[UPDATE, 26/10/2011, various sections of this post have been updated following the emergence of new information overnight]
Less than two weeks after the resignation of its China Practice leader, KPMG has delivered a broadside to hardworking staff by indicating it needs to shave headcount. At 10:00am today (eastern standard time), KPMG staff were directed to the firm’s intranet to watch a video featuring the firm’s Australian CEO, Geoff Wilson.
In announcing the wide-ranging programme, one anonymous source told us that Mr Wilson made the following arguably contradictory statements:
“overall things are going well…I am committed to KPMG being the best firm to work with … I am confident about our future … the pipeline is continiung to grow … [there has been] a slow down in growth … the current market is uncertain … [we need to] look at our business model … tighten our belts [and address] pockets of under-utilised resources.”
In the video, CEO Wilson confirmed that staff have been presented with an option to voluntarily be made redundant, in which case they’ll receive 4 weeks pay + 2 weeks pay per year of service, or an option to volunteer for part-paid leave. Under the latter option, voluntary leave must be taken in minimum 2-week blocks up to a maximum of 12 weeks and taken between 14 November 2011 and 30 June 2012. Participants in the leave scheme can receive 30% pay and take an immediate reduction in salary for the duration of the lease or elect to have pay reduced over a longer 6 month period.
KPMG Email Fail
We contacted KPMG for comment, sending the following email to the firm’s head of communications (and her underlings):
——– Original Message ——–
Subject: URGENT: Request for comment
Date: Sun, 23 Oct 2011 23:30:51 -0400
From: news@firmspy.com
To: <ksilva@kpmg.com.au>
Cc: <talexander1@kpmg.com>, <mkhouri@kpmg.com.au>, <ncausley@kpmg.com.au>, <kerrylittle@kpmg.com.au>, <avilyntan@kpmg.com.au>Hi Kristen (& ors),
We would like the official media release (if any) that attended today’s announcement re voluntary part-paid leave & voluntary redundancies. If there is none, can you please give us a comment on what went down at 10am?
What will happen if take-up is low? Will there be involuntary redundancies?
We’re intending to publish something in the next couple of hours so an urgent response would be appreciated.
Regards,
FS
We received the following unwitting reply-all email blunder:
——– Original Message ——–
Subject: Re: URGENT: Request for comment
Date: Mon, 24 Oct 2011 14:59:44 +1100
From: “Silva, Kristin” <ksilva@kpmg.com.au>
To: <news@firmspy.com>
Cc: <talexander1@kpmg.com>, <mkhouri@kpmg.com.au>, <ncausley@kpmg.com.au>, <kerrylittle@kpmg.com.au>, <avilyntan@kpmg.com.au>I am going to rec to geoff we ignore. Any response legitimises the site. Keep u posted k
Foreshadowing an email to the CEO about correspondence received from FS? Talk about legitimising us in the most incontrovertible fashion. We sent the following reply, of course copying in CEO Geoff Wilson:
——– Original Message ——–
Subject: Re: URGENT: Request for comment
Date: Mon, 24 Oct 2011 00:46:09 -0400
From: news@firmspy.com
To: “Silva, Kristin” <ksilva@kpmg.com.au>
Cc: <talexander1@kpmg.com.au>, <mkhouri@kpmg.com.au>, <ncausley@kpmg.com.au>, <kerrylittle@kpmg.com.au>, <avilyntan@kpmg.com.au>, <gwilson@kpmg.com.au>, <geoffwilson@kpmg.com.au>, <geoff.wilson@kpmg.com.au>
Geoff, is that you?Dear Kristin,
It’s a bit silly to think we’re illegitimate when a good many of your staff read us daily, figureheads from major law firms regularly correspond with us, we have in the past dealt with the head of comms from PwC & Deloitte, and, if nothing else, the AFR thinks we’re “legitimate” enough to write:
“the hottest topics in professional services these days stem from gossip published on the Firm Spy website – Australia’s own Wikileaks for lawyers and accountants” (12/7/11). [ED read the full FS AFR Article]
We’ll very begrudgingly overlook this reply-all blunder of epic proportions if you come back to us (pls do so quickly b/c we want the scoop – well, we’ve already got it but want it to be as balanced as possible).
As stated on our site, we’re trying to be more mature in 2011 and part of this involves firms dealing with us, like what we’re inviting you to do here.
Have a think about it. If we don’t hear back from you by 6pm Eastern Standard Time, we’ll assume we’re still on non-speaking terms.
We really hope to hear from you.
Regards,
FS
Well, we didn’t hear anything. [UPDATE: but apparently Kristin has been hearing quite a bit about this fiasco. We received the following tip-off yesterday:
An amusing story out of the PR debacle - apparently some KPMG staffers have taken to ccing Kristin Silva into all their inane personal emails to each other. She asked them to stop - but they decided to "ignore and not legitimise" her lol.]
Good thing there’s plenty of KPMG spies willing to dish the dirt.
KPMG Spies Reveal Employee Worry
At 7:50am this morning (Eastern Standard Time), we received the following tip-off from a source going by the apt pseudonym “KPMG Gossip”:
KPMG Tips:
KPMG to launch ‘voluntary part-paid leave’ and ‘voluntary redundancy’ programs at 10am today.
Yep, that email arrived 2 hours before staff were advised (aka a leak from the upper KPMG echelons). “Tick Boom!” we hear Neil Cannon yell as he responds to questions of our legitimacy – “they knew about the redundancies before any staff did!”
Tipster 2 (after 10am):
Gfc2 hits. KPMG have just released a video offering voluntary part paid leave and “voluntary” redundancies.
Not quite GFC2 yet, but we’re already concerned that we’ll see some of involuntariness creep into the “voluntary redundandies” that we saw in GFC1 (click here and here).
Tipster 3:
Have just heard that one of the Big 4 has started rolling out “voluntary work options” as of this morning, and another of the firms has let slip that they will be doing the same within the next week. Strong emphasis is on early retirement and part-time work – no one wants to bring up the R word quite yet, though there are already rumours some firms are getting ready to cull under-performing consulting teams.
Precautionary measure at this stage – but still an ominous sign.
Please email us if you know more about the movements at other firms.
Tipster 4:
Mass redundencies and volutary leave offered at KPMG Australia wide!
Simply because of ridiculous and totally unrealistic targets set in 2011 (some were up to 20% increase from last year) by the inept partners, KPMG are well behind budget and as of today (24 Oct 2011) Geoff Wilson (CEO) sent out a lame and unemotional video offering “flexible work arrangements” around Australia.
KPMG partners need to realise that employees will walk across the road to firms with better pay, conditions and opportunities instead of remaining at the ponzi scheme known as KPMG.
KPMG pay the least of all the big 4 firms at all levels, except partners of course, and have recently begun replacing seniors who left with graduates and undergraduates as a way to keep bums on seats. I wonder how clients would react if they knew an 18 year old first year uni student was doing their advice, audits and tax returns instead of the experienced employees contained within the engagement letters?
Ce le vie KPMG. I’m going to EY.
Tipster 5:
Further to an earlier tip today KPMG are now holding firm wide information sessions for staff on the voluntary redundancy and voluntary part paid leave program.
Government clients are effectively propping up the firm, and staff in the government advisory area have been told that they have nothing to worry about, that the action is targeted at the Transaction Services part of the business (where staff utilisation has apparently fallen to 26%) but that the offer has to be made firmwide for legal reasons.
Tip 6:
I think we need an #occupyKPMG campaign to protest against Partner greed. Shouldn’t this [business review] include reviewing partners peformance and giving the golden handshake to partners that can’t generate enough work for their staff underneath? KPMG is top heavy not bottom heavy. Furthermore, how about setting realistic targets to sustain the business through tough times rather than implementing part paid and redundancy schemes every time there is a downturn?
KPMG is applying for the Women’s Employer of Choice accreditation yet as one tipsters points out one of the target audiences for the cull is KPMGs part time workforce which if I am mistaken would largely be made up of……women. Employer of Choice – the choice is either redundancy or part paid leave, both voluntary though ladies.
The Shadowy Business Case
If staff utilisation in the Transaction Services Team has truly nosedived to 26%, then yes, there’s little doubt that a business case can be mounted for a voluntary redundancy scheme. In fact, we’ve had word from another source within KPMG that the scheme is intended to slash headcount within Transaction Services, consistent with the comments above, but this doesn’t explain why the firm is also offering voluntary part-paid leave. Moreover, if the firm is hanging onto staff within Transaction Services, it sounds like they might be expecting a utilisation uptick , in which case the current under-utilisation might reasonably be treated as the kind of workload trough that is the ordinary constituent of a major business. Not, that is, cause for widespread and distressing action
The stats certainly suggest KPMG can weather the storm. In FY 2010/2011, KPMG recorded revenue of $1.064billion, up 11.1% year on year. This compared with FY 2010/11 revenue of $1.43billion at PwC (up 14.7% from FY 2009/10), $1.052 billion at Ernst & Young (up 14.8%) and $935million at Deloitte (up 14%). Double digit growth across the Big4 certainly does not, in our view, warrant broader redundancy programs. We hope this is an isolated case.
Last Time Around
On 18 February 2009, KPMG announced the redundancy of some 101 staff based in its Sydney and Melbourne offices. At the time, we made the following portentous comment:
PwC [are] the only firm thus far to have wielded the GFC axe. The Price partners swung the axe in uncompromising fashion over two periods; before and after xmas. No doubt KPMG staff are wondering if there is 99 redundancies yet to be made …
To our dismay, on 8 April 2009, KPMG indeed sacked another 99 employees. An anonymous insider sent us the following comments:
everyone thought the first round would be enough but now, after this second one, there is more concern than before that there will be third and fourth rounds… Everyone is now at fever pitch trying to show their value to the partners so that if more sackings come they will be favorably placed.
Back then, the situation was vastly different. KPMG posted FY 2008/2009 revenue of $1.02billion, up 1.4% year on year, roughly 75% lower growth than this year’s receipts. History will show that redundancy rounds 3 and 4 never materialised, unless you count this latest episode.
Moving Forward
Applications for Voluntary Part Paid leave are to be received between 1 Nov – 2 Dec. The Voluntary Redundancy scheme has similar application dates. Exit dates are 2, 9 or 16 December. State-based KPMG Christmas parties are mostly held the day before the office closure period so staff exiting will be asked to leave the building the week prior to the Christmas parties. This should tie things up nicely with no departing staff getting the opportunity to use the Christmas festivities to, for example, pour a pint of beer on the head of the CEO.
No doubt all KPMG staffers, but particularly those in Transaction Services, are currently deliberating over a difficult decision. We know of one employer where lucrative career opportunities might be found. It is a private equity firm known as EMR Capital, and is headed by Jason Chang – the recently-departed head of KPMG’s China Practice.
The AFR (17/10/2011) made the following assessment of his departure:
The head of KPMG’s China practice, Jason Chang, has resigned to start his own private equity firm, leaving a real dent in a key growth pillar at his former firm.
Perhaps it was Chang’s departure and the concomitant downgrades in the firm’s China practice growth prospects that precipitated the current redundancy scheme. We’re confident that most clients of the KPMG China practice will be underwhelmed by Chang’s replacement – Doug Ferguson – who is an internal promotion and is to be based in Sydney.
Be sure to share your thoughts in the comments below.
We’ll update this post as more details emerge, so be sure to email us (news@firmspy.com), or anoymously if you wish.
Send the Firm Spy your news and views!
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I was one of the “unlucky” (not!) 99 to go in April 2009. The place is completely ridden with transparent muppets!
Just wanted to extend my sympathies to my accounting counterparts.
Too many firms (law and accounting) are far too short sighted when it comes to redundancies. So many law firms shed staff through redundancies during the GFC, only to now find themselves in a position where they can’t recruit enough staff now.
I wish partners at these firms looked beyond their drawings for the next year when making decisions that affect their staff.
Your comment implies that there are (assuming big) firms out there which are not? Point me in that direction good sir/ma’am!
It’s a valid question for graduates to ask of firms when applying for jobs: how else can you get an idea of (a) how secure your job is (last in, first out) (b) what you can expect to get if you’re chopped off at the legs.
Whole tranches of graduates were let go in GFC1 but there were some firms that took a different approach and made no redundancies.
I worked for PwC for a few years and received a promotion just as we were going into the GFC. Only a few months later, just after the senior partner retired, the junior partner from my division pulls me into a room and asks me to leave without redundancy and only 4 weeks notice, citing poor performance, however I do not feel that there was (a) any significant evidence of poor performance or (b) sufficient opportunity to prove myself in that role due to only occupying it for a very short period of time. Their policy is very clear regarding the fact that you must demonstrate all of the qualities necessary for that role before you get it and I had some great appraisals on file, so there was no basis for what he did. There were other policy breaches as well, so I got HR involved and they said that whatever had been said at that meeting, I was still to continue as an employee. They seemed quite shocked when I discussed what had happened and showed them my appraisals. The whole thing became a fiasco. At one stage we were threatening legal action. One thing I learned from this is that you have to remember who pays HR, despite how independent they say they are. Regardless of the outcome of any deliberations, my position there was ultimately untenable, and they were only too happy for me to take time off to go to job interviews because all they really wanted to do was lower the head count. They probably thought I would go quietly and didn’t want to add me to the number of redundancies officially published. My Director and coach who worked closely with me on most of my assignments was appalled too and he and a few other managers quit shortly after because there were a lot of ill feelings at the time over what was happening.
I was also at a mid-tier firm shortly after where the Partner I worked for didn’t even have a CA or CPA and was doing some unethical stuff like claiming to be an expert on stuff he knew nothing about. I actually had to teach him everything about most of the reviews we were doing because he’d never received proper training or had any experience in that area. The guy only cared about money and low-balling other firms for it – his staff would do the work and he’d just sign off the reports. Some days he just wouldn’t come into the office if he didn’t feel like it. To him it was more of a sales job, so trying to sweet talk clients was all he cared about. The story of how he became a partner is actually comical but that’s another story… An experienced, professional, CA qualified manager who worked there did the right thing and challenged him, but guess who won and who swiftly became unemployed? I really felt sorry for her.
I have moved to much greener pastures in industry and would encourage KPMG staff to perhaps look at this as a get out of jail free card if they can find a new job at short notice – start looking now, the economy is not that bad. It also looks better to leave on your own volition than to be forcibly removed. Take your skills and ambitions elsewhere to a place where they will be appreciated and you will be more appropriately compensated. I still can’t believe that I can go home at 5 now, I get a lot of praise for my ideas and the hard work I do, and have a work free weekend. 3 years on and I am earning 50% more, get lots of additional benefits, and I can see tonnes of opportunities just in the business I work for alone. My friends in the Big 4 from the same year group are still wallowing at virtually the same position as I was in when I left.
There are a lot of good people at these firms, but at times the culture in certain silos can be very sick, especially when things aren’t going their way. My feelings are that a lot of the good people get weeded out through incidents like these and you can be left with some scumbags. Don’t spend your life chasing partnership to feed off industry – contribute to a real business. There are plenty of people out there who earn more than a partner while having to do a hell of a lot less sucking up and who carry fewer burdens and liabilities. Maybe aim for that.
@Undergraduate
Word of advice. Before joining any firm, do your homework. If you have friends in a firm, take what they say with a grain of salt. They’re probably going to tell you how good things are at their firm, so you join and they get a sign on bonus (most Big 4 still have referral bonuses for staff).
Blogs and sites such as this are good, as people are like to give more information if it is anonymous. You can generally get a good feel for the vibe of a firm by reading through the posts. For example, PwC doesn’t get to many bad posts, generally limited to a specific issue. On the other hand, BDO gets hammered by ex employees. Any firm that can apparently sack a Partner, manipulate votes on this website and invoke such vitriol from ex staffers and the Brisbane accounting fraternity has something to hide and probably wouldn’t think twice about sacking a grad.
Good luck on the job front.
@AnonymousFormerBig4
very good insight to the big4, I too worked for PwC and saw some of the most disgraceful things happen to good people. I could not be happier that I moved on, things are far better for me now. I witnessed bullying, under-handed promotions, hiring of friends rather than qualified people and other rubbish about what they did for work. The most comical was the so called ‘leadership offsites’ where the disfunctional leadership team would go over old rehashed material for the smart people who had left ages ago.
Even on the way out I had issues – HR do work for the Partners and are not concerned with the general staff wellbeing, it is only a matter of time until something happens to staff and they will face legal action in the media again.
For the KPMG team – start looking now, there are good opportunities outside of that toxic environment.
Good Luck!
Dear FS,
I think there is a bug in your system, because all the votes (no matter how many are made) balance at 0. It is the same for a couple of other posts as well.
Just thought you would want to know.
PS, I also worked in PwC. When I left, 25% of the partners had a non billable role. They were “head of mining infrastructure’ or ‘head of aquisitions’ or ‘head of the tuckshop’ etc., all of which involved swanning around the countryside and long lunches.
Given these type of ‘initiatives’ are generally targeted at those who may be tempted by an early exit payment (working mums, mature age) I would recommend individuals give this some serious thought, particularly those over the age of 45. While many employers dismiss the notion of age discrimination, the research doesn’t support this view with those over 45 likely to be unemployed up to 3 times longer than those under 45. So, before you take the cash, understand where the market is and what your intentions are. If you intend to retire and be done with 9-5 then this might be the right choice. If not and you need to get back to work do some research as to how employable you are. Your skill set may not be as “in demand” as you think. At Adage, we target experienced workers over 45 and connect them with ‘age friendly’ employers and we have seen many jobseekers come to us after struggling to find work after taking a voluntary redundancy.
I was in KPMG when they retrenched 200 staff and scaled back hiring of new staff and secondees from overseas during the GFC to cut costs. This shortsighted strategy meant that they then didn’t have enough staff on hand during the post-GFC recovery a year later. They resorted to advertising on Seek and hiring more new grads. But you can’t just replace years of experience with new staff and expect everything to stay the same.
Now it looks like they are at it again. I guess their shortsightedness goes both forwards and backwards.
I was at Kapers for a couple of years. All i can say is that half the partners are a bunch of drunks and the other half are old minded school boys earning everylast cent before retirement.
i mean i understand that they need to cut costs but they need to force retirement of some old partners particularly in tax and allow others to have a go.
I dont trust the partners there they are very cunning and are plain old dogs.
go to another big4 if you are not happy where you are send them a message.
Its funny… I had a big piece of audit and forensic work to farm out to one of the big four and kpmg were at the top of my list for various reasons.
This changes my total opinion about their involvement in my business. I think I’ll be looking elsewhere…
@Reg – if you’re hunting for involvement from an ethical member of the Big 4, steer clear of Deloitte – they tried to push people out in similar fashion described here.
KPMG should leave audit and tax alone and should start with all the excess people it has who have no positive function in the business, like the majority in randomly set up advisory teams who no one has a clue what they do, the many sales/marketing picture makers who can be replaced by a high school student who knows how to use google and the partners who have no skills beyond being able eating lunch.
That should cut out half of the people in the firm and save the people who the firm really need, the accountants!
Move to India to work for an LPO. It’s what the cool kids are doing.
Maybe they should start by cutting back on Partner lunches and conferences?
@anonymous former big 4… Very well said!
I was working at pwc too and got cut during gfc1 with no reason.. And only got the 4 weeks notice… Then like u, I thought let’s try midtier… Just as bad! Like how u said…. Partners know nth! I’m now prepared to quit and leave ca firms.. I’m fed up..
Where r u know? In commerce? Know where is good to look?
But yeah @kpers.. All u kpers out there…. Good luck.. If the unfortunate does happen.. It is not ur fault!! These firms are just shit… There is always other jobs outside…don’t despair…. And don’t just eat the shit! We must all stand up against it to stop it from keep on happening! We should all petition! They can’t bully us like this!!
Astonishing as KPMG keeps rebadging no-good partners (ie those that couldn’t win a piece of work if their pay check depended on it – which of course it doesn’t as each just ‘takes and takes’ their distribution) to “head of this or that” – no value to the firm or god forbid the clients ! one day the workers wont be there anymore to actually make the money for the fat-cats. a people’s business that doesn’t know how to look after its people. get out move to a real life business
@Anonymous 11.03pm…
With the way you write, I am not sure there are many places that would suit you.
I would imagine that if KPMG were prepared to cut some of their under-performing partners this news would be seen in a more positive light. You can’t get rid of the indians and leave the chiefs untouched….. does anyone who works at KPMG know if any partners have left recently? I would bet if they have they have been pushed…..
Just to clarify too that the redundancy and part paid leave options are voluntary right now? If that is the case I don’t see why people are so upset…. some people may see this as a way to retire/go on a holiday etc
When firms like KPMG toss out quality staff during the tough times, how do they expect to attract quality staff back again when things pick up?
I think the most telling sign that kpmg is in real trouble is that there have been quite a few defections to rival firms across all levels, but no movement of staff coming the other way. In my opinion all the big 4 are poorly run businesses that are controlled by a bunch of muppets but kpmg seems to be the worst of the worst.