EY staff in Australia latest in the firing line

25 April 2023 Consultancy.com.au 4 min. read
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The announcement of job losses are coming thick and fast at the world’s largest consulting firms with EY the latest to announce cuts in what is an apparent attempt to claw back losses from its failed split.

The ongoing fall-out from Ernst & Young’s failed bid to split its global audit and consulting divisions looks set to hit Australian shores, with industry publication Accountants Daily reporting that the firm’s local human resources chief Elisa Colak has walked out amid lead service line partners being told to draw up ‘hit-lists’.

While the US branch of the firm last week announced massive layoffs, EY’s organisation in Oceania initially denied that any local staff would be affected.

EY staff in Australia latest in the firing line

“They have been asked to come up with a list of people who need to be performance managed. That’s code for people who haven't hit targets – that includes partners, directors, senior managers; the people who are meant to bring in revenue and are not hitting targets,” the unnamed sources told Accountants Daily, with no-one said to be safe from the purge.

According to the sources, EY is determined to recoup the estimated $600 million in losses pursuing ‘Project Everest’.

A brief summary, for anyone who may have spent the past months in the Saudi Arabian desert watching off-road motor-racing. EY set out roughly a year ago to explore a separation of its audit and consulting divisions, with the belief that each would flourish via a reduction in conflicts of interest and regulatory oversight. That plan spectacularly ran aground this month, blocked by the firm’s audit partners, led by those based in the US with earlier protests from China.

The irony: EY’s audit division couldn’t wait to push its consultants out the door in the wake of the Enron scandal – with the business ultimately sold to Capgemini as the firm picked up the majority of Arthur Andersen’s shattered accounting business. While PwC and KPMG sold their consulting lines to IBM and BearingPoint, Deloitte back-flipped, since becoming the largest professional service player in the world alongside Andersen Consulting successor Accenture.

Still, it hasn’t been a total disaster. EY has since picked up Parthenon and Port Jackson Partners locally to rebuild its strategy consulting business en route to cracking the $40 billion global revenue mark – its Australian business now contributing in excess of $2.5 billion with a local partnership headcount of more than 700. Except, with the firm tragically already under the pump as to cultural issues, some of those partners could now be facing the axe.

At scale, the planned 5 percent reduction in EY’s US workforce if applied to Australia would see the loss of around 400 jobs – after KPMG, McKinsey and Accenture have already made similar moves. The firm may however be saved from the hassle of at least one of those redundancies, with EY Oceania head of talent Elisa Colak reportedly handing in her resignation on the spot after spending close to the past eight years at the firm out of Melbourne.

Accountants Daily cited an internal memo from EY COO Craig Robson stating that the firm would miss Colak’s wise counsel, while thanking her for the massive difference she had made to the business and staff as a driving force through even the most difficult times. “It is with a great deal of disappointment that I advise you that Elisa has decided to take a change of direction in her career and chosen to finish in her role with the firm at the end of May.”

Meanwhile, the publication also quoted an EY spokesperson denying any local chopping block. “There is no question we are in a very different market to the past couple of years, with headwinds and uncertainty ahead of us,” the spokesperson stated. “We are still experiencing solid growth and demand across many parts of our business. We have pulled back on recruitment where necessary. We do not currently have any plans for reductions in our headcount.”