This was originally posted Going Concern.com on August 12, 2009.
…there’s definitely collusion/shenanigans going on amongst the big 4 for compensation along with extending dates for promotions. Ratings manipulation is also going on along with unfair treatment of those that tried to go above and beyond….”
Both Deloitte and KPMG admitted last fall that job cuts were made for economic reasons, removing the taint of “performance issue” from that wave. It’s a small thing, making up for over-hiring, under-managing risks, and sucking in new recruits only to cut them loose a year later.
But layoffs continue and are occurring in greater numbers at all firms. Are there still so many “performance problems?” How can a “business” that only hires top graduates, puts them through one, sometimes two, internships, an extensive interview process, and programs such as “Mass Career Customization,” still have so many “not performing” or “not a fit?” They’re trying to solve a leadership problem on the backs of their employees. For example, they hire, acquire, and over staff practices where there’s no long-term commitment and no shot, such as PwC’s return to systems integration.
Big 4 rates are high to pay for their mistakes and their overhead – mandatory training, generous benefits, empty offices, lobbying and political contributions. They’re higher because they theoretically sell a different product – better, better trained, supported by a global network of specialists, utilizing best practices and state of the art tools and methodologies. So who do you cut when “all the children are above average?”
The answer is: Compare everyone’s performance to each other, instead of to objective criteria.
It’s called “forced ranking.”
“Forced ranking is the antidote to inflated ratings and the failure to differentiate…While conventional performance appraisal systems may allow managers to inflate ratings…a forced ranking system ensures that distribution requirements will be met.”
“Distribution requirements” put someone at the bottom of the list each time. No raise, no promotion, maybe even layoff.
So what’s the downside?
“Forced ranking pits associates against each other…someone still must be ranked low, despite meeting performance plan goals…a dysfunctional and hyper-competitive workplace…demoralized staff and a mistrust of leadership. Discrimination lawsuits…”
The cut-throat, GE-style culture is now embedded in the Big 4. But is that good for their clients? Does it result in better quality audits? Not if you’re the one left behind doing more with fewer people for the sake of achieving partner payout targets. But, “It can’t happen to me because I’m not a loser.”
Until it does.
“Jim’s better than Bob but not as good as Anne.” In a nutshell, that’s forced ranking. Unfortunately, if they don’t get better at forecasting, engagement management, and mitigating audit failure risk, most professionals will end up at the bottom of that totem pole at some point, through no fault of their own.