According to reporting across the pond (including this story from City A.M. we shall be quoting in a moment), KPMG UKers are not going to have a fruitful bonus season due in large part to a slowdown in business.
KPMG has slashed the bonus pool of its UK workforce and reined in commission for salespeople as its profits falter amid a slowdown in the dealmaking environment this year, City A.M. has learned.
The big four firm told staff in its mid-year update last week that some bonuses would be slashed by as much as half while sales staff were told their commission could be held back until the end of the year.
In a note to staff seen by City A.M., bosses told workers that while the company had seen “double-digit growth in many areas of the firm” it had “not been as high as we’d planned”.
“This means that our profit, and our bonus pool as a result, will be reduced on our original expectations,” bosses said.
Staff in the firm’s UK-wide business development team were told yesterday that the company would hold back 40 per cent of total discretionary commission until the year end, but it could not guarantee they would be paid the full amount, a source on the call told City A.M.
Staff were already told in March there would not be mid-year promotions in 2023, in audit anyway.
While we haven’t seen any communications here in the US yet, a tipster did advise us that KPMG bonuses on this side of the pond may be light as well. “No bonus to some and bonuses will be less for others,” they said. Those who brought in business will for sure see a bonus, they added. That’s as yet unconfirmed but our tipster is solid, reach out if you have more info.
Last year, KPMG US was quite generous with mid-year raises on April 1. The market has shifted dramatically since then as firms across the board are seeing a significant contraction in consulting fees and lower-than-expected attrition due in part to a cooling off of last year’s scorching hot accounting job market. Will be interesting to see how things shake out in October, here’s some Reddit gossip about that.
2022’s generosity was also spread to our friends across the pond when KPMG UK handed out £2,000 ($2500) or £4,000 raises to 15,800 staff, costing the firm £51.7 million. That’s on top of a £100 million bonus pool. Wrote CEO Jon Holt (who took home £2.7 million in 2022) on LinkedIn 13 months ago:
Because of our people’s efforts, and the work they do every day for our clients and communities, our business is performing strongly and we’re making great progress on our strategy. And we want to recognise that contribution and address some of the immediate pressures on them.
So I was really proud to announce to our colleagues yesterday that everyone in our firm will each receive an overnight flat salary increase of between £2,000 and £4,000. It’s progressive and we’ve deliberately designed this so that our more junior colleagues feel the greatest benefit now. This is separate to our annual pay review later in the year and doesn’t include our partners or associate partners.
This came months before the firm announced revenue of £2.72 billion ($3.4 billion) for the year ended September 30, 2022, a 12 percent increase over the year prior. Deal advisory saw the biggest jump, increasing 24 percent to £443 million ($555 million). Audit, Tax and Legal, and Consulting also saw double digit growth of 10 percent, 13 percent, and 22 percent, respectively. When revenue numbers came out in January, it was expected that consulting would continue to drive growth, meanwhile KPMG UK told audit clients they would be raising fees. “The sector is facing a number of upward cost drivers, from new audit and accounting standards to inflationary pressures,” said their CEO at the time. Audit fees at Big 4 firms in the UK have been on the rise for years, increasing 22 percent since 2018. Clients naturally dislike this.
But then the great slowdown hit and KPMG US became the first of the Big 4 to lay off advisory staff. Since then we’ve seen EY, Deloitte, BDO, and Grant Thornton shed about 5,300 staff all told (tbf 3,000 of those belong to EY). And that isn’t counting silent layoffs and performance-based separations. As of February, KPMG UK spokesfolks said there is no plan for layoffs.
And the belts continue to tighten across the profession.