A new friend recently asked me, “Do you keep all of the books you buy or do you give them away and throw some out once and a while?” He knows I’m an avid reader and suspects that my house is full of books, maybe old ones, dusty ones, duplicate ones. I sense he enjoys a little more world order than he’ll find at my place.
I had the luxury this past long holiday weekend to read a little more, write some non-audit related pieces, and think. I answered my friend that I have a lot of the same books and many unexpected ones. Not as many business books as you might suspect and quite a few collections of everything written by and everything written about certain authors. I also keep duplicates of my favorites, because I like to lend them. My siblings and a few friends are regular “circulators” of books. Not because we can’t afford to buy them ourselves but because we like to read hardcovers and there is a joy in sharing something you’ve read and knowing someone else is now reading it. Then you can discuss it.
Part of Truman Capote’s public persona was a long-standing rivalry with writer Gore Vidal who famously said, “Truman Capote has tried, with some success, to get into a world that I have tried, with some success, to get out of.”
Truman’s undoing was discreetly conducting research (unbeknownst to his friends and benefactors) for his tell-all Answered Prayers (eventually to be published as Answered Prayers: The Unfinished Novel). He permitted Esquire to publish four chapters of the unfinished novel in 1975 and 1976. Although the issue featuring “La Côte Basque” sold out immediately upon publication, its much-discussed betrayal of confidences alienated Capote from his established base of middle aged, wealthy female friends, who feared that the intimate and often sordid details of their ostensibly glamorous lives would be exposed to the public.
It’s with this theme of an insider telling tales, that I reprint for you here a long letter I received from a daily reader, Tenacious Truman. It’s music for the professionals who live as chameleons in the firms, changing their skins, as needed, to survive. Tenacious Truman and I understand you, we even empathize with you, but we no longer envy you.
After nearly 10 years in the “Big 5” accounting world (nearly all of which was spent as a consultant), this month I moved back into the corporate world. The commute is a killer but travel is next to zero, so I call that an even exchange.
I was lucky in that I had been an “experienced” hire, meaning that I’d had more than a decade of corporate experience prior to joining in 1999 what was then one of the Big 5. So the transition back to corporate life has been a bit easier for me to make than I imagine it has been for others. The pace is certainly slower—and I must say that the dedication to “work/life balance” is palpable, and not merely the lip-service to which I’d become accustomed in the Big 4 accounting firms. We have flexible work hours, employee recreation clubs, commuter services, and there is absolutely no raising of eyebrows when people take time off (or dare to leave work on time).
One thing I’ve immediately noticed is the graying workforce. Where I work most of the accounting staff is within 5 years of retirement. Retirement parties are common (we already had two this week) and people are concerned about succession planning. But talent is scarce and my company has more openings than it can fill—even in this economy! There are jobs aplenty for the right people with the right combination of skills, background and positive mental attitude. If there’s a lesson there for your readership, it might be that just having GAAP or audit or tax skills is not sufficient; one must also have a good understanding of industry issues and the other, softer, skills, in order to make a successful transition out of the Big 4 and into a position within industry.
For some time I’ve wanted to talk about my decade of experience in the Big 5. I’ve held off because (obviously) it wasn’t appropriate to criticize my employers while taking a paycheck. But now I get to tell the truth (or at least my version thereof,) which is kind of what you do on your blog.
Here are some of my “truths” :
1. The partnership model is broken. It’s utterly ineffective for executing the mission of the accounting firm. How can five thousand (or one thousand or even 500) Type A “equals” ever agree on anything? They cannot and they do not. As a result, firm “leadership” makes decisions and the rest of the partnership is subsequently informed of those decisions. Which is why partners are frequently as surprised as staff by layoff notices, reorganizations, new branding, etc. This is also why partners spend so much time away from client-facing work; they are on calls with each other (many of which are regularly scheduled) trying to figure out what is going on … so that they can align with it.
I usually tell people that there are two levels to each of the partnerships: partners and everybody else. If you’re not a partner then it doesn’t matter what title they give you. But in fact, the partnership itself appears to be a multi-level pyramid, with a leadership model based on “apostolic succession” (to borrow from the law partner-as-employee legal decision) rather than merit. This model is outdated and irrational (to say the least), and it will eventually lead to the downfall of these firms unless reform is undertaken.
Staff are enticed to stay with the firms based on a dream of one day becoming partner so that they too can share in the wealth generated by the aforementioned pyramid scheme. To call an accounting firm a “for-profit business” woefully understates the true basis of the partnership, which is (quite simply) … greed.
Another price paid is lack of integrity. At one firm, I was told to “eat” hundreds of billable hours because the partner had negotiated a fee ceiling and didn’t want to go back to the client for more. Sure I could have reported said partner but, as we know, that would have been a career-limiting move, and I was on partner track (or thought I was). I’m pretty sure that my experience is a common one; and it begs the question as to how the firms enforce quality or ethics rules when the partners who violate the rules are the same ones who get to decide annual performance rankings, or who gets admitted to the partnerships and who doesn’t.
Here’s another true story about another partner: Our employee satisfaction survey results were too low. The partner was grilled by local leadership as to the causes for the low scores, and directed to fix the morale problem(s). How did he address staff morale issues? He did it by visiting every one of the staff and telling us that his compensation was tied to the employee satisfaction survey scores, and now our compensation would be tied to the scores as well. Guess what? Next survey he had the highest scores in the region! Based on his ability to drive staff morale to such high levels, he was then asked to help other partners turn-around their low scores as well….
3. Making partner is a long, arduous process. It’s a mystery which remains a mystery, even to those who participate and is still a mystery long after it’s over. The firms have a vested interest in keeping it that way because it gives them flexibility to promote certain partner candidates without regard to merit or even diversity concerns.
From my point of view, the passed-over “boat-rockers” who created friction were quite possibly the firm’s future leaders, with charisma and ideals and the courage to speak truth to power; and so the partner candidate vetting process would tend to discriminate against the very folks that the firms would seem to need the most right now. (One of the most frequent criticisms, and it’s quite correct, is that leadership is comprised of good auditors and managers and administrators—but very few good leaders.) As you have described it, it is quite literally “the bland leading the bland.”
4. Which leads me to the sad conclusion that although the most obvious aspect of the greed-based culture is getting rich off the backs of the staff, a more insidious one is enticing clients through appeals to their baser natures. For example, how much money do you think the firms spend on skyboxes and suites and box seats at sports events, music venues and theaters? How many staff positions could be retained by eliminating those seats? More importantly, why have them in the first place except to act as potential gratuities and bribes for client decision-makers? What about the thousand-dollar dinners to wine and dine CFOs, CEOs, etc? Why the SEC and PCAOB permit this type of amoral behavior is not known but it is part of the greed-based culture and needs to be eliminated right now.
I need to reiterate that the purpose of the partnership is to make money for the partners. This leads to immediate gratification decision-making, where staff with high utilization gets RIF’d before the partners’ income is touched, even though RIF’ing staff reduces long-term income prospects. Partners don’t care about tomorrow; that’s the problem of those (future) partners.
5. One unfortunate result is that the Big 4 firms spend millions upon millions of dollars in branding, advertising, and internal messaging trying to convince everybody that the firms are “one firm” when in truth they are simply a series of interlocking partnerships and every partner is in it for themselves.
6. At my last firm, leadership was focused on creating a “culture of high performance.” We got this messaging at every opportunity. I found this preoccupation ironic, because it was clear to me that the Big 4 firms already had such a culture. Nowhere in my career have I encountered such hard-working, knowledgeable, dedicated employees. Sure, there were some exceptions (aren’t there always?) but those were usually taken care of during annual performance reviews.
7. One more point – it’s time for collective bargaining. Staff at levels perhaps as high as “manager” need to organize and unionize if they want to have a voice in their compensation. Engineers already do it and accountants can as well. Failure to bargain collectively leaves each individual at the mercy of the partnership, which is not very merciful.
Okay that’s it. Perhaps a bit more sour grapes than intended, but that’s what the internet is for, right?