underperformers could be awarded due to the Minority push. Still the same bs today, that’s all they talk about “we need to hire more minorities”…….only in ITS. If you are a competent non-minority, stay away from ITS because you will be a sacrifice to that organization. The incompetent leadership of the CIO and his appointees are disgusting. When economy gets better, competent non-minorities are getting out. ITS at big D has become a joke !!

  11. Anonymous
    Anonymous says:

    @460, when was International Tax Services (ITS) at the Big D ever not a big joke? ITS deliberately focused on minorities when laying off last year. Now, they are trying to buy back the minorities, by actively going into the market place and recruiting them. Got to make the numbers work. Rumor is that the top ITS guy moved on to a different role, and perhaps the new guy is trying to fix what the old guy did. Well, new guy, don’t forget to take care of all the old guys’ henchmen.

  12. Departed
    Departed says:

    @461, ITS (Information Technology Servicest)…..obviously you must be a non performing minority since you can’t associate a CIO to Technology and not International Tax Serivice…..sounds like you need to be replaced because you are one of the appointees that doesn’t have a clue !! You are as clueless as your response because you can’t associate terms in my original response. Good grief, that is why Big D has problems because reasoning skills are not needed, just dumb head nodders. If you are not in Information Technology Services, maybe you should apply….sounds like the sky is the limit for you !!!

  13. 2 Years Later
    2 Years Later says:

    It’s interesting to look back at this thread 2 years later. It seems like the high-water mark for layoffs was May of 2009 and then things seemed to stabilize at D&T after that. I was one of those cut in the May 2009 round of layoffs and I’ve been wondering what things are like at D&T these days. I’ve heard from friends still at the Firm that they stopped laying off people after May ’09 because people began quitting on their own in mass numbers and now it sounds like things have returned to normal (i.e. pre-2008 status quo).

    Francine, what’s your take on things in Green Dot land? Have things really returned to normal over there? Or did the 2008-2009 layoffs leave a permanent mark in the morale at D&T? Considering that the layoffs went all the way up to the Partner level, I imagine that the way D&T handled the recession has left behind some permanent changes to the culture of that place. Or maybe not. Maybe the fresh crop of newbies with no memory of the recession have already embraced the “Best Place to Work” mantra and everyone else has a short memory. Either way, it would be interesting to get an insider’s assessment of life at D&T 2 years post-layoffs.

  14. Update
    Update says:

    Funny you should ask! Word on the street is that PwC has been successfully raiding a number of the other firms, tempting senior level employees with high pay and advancement. One Deloitte partner was trying to convince a number of people that big bad PwC had laid off too many people and was now trying to raid innocent and loyal Deloitte which did not lay off like PwC did. If one did not know better, one might have actually believe this. Coincidentally, Deloitte is attempting to replicate PwC’s newly announced (more lucrative) pay structure, likely in an attempt to curb a mass exodus.

    With the direction that the economy appears to be heading, perhaps more layoffs may follow. Committments to high multi-year raises right before another 2008 ish downturn might force Deloitte to resort to the behavior it knows best – circa 2003 and 2008. Judging by the posts on this site, the Greendots are not a silent bunch and will likely post, if more layoffs occur.

  15. the dude
    the dude says:

    On the tax side – layoffs will be coming …. forced number by office at manager and above … attribute to the double dip … they tried to keep long as they could … ugh

  16. Bender
    Bender says:

    I’m surprised that during the last round of layoffs Senior Managers were largely spared. I know a lot of Senior Mangers who are very well paid and have been at the Senior Manager level for many, many years. These people aren’t moving up because they don’t sell anything, and they aren’t moving out because they’re too comfortable where they are.

    On the one hand, the firms don’t want to lay off people who could soon be customers for their services (don’t want to poison that alumni network). But on the other hand, this growing army of redundant Senior Managers represents a very expensive layer of middle management that is hard to justify keeping around during a double-dip recession. I wonder what the future holds for these people if the economy takes another dive.

  17. Update
    Update says:

    Strange, the other Big 4 firms are aggressively recruiting tax people, from one another and from industry. I doesn’t sound like the Deloitte taxoff is due to lack of work in the market place. Could something else be going on – for example, is Deloitte about to lose a big lawsuit?

  18. Anonymous
    Anonymous says:

    just on a lighter note, when I was at Deloitte slogging through year end audits and wondering if what we did added any value to the clients, we would call ourselves DoLittle TouchALot

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