Monday, October 26, 2009

The Big 4, the Recession and the Redundancies (My Perspective)

Let me just say this first – to those who lost their jobs, whether in the Big 4 or not, you have my sympathies. In these difficult times, losing one’s job is a very difficult (and scary!) experience. For those people’s sakes (and for others as well), I really hope that the recession will end in the (very) near future.

Okay, so you just might say “What the…! What is this blog?” Settle down. I just wrote that first paragraph because well, these are really hard times and those working in the Big 4 are not immune to the effects of this recession.

In fact, after reading through some blogs / posts and some articles over the Internet, Big 4 firms around the globe announced employee reductions as early as last year and as late as the second quarter of this year! These firms may have been late in such announcements, but they are catching up in the redundancy wagon and they are catching up fast!

That said, I just really want to write a blog (a rambling blog, if you want to call it that) about the Big 4 and the effect this recession has on them.

In fairness to these Big 4 firms and from what I read, they tried (as much as possible) to avoid these redundancies. I mean private companies shut down or laid off as early as 2007, with the bulk of them (the most controversial ones at that) doing so in 2008. But the Big 4? They held it off for as long as they could, going to the extent of implementing other cost-cutting measures (like flexible working hours) just to avoid the staff cuts.

But alas, the hard times caught up with them and all four have no choice but to let go. Sure the redundancy rates are small but if you compare them to the thousands of people employed by these Big 4 firms, the number can also be quite large.

But then again, on a positive (if you want to call it that) note, I haven’t seen any indication that any of the Big 4 firms implement freeze hirings (unless I’m wrong about this, feel free to correct me) and I really don’t think they should. Why? Because it backfires.

When a certain continent experienced a financial crisis more than a decade ago, some Big 4 affiliates reduced their new hires to the bare minimum (like only 20% to 40% of the usual number of new juniors). After less than 5 years, this continent’s economy picked up and the Big 4 affiliates realized their mistake, a mistake even one country managing partner admitted in a speech. By reducing their new hires during the 1990s, they now had fewer experienced people to promote to seniors and managers, and even partners!

On the other hand, I remember when I visited my old office a few months ago. I talked to a friend of mine still working in that auditing firm. She was a manager when I left the firm, now she is a partner. I asked her how the crisis was affecting them. Her answer was the firm is still doing okay (not excessively well, but just okay) but…here comes the tricky part – they were now on the evaluation stage for the new juniors and they were going to be quite brutal about it. Meaning? They were going to weed out those juniors that they think are not good enough and replace them with a new batch of faces (which legally they can still do since these juniors are still classified as “casuals” or “temporary”). They can afford to because there are already a lot of applicants (unlike before when we had to scramble to get new ones) who may be better than the ones they have now.

The above just goes to show that in good times, being a good junior (or a good auditor) will guarantee you a place in the Big 4. In bad times, being a good junior does not cut it; you have to be an exceptionally damn good junior because there are other applicants out there who are more than willing (excessively eager, in fact) to take your place.

It’s harsh, I know, but this is how it goes. And this ends my ramblings, uhm, I mean my blog. Good day and cheers!

4 comments:

  1. I heard that the graduating class of this past spring at the University of Arizona got kinda screwed by PWC. Allegedly (this is through someone that worked at a place I interned at) PWC had extended job offers to some graduating seniors in Accounting in Spring, but then due to the economy or new layoff policies, they yanked back those offers partway through the summer, leaving those students without any offers because they had already declined other ones and nobody was recruiting anymore.

    Also, from another source I heard that of the forty spring graduating Finance seniors from the University of Arizona, only four found full time Finance-related job offers.

    Again this is just what I heard through the grapevine.

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  2. Big Tuna, that's harsh. I can't wait for the recession to end (officially) so that we can put all these behind us. Unfortunately, from what I've been reading, the Big 4 will still feel the effects even after the recession ends.

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  3. That's disheartening to say the least. I saw a popular Regional firm in my area looking for contract CPAs for tax season. One can only imagine how many in the tax dept. got aid off only to see the company advertising their job on CL for less money and no benefits.

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