Joe Ucuzoglu, the former head of Deloitte US and current Deloitte Global CEO, has recorded a 20 minute video which was circulated to all firm leadership yesterday and then,
just to be sure EY sees it to be as transparent as possible, had it published to the Deloitte website for all to see. In it, he is adamant that Deloitte does not intend to change its current model as unified professional services firm (a.k.a. “multidisciplinary model”). The timing of this video is probably not coincidence, or it is and it just so happens that Joe decided to be extra transparent the week we find out that internal EY split talks are falling off the rails.
Can’t embed it so you’ll have to head over to Deloitte.com to see the whole thing but I did transcribe the first two minutes up until he offered the TL;DR. Quick thank you to Joe for speaking clearly and slowly enough for my old arthritic fingers to keep up.
The success you’re driving is extraordinary and sitting at the foundation of that success is our multidisciplinary private partnership model. Our choice to keep this incredible breadth of expertise and capabilities together under one Deloitte umbrella. This is a topic with a lot of visibility right now. One of the other Big 4s is talking about structurally separating their organization. The complexities surrounding that have been in the press recently and some of their senior leaders are out suggesting not only do they think this is a good idea for them, but they think others in the Big 4 would want to do this also and that their path is the roadmap for reshaping the profession. That is a direct quote.
I’ve had conversations on this topic with so many partner groups around the world. And in light of all this public attention I thought it was important and timely to synthesize all those discussions to make sure all of you have access to the complete picture with full transparency. The strength of conviction we have in our model. The depth of thinking and analysis we’ve put into this. The alignment we have on this topic around the world. And some candid detailed answers to the questions that come up most often. And being that we’re in the business of trust and transparency, I’m gonna put this very same video up on our website. We are exceptionally proud of the Deloitte we’ve all collectively built, we are confident it is serving our stakeholders well.
Here comes the TL;DR:
For those who just want the short version, I will be unequivocal right up front. Our multidisciplinary model is allowing us to deliver incredible impact across so many different stakeholders. Our clients value the breadth and capabilities, our people value the diversity of career paths, the markets value the quality we deliver, and our communities value the impact that we make on so many big societal issues. This model is going to continue to be foundational to our strategy going forward. It has some complexities we have to manage, we invest a lot in doing that.
When you take a step back and you look at the power of our combined organization, the results speak for themselves.
The Guardian has better transcription capabilities than we do and added this:
He said: “History is littered with multiple examples of grand aspirations around these types of transactions that I’m sure sounded great and had pretty slide decks, lots of big promises. It’s easy to get swept up in deal fever but this has actually never once played out as intended.
“We’ve looked at how we go about a separation if we were ever compelled to go down that path. You’d expect us to have done that.”
Deloitte’s leadership has so far decided against splitting the business, however. “It’s not even a close call,” Ucuzoglu said.
Did someone say pretty slide decks with lots of big promises?
When the news of a potential EY split first broke late last spring, rumors immediately began flying that Deloitte would be next in line to break consulting off from audit. Whoever told the Wall Street Journal that information was obviously not as familiar with the matter as they purported to be, Deloitte quickly squashed the rumor.
Since then, various publications have repeated statements from Deloitte, KPMG, and PwC that no matter what happens with EY, they do not plan to split. Meanwhile, some of these firms are eagerly lurking in the wings hoping to poach talent abandoning ship before the split happens.
In the last several months, EY has pushed back the partner vote on the split, citing details in need of hammering out. Up until last week it appeared to be moving forward as planned despite these delays, and EY Global Managing Partner Andy Baldwin went so far as to say “our plan is that we will continue to what we call soft separation next year, and continue to start to run these two businesses separately, albeit they will continue to be part of the single enterprise of EY” in December when the legal details and market conditions were really beginning to hold things back. But just this week the cracks started to show and insiders say split discussions among partners are now plagued with “chaos”, “low morale” and “infighting.”
Said EY in a comment to The Guardian:
As part of our deliberation and due diligence in connection with the proposed transaction, we are engaging in a dialogue with the largest EY country member firms to determine the final shape of the transaction.
This transaction is complex and will be the roadmap for reshaping the profession, so it is important we get this right. We remain committed to the strategic rationale that underpins Project Everest and believe that a deal can and should be done.
This is getting juicy!