Veteran’s Day In PwC Advisory: Say Auf Wiedersehen
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…
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Just a sidenote for all those incensed by pwc4life. I believe NYmetro advisory partners are no longer just monitoring this blog but have begun posting under the guise of younger staff. Cmon people if you really worked in Metro advisory you’d know EXACTLY who is posting under this name. Times are tough but we love sports enough to not only use them as analogies under a pseudoname on blogs but also to include sports events as one of those mandatory but not mandatory ass-kissing group events. Wonder why the army notre dame game is one of these annual events? It’s not cut and paste marketing materials in his posts. Folks you’ve got yourself one of the said executioners on this blog.
@349 is on target with all points. Also, not everyone let go is a performance issue, but some are. And not all the terminateions claimed to be performance based are — but some are. One cannot make the broad sweeping statements some have made here, nor the broad sweeping statements that B4 leadership makes. the truth is in the middle.
@350 — interesting that you will steer work away from D&T. And while I completely understand it, there will others let go from E&Y steering business away from E&Y, and others steering it away from PwC and KPMG too. Depending on the success of all these former B4 employees — seems to me it just reshuffles the client base… and in the end has little impact on the entire industry. It sould be nice to find a way to have a more meaningful impact, to introduce real change in meaningful and important ways (we will all disagree on what those changes should be of course). So far I don’t see what will cause this change.
But change is coming in a different manner — B4 firms are restructuring, and the restructure is designed to make some sweeping changes which may or may not be the right ones. It will be interesting to see what the next 2-3 years bring.
@52 – Your last comment about restructuring is very interesting. I’ve heard rumors about something similar coming down the pipe in the near future. Care to elaborate?
I have heard that some of the tax departments are getting really intense about “utilization.” Really want to make sure people are utilized fully…I hope it doesn’t mean what they say it means, but I am shaking in my boots.
Francine has been quoted in deloittes competitive intelligence monthly regarding this article, though they do not use her name personally, instead they state per blog positing…….
@53 – I don’t completely understand the restructure and its impacts yet. The fundamentals of the KPMG advisory restructure seem to be that the individual practice and regional leadership is being transitioned to a single advisory leadership. Partners who were responsible for a practice area or region no longer have these responsibilities. In addition the employees in advisory are now considered one large pool to be used across engagements in any practice area. The party line is that this is intended to create real teaming and knock down walls in the old structure (it could do that). The question is whether this is a way to have partners compete across a larger population and thus expose those that should not be retained. The second question then becomes what is the impact on employees as the partner pool is reduced. I has been suggested to aligned oneself with successful partners in order to survivors – regardless of the practice areas and regions in which they are/were alligned. This is nothing new just that the cross over to other partners is easier now. It appears that the new structure may make more people vulnerable because the structure that was protecting some has been removed. This will clearly create opportunities for some and make others vulnerable (that is true with any restructure). Long term, it will be interesting if they return to the practice/regional structure — or some version of it. Short term it seems that some of the ability to build and manage a specific office/practice, region/practice or overall practice is more of a challenge because the reporting structure no longer works in this manner.
@352 – I think they’ll be client re-shuffling, but the mix will include non-Big4 firms, a further downward pressure on fees, or a complete disappearance of the service. Former Big4 workers have been through enough hour-eating and other non-sense to know where the resource inefficiencies lie. Many client decision-makers are cherry-picking what they need, and it’s not difficult to force an incumbent firm into a corner using a combination of methods, including lower fees, less work and hours, more reliance on others’ work or in-house staff, or showing the partner the door.
@357-the mix already includes non-B4. It could happen that the non-B4 get an increasing share of the pie… that seems very possible. Would be interesting if the B4 starts increasing again — we went from what was it B8 to B4… will we increase again as the non-B4 get more market share?
RE 358 – A quick search of the Edgar database will show you that many companies only recognize the Big Four as competent accounting firms with the technical expertise and breadth of resoruces to deal with complex accounting issues. I don’t want to turn this into another Big Four vs everyone else debate – just pointing out – rightly or wrongly – the non-Big 4 movement is probably relegated to the smallest, and simplest, SEC filers. You may see some boutique advisory firms start to crawl in on the “Technical Accounting and Consulting/Implementation Space” that’s been split among the Big Four – but it’s harder when you don’t have a seat at “FASB” roundtables or other Big 4 only type meetings to be privy to the most recent implementation/accounting issues. Anyone can consult on FAS 133 – or a standard that’s been out for years – but if you were dealing with the latest FAS 167 consolidation issues and the successful application thereof, only the Big Four would be privy to that specific knowledge base (e.g. deferreal for investment companies) before it became public.
For example, Oilsands Quests 10Q from last month states “We plan to remediate the material weakness described above by consulting with an independent big four accounting firm on complex accounting issues and obtain written analysis of the accounting options available to us.” Many hedge fund and other deal documents specifically reference that the audits are required to be performed by a Big Four Firm. It’s a mitigating factor for Boards of Directors (Audit Committees) to assuage their concerns about quality/risk.
I had the pleasure of working for PwC for 6 years and found out through your blog what my future was. I have to say that I was so blind these last 6 years. As a minority, did I really think I was ever going to get to the top of triangle? Most definately not. PwC good luck to you in the future and if I ever have a say in working with your firm in the future you can get bet I will make sure to turn you away.
Many ex-PWC seniors and managers from Asset Management practice are setting their own shops these days….Piedmont Fund Services in NYC or Enetne in DC are prime examples there is a life after Big4.
The disposable worker……………………..Diapers to Deloitte!!!!
http://www.businessweek.com/magazine/content/10_03/b4163032935448.htm
The Jay Leno and Conan O’Brien ordeal reminds me of the November 2009 RIF at PwC. High level guys making illogical decisions. When will these fat cats realize that a pulse survey is not a replacement for rolling up your sleeves and talking to your staff.
Glad to see that Advisory is looking to add around 300 new folks. Gotta love the strategy, nothing like wasting goodwill, talented folks and then spending $10-20K per new hire right after you finished doing a RIF of 260 for those same positions.
That’s exactly the reason why so many people are either looking to leave…..whoever is steering this boat has no clue. So why stay on board this ship.
Until they get non lifetime auditors to run their “consulting practice” (Advisory) then it will continue to be a poorly executing adrift entity. It just makes no sense the way PwC is structured re; Advisory. It will never ever be able to compete with such incompetence.
@Not Moritz
There are some non-lifelong auditors who can run that “consulting”practice. They work for IBM. Ha.
PwC needs to sell or dissolve their Advisory practice and stick to audit & tax. It would not surprise me if that is the path they follow once the BP acquistion doesn’t pan out.
@252- It looks like GT may be more competent than PWC.in this case.
PWC – will probably have to deal with a whole slew of new lawsuits related to years of restatements.
GT- fired for holding to their guns and not giving in to the client.
http://goingconcern.com/2010/02/winners-and-losers-in-the-overstock-restatement/#more-2759
PwC is finishing off its purge of its IFS personnel. However, CFO, Mike Burwell, just stated that there will be another round of IFS layoffs announced at the end of February. I assume this will be to the TAs. He also announced that the Firm is looking to reduce staff by 30% through reductions in hiring and attrition. They are looking to standardized many tax and audit processes in the Tampa center. Once they have the quality to the degree they want it they will then outsource those functions to Argentina, India, China or Singapore. They are hiring tax professionals for the Tampa center starting at at $25K – $30K. The audit professionals are slightly higher topping out at about $35K. These jobs are going away and never coming back. The bloodletting is only going to continue until the economy has recovered and PwC will be about 9 months behind.
For all those reading this and blogging at work, I was contacted by the lovely people at Ethics and Compliance and warned/threatened not to spend time on this site or be very careful as to anything I contribute. They are watching…
StbXPwCer @ 371 —
So the take-away here is that Tampa is the place to be? If you’re in Tax or Audit (or IA, I assume), and you’re worried about utilization, what you should do is jump on the internal project to “standardize” the processes in preparation for outsourcing. That’s what I hear you saying.
Do the relocation. Chances are, Tampa’s got a lower cost of living than wherever you are at the moment. Plus, no travel!
Also, you can have a job for life working on standardizing the processes … because you can always argue that the processes are not at “the quality to the degree they want”. Until the processes are at a high enough quality level, outsourcing would represent an unacceptable risk to the firm.
Thanks for the tip. I hope PwC staff consider your words and jump on that internal project code with both feet.
— Tenacious T.
Rumor has it that PwC Advisory in NYM let too many people go in November as the market began to recover, now there is not enough people to do the work (especially in FS). And I think they did not anticipate the number of people that decided to get out before the next round of layoffs. I think I hear bonus referrals around the corner to stimulate hiring – LOL.
It’s no secret that the creation of the TA role in advisory was a failure. One year later, leadership has decided to attempt to fix their mistake by yet another new creation for TA’s – A TA “pool”. All TA’s will be grouped and sat together in a designated area (middle of the floor) on floors 6-8. Managers and Directors will request help with projects via a database (to be created) and walk-ins will be accepted. Sounds very 70ish. I’m seeing and hearing the frustration of many TA’s…..if this pool proves to be another failure….you know what and who is next to receive pink slips.
@TheTAPool
Actually sounds very un-professional. Are TAs earning overtime?
fm
I believe TA’s are hourly employees and get paid overtime, but it’s frowned upon. The team leaders will give any TA working OT a lot of cr@p, as they expect them to get all the work done between 9-5. When I was there, a lot of TA’s would just eat the time to avoid the harassment. I think I read in one of the posts that McKinsey came up with the TA idea, similar to the “market team concept” and we all know how well that worked out. I wonder if they brought Mckinsey back in and paid them another big consulting fee to retool things.
More terminations at PwC..150 IFS staff will receive pink slips at the end of the month. The new model for the TA position will be rolled out later in the month It will operate like a “service center” the TAs will sit together in a designated area on 3 floors, each floor will be assigned a coordinater who will monitor the database that will be used to request work from the TA service center. You’re right Francine, it does sound “unprofessional”. The TA’s have seen their share of changes and challenges and it is evident by the low morale amongst them. If this fails….then what?
I was with the firm for 12 years and it troubles me that the firm would gamble its future in Advisry by buying assets of a company on the brink of bankruptcy and contracts with no real value left and leave “veteran” employees in the wind. lets face it these BP folks have been around the chopping block before. I know a guy and you know one tooo, who proudly says he’s work for all the Big 4 and hasn’t spent more than 2 years at each. They are like energizer bunnies.
At some point Advisiory will have to demonstrate they can make money for the firm. Maybe this was their last ditch effort to do so, by buying some of BP’s contracts…. If it doesn’t happen then it’s time to carve-out Advisory and sell and go back to the white board, or better yet call in McKinsey for another consultation.
FtM @ 379,
Please explain to me how PwC’s Advisory practice doesn’t make any money for the firm, when its standard hourly billing rates are three times what Assurance charges and it has zero litigation exposure and practically no practice protection costs? Walk me through that logic again?
I can do realization vs. utilization math too. So don’t try that one either.
— Tenacious T.
@380
I won’t pretend to know the specifics and I have to qualify that the comment is toward the US only. From what I gather the internal costs are too high as they hired to grow market share in the US. Advisory leadership was aggressive in hiring between 2003-2007 and hired in anticipation of the workload, many of these hires were catalyst hires who were industry experts and highly compensated. They had very agressive growth targets (ask any Advisory professional who worked during that period and attended Advisory University). Oh, and don’t forget the cost of Advisory University. In short they always had more bodies than work from an overall Advisory perspective, but there were some niche practices that did very well.
I too was also under the impression that Advisory was profitable until I heard it from a senior member of the firm. So take it for what it’s worth.
FtM–
If PwC Advisory is not profitable, it can only be from a couple of reasons. One, when you RIF staff who are 100% utilized, that’s not smart. Two, when you RIF “industry experts” who have multi-million dollar engagements in their pipelines, that’s not smart. PwC Advisory did both those actions and more over the past 3 years. Fact.
There are some other partnership games that could have been played. Now, I’m not saying that PwC did this, but what if one spread practice protection costs equally (i.e., evenly by partner head) instead of where the risks are? What if one spread litigation costs and loss reserves equally rather than where the litigation exposure is? That would have the effect of making otherwise profitable LoBs look bad while otherwise margin-weak LoBs look good.
Again, I’m not saying PwC did that. But if it could be done, would you say it would be from a top-down mandate from the Senior Leadership Team, or from a democratic partner-wide vote? Certainly it would be done in the name of equity and fairness, right? Shouldn’t every partner share equally in the revenues and equally in the losses? I’m sure that is the principle that guides so many of leadership’s decisions….
Or, you know, maybe you’re right. Maybe PwC Advisory sold the firm on aggressive growth, which could only be achieved by aggressive hiring. You can’t sell hours you don’t have, right? PwC Advisory created a strategy and sold it, then couldn’t deliver the goods. My opinion of PwC’s leadership acumen is a matter of public record on this site. By no means would I be shocked if PwC Advisory Leadership “screwed the pooch” as they say.
So PwC Advisory missed their revenue and margin targets, and then they bought half of Bearing Point because … well, I’ve already posted my theory on that decision. It’s one of my many, many (too many) posts on this site. But “double down” on a weak hand is only the wrong strategy if you’re in it for the long-haul. If you only need a year or two more before you’re age 60, then it might in fact be the winning strategy … for you.
I’ve got friends all over the Big 4 (as well as GT and several regional firms) and none of them are particularly thrilled about their engagements, their careers, or the decisions of their leadership. It’s not like PwC stands out from the others on that score. But if you can’t make money billing 1st years out at $150 – $200 per hour, then I’m thinking you’re in the wrong business.
— Tenacious T.
Need some help for a story I’m working on…
Looking for a step in a methodology or policy/procedure for auditing hedge funds that says how often auditors should be going to the investment advisor/broker/custodian’s premises and kicking the tires. When/how often should they be performing detailed testing versus just inquiry? This doc tells others how PwC interprets AICPA guidance, but looking for internal policy and procedure.
http://www.pwc.com/en_US/us/alternative-investment/assets/0407_au322.pdf
Thanks!
Next week should be an interesting week as PwC Advisory releases annual review results.
Any news on a Veteran’s Day in pwc Advisory for 2010?
@Follw_The_Money
Whoa. I forgot that day is coming up. They would not be so stupid to… Nah.
@Francine
I hope you are right that they would not be so stupid. Often pwc advisory makes decisions that don’t make logical sense.
Ipad’s!!! All is well!
A little more than a year since the last post…. any new thoughts or opinions on the state of PwC Advisory?
Major hiring spree – to the point that new hires in smaller markets are being shipped to bigger markets….. as the smaller markets don’t have enough work for them. Call it growing pains………or being presumptuous. I believe history always repeats itself……we’ve seen this before….then in 2008/2009 – well….read the older posts. I’m curouis if there has been any other news regarding more outsouring. IT was hit awhile ago – wondering if some other areas are soon to take large hits as well soon – remember – the last group was part of a “strategic” plan. And then again – June will soon be here – that’s always exciting!!!!!!!!
yea, I know there is a bit of a hiring frenzy. I have some friends trying to draw me in, and I’m thinking about it, which is why I was soliciting thoughts on the current state. I’m thinking management consulting, specifically. I have experience in public – both at PwC and Grant Thornton. I’ve been in corporate IT Strategy for about 5 yrs, and I’m getting bored. Economy is picking back up, and seems like a good time to jump. As much political BS as there is in public accounting / consulting, there definitely is not a lack of young, smart, driven people and I miss that. But I also don’t want to get my head cut off 6 months after landing.
Like everything, you need to weigh the pro’s and con’s. Since you were with PWC before, it should make your decision easier since you know what you are walking into. Personally, iI would say if you were to proceed, do so with caution. The numbers being hired are exteremely high….that always concerns me. Francine – your thoughts????? You always seem to have good insight.
In SIngapore PwC, the treated the IFS staff like shit!!!! Especially toward the GTS low rank staff !!! Fuck them !!! Those stupid assholes that worked in the office environment dont even known how to hook up a projector to a laptop ! What a stupid fool of those highly educated staffs !!!!
It might be interesting and definitely serve as an outlet for EA’s and TA’s (especially) to revisit the birth of the TA role then the birth of the Business Support Team (BST) and NOW the possible demise of the BST. No more lies, misleading utilization numbers, cover ups and threats to TA’s i.e., if goals aren’t met = termination. Who is the genius who figured 90% of TA’s would have to be terminated because vast majority are not reaching utilization goals? The truth hurts! BST is a failure and it wasn’t brought down by TA’s.