Consulting firms slashing pay and laying off staff to stay adrift

06 April 2020 Consultancy.com.au

Earlier confident they could withstand the business threat from the coronavirus outbreak, Australia’s leading professional services firms have now been forced into action.

Like most sectors impacted by the coronavirus pandemic, the global consulting industry is facing some tough times ahead, with one early forecast suggesting a $30 billion or near 20 percent hit worldwide. While the Asia Pacific is expected to fare better than elsewhere, and Australia boasts one of the strongest consulting markets worldwide, the local fall-out is already gathering pace – with a series of recently announced job-cuts, pay reductions, forced leave and office shut-downs.

KPMG

Collectively, the Big Four employ upwards of 30,000 professionals in Australia. 200 of those have already been axed by KPMG, with the firm also slashing the pay of its partners by around 17 percent. Previously, the firm told the Australian Financial Review, together with fellow Big Four members Ernst & Young and PwC, that they were not considering reducing the size of their workforces, but like elsewhere the situation in the consulting realm continues to unfold.

Big Four slashing pay and laying off staff to stay adrift

According to the latest reports, KPMG partners and staff pulling $62,000 or more will be asked to take a 20 percent pay-cut between the months of May and August, equating to 7 percent of annual income. The majority of the firm’s around 600 equity partners however have a salary range of between $500,000 and $700,000, and with the proposed cuts and profit distributions coming out to around 17 percent, will be giving up $85,000 to $120,000 of their yearly income. 

“Australia is facing a period of unprecedented volatility, uncertainty, and stress,” KPMG Australia’s long-term CEO Gary Wingrove is said to have told the firm, adding that the redundancies simply could not be avoided. “We too have to make tough calls. And the decisions announced today are geared at protecting as many jobs as possible today, and for the future. I strongly believe these measures will help ward off larger job impacts in the longer term.”

Deloitte

The largest of the Big Four, with a headcount of 11,000 in Australia, Deloitte will be shuttering operations for one week from the 20th of April – with the entire team forced into annual leave. The most ominous aspect however was a separate firm-wide email warning staff to keep up their productivity while working from home, with the suggestion that such would be key to staff keeping their jobs. The firm has also apparently set off on a billing spree to enhance cash-flow. 

“All our employees and partners need to take one week of leave during this period,” wrote Chief Strategy Officer Clare Harding Harding. “You may choose to take the leave during the preceding two weeks if you have special circumstances, including if you have school-age kids with school holidays that don’t fall within the period from April 20 to April 24. Whichever option you choose, please make sure it doesn’t adversely impact client engagements or deliverables”.

EY

In an effort to avoid job cuts, EY has instigated a range of new measures, including slashing discretionary spending, halting recruitment, and cutting the amount of money partners can draw from the business. Still, an EY spokesperson told Guardian Australia that redundancy remains on the cards as a last resort should there be a significant and prolonged downturn in demand, and where redeployment is not possible. The firm also has a crisis management team in place. 

“We have explained to our people that we don’t have a crystal ball and there is significant uncertainty, and that explains our cuts to discretionary spending, the freeze on recruitment and reduced partner draws,” the firm stated, adding that it had brought in resilience experts to advise. “We have also been clear that to protect jobs we will redeploy our people to higher demand areas and provide options for people to modify their work arrangements or scale back hours.” 

PwC

In the latest move among the Big Four, PwC is reported to have instigated a four-day week for its 8,000-strong Australian workforce as of the 1st of May, as the firm continues to cut pay and bonuses. Earlier, the firm had said that it will cut the hours and pay of under-utilised staff by up to 40 percent to counter revenue losses, while the firm has told its ~700 partners that they can also expect pay reductions of between 30 percent and 40 percent to their annual incomes.

“The vast majority of PwC Australia's amazing partners and staff are now operating remotely, and I am so incredibly proud of the way we are pulling together, improvising and helping each other as we work to support our clients and each other during this unprecedented crisis,” said PwC CEO Luke Sayers, who will hand over to Tom Seymour in July. “Also massive shout out to our digital team who are making our working from home experience a seamless one.” 

Grant Thornton

Mid-tier accounting and consulting firm Grant Thornton, which has around 1,200 local staff,  has also asked its partners to accept pay cuts from 20 percent up to 50 percent, while almost all of its regular staff will bear the brunt through reductions in their hours and pay. Speaking with the Australian Financial Review, Grant Thornton Australia CEO Greg Keith said that the measures were aimed at avoiding or reducing the number of staff cuts that would be required.


×