When the largest public accounting firms in the U.S. had their employees move their battlestations from the office to home in mid-March because of the coronavirus pandemic, we had no idea what was going to happen next.
But some accountants who worked at the Big 4 and the top midtier firms during the financial crisis offered up some clues on the usual chatter sites in early spring about what the firms might do if business dries up, money from clients stops coming in, and the economy starts to tank due to the Rona: they would cut employee pay and reduce partner draws, cut or offer lower raises and bonuses, and cut jobs.
And that’s exactly what happened.
While many employees grumbled about having their salaries reduced for several months and not getting the raises they felt they deserved while maintaining ridiculous workloads, at least they still had jobs. But for a couple thousand people (or more), they were told their services were no longer needed and found themselves unemployed during the worst pandemic in our lifetime.
So it should come as no surprise that our top five most popular posts on Going Concern in 2020 were about layoffs at Big 4 firms—not just in the U.S. but also in Canada.
Layoff Watch ’20: Deloitte Has Begun Handing Out Thousands Of Pink Slips
Practice leaders at Deloitte told their staffs on May 29, two days before the start of the firm’s new fiscal year, that a bunch of people would be getting pink slips in the very, very near future.
Deloitte ended up laying off about 5% of its U.S. workforce, across all service lines, which would impact an estimated 5,000 or so Green Dotters. The layoffs occurred over the course of several weeks.
Based on tips we received and posts we saw on Reddit, the layoffs not only affected low performers and those “on the bench” but also those with high utilization. For example, one person posted on Reddit:
Had my call this morning. Officially laid off/separated. Was told it had nothing to do with performance issue or personnel stuff, just simply due to economic struggles at the moment.
And another posted on Reddit:
Advisory Cyber Risk – just laid off. 11 months at Deloitte, Util was great, had one average rating on scatterplot, but all others were great.
In addition to the layoffs, we were told an additional 1.5% of Deloitte employees would either be furloughed or have their work hours reduced with reduced pay.
Layoff Watch ’20: It’s Pink Slip Day at KPMG
On Sept. 29, two days before the start of KPMG’s 2021 fiscal year, 1,400 people were notified that they no longer had a job with the firm.
Here’s how many people were let go by service line, sources told us:
- Advisory: 396
- Audit: 189
- Tax: 194
In addition, we were told that 125 KPMGers in tax had to take a comp reduction.
The other 620 or so KPMG staffers who were laid off were non-client-facing employees.
Layoff Watch ’20: What In the World Is Happening at Deloitte Canada?
From May until October, there were three rounds of job cuts at Deloitte Canada. The first round in early May impacted more than 500 people in Canada and Chile (Deloitte Chile falls under Deloitte Canada’s umbrella), according to sources.
This was after Deloitte Canada management strongly encouraged people to voluntarily reduce their work hours and take a corresponding cut in pay in order to save jobs from being cut. One source told us the reduced pay options were 20%, 35%, or 50% time reductions, “with a bigger bonus stipend for those who take the more drastic options.”
The second wave of job cuts happened in July and affected nearly 200 people in non-client-facing roles, such as HR, IT, marketing, and administrative assistants.
The last job cuts occurred in October and Deloitte “did it on a rolling basis in the entire month across service lines. They probably did this in advance of the new hires starting in November,” a source told us.
Layoff Watch ’20: Apparently It’s Doomsday for Some at EY
In late August, we got this tip from a credible source at EY:
EY is stealthily laying off people. Three friends, who are seniors, got calls from partners today. They claimed it to be performance based. However, while those people who were not on PIP got fired, some people who are on the improvement program were not let go.
During the first couple weeks of September, we heard from several people who told us they lost their jobs at EY because of performance but stressed they were not on any type of performance improvement plan.
One person who was on the verge of being promoted to senior manager told us:
On Tuesday, August 25th (i.e. only weeks after the promotion discussion), I received an unexpected request for a call from the same counselor with the subject line “Performance Discussion.” An HR representative was on the call as well.
The call was brief where the counselor told me, “This call is to inform you that the firm will be terminating your employment effective 9/8 for performance.” The HR representative then read me what I need to do as part of my separation and how any violations will have legal consequences.
I asked for an explanation as to how my performance changed from qualifying me for a promotion to resulting in my termination. The counselor indicated that he will reach out to me to schedule another call to discuss it. I have not heard from him since.
I reached out to another partner with whom I worked most of last year but he was not able to provide any additional details and told me how sorry he is that this is happening to me.
Since COVID-19 started, we were told by Kelly Grier (EY’s US Chair and Managing Partner) on the monthly calls that the firm has taken necessary steps to avoid layoffs and that performance based terminations will be delayed until September which I guess explains the framing of these terminations as performance based rather then layoffs.
But I worked inhumane hours to qualify for this promotion and was diagnosed with chronic fatigue as a result. So it was disheartening to receive this news and especially in the format it was delivered with zero compassion or appreciation.
While we don’t know exactly how many people were laid off from EY in late August and September, Grier said during a webcast on Sept. 23 that 370 senior managers were let go. She added that in any given year, about 1,000 individuals lose their jobs due to performance, but this year there was a 50% reduction in performance-related separations because of a moratorium put on job cuts early on during the pandemic.
Layoff Watch ’20: KPMG Canada Seems to Be Going On a Pink Slip Frenzy
KPMG Canada may have been the first Big 4 firm in North America to cut a slew of jobs during the pandemic.
Starting around March 30, KPMG laid off about 200 employees throughout the country, with offices in Toronto, Vancouver, and Calgary being the hardest hit.
One KPMGer who lost their job told us they were blindsided by the layoffs:
Yes unexpected and yes we were under the impression that letting people go would be a very last resort and they would do everything they could not to have to do that.
A person who lost their job at KPMG in Vancouver told us the whole thing “was very abrupt.”
None of the managers knew that I had been laid off. I was still getting meeting invites and had to explain to a few managers that I no longer worked there. They had no idea. It really makes me feel like they didn’t put any thought into it before deciding to lay us off.
- An Open Letter to EY Management
- (CONFIRMED) Rumor Mill: It May Have Been a Black Tuesday At Two Top 40 Accounting Firms
- Layoff Watch ’20: PwCer Claims Performance Ratings Are Purposely Being Bumped Down to Make Separation Decisions Easier During the Pandemic
- Layoff Watch ’20: How Bad Were the Job Cuts at Crowe and Baker Tilly?