PwC commits to full recommendations list of independent report
The Ziggy Switkowski report into culture and governance at PwC has been publicly released, with the firm committing to its full suite of recommendations including the appointment of an independent chair.
PwC will accept in full the almost two dozen recommendations contained in Ziggy Switkowski’s independent report into the firm’s governance, culture and accountability frameworks initiated in the wake of PwC’s government tax breach scandal, with the former Telstra chief outlining a “growth at all costs” mentality which had pervaded the firm and an unchecked concentration of power among its most senior ranks.
Indeed, while assigning blame for the ethical breaches was beyond the report’s terms of reference, Switkowski’s findings focus heavily on the position of CEO within the partnership and other power politics.
“Culturally, the generally accepted view is that the CEO runs the show,” the report states. “During a long period of commercial success, this has translated to a reluctance of partners to challenge the CEO, even at senior leadership levels.”
The report further notes the “long term relationships and reciprocal obligations” of a typical partner on the board, yet it seems some members have pointed the finger back in the other direction, described as perceiving themselves as “more junior” to the CEO and those in senior leadership roles who have the power to influence pay and career progression. Some were said to make or override decisions from “outside” of the executive boardroom.
More broadly, the report found the firm’s aggressive growth agenda had led to an internally competitive culture where “revenue is king” and partners in varying departments felt anxious and pressured to meet financial targets and make borderline unethical business decisions, with the rules not always applying to certain high-grossing individuals or “rainmakers” who are perceived to be “untouchable” and excused for their poor conduct.
In response, PwC has pledged to appoint three independent non-executive directors to its governance board (the report suggests a preferable majority), including a non-executive chair, with the board to be given the appropriate level of authority to appoint and remove the CEO as well as greater hand in leading a revised electoral process.
PwC will also appoint a new chief risk officer with significant corporate experience from outside of the firm.
Other major changes include a commitment to publish comprehensive, audited financial statements by late 2025 as part of a broader move toward a more AXS-style of corporate governance wherever its principles can be feasibly applied to a private partnership. PwC will also overhaul its partnership performance and pay assessments, with a greater emphasis on non-financial factors such as integrity, culture, client focus and collaboration.
“We realise the challenge ahead, but we also view it as an opportunity to start with a blank page, working with our stakeholders to set a higher bar for our industry,” stated CEO Kevin Burrowes. “We now know that an environment, driven by leadership, where pressure to perform was paramount and a culture that promoted aggressive marketing was allowed to infiltrate the business, meant that profit was placed ahead of doing what was right.”
