During a cheerful retirement celebration at New York’s Glasshouse venue last week, Janet Truncale playfully gifted Carmine Di Sibio luggage tags to signal his return to commercial travel. Truncale had just assumed the role of global chief executive at EY, the Big Four accounting firm, seven months after her selection as Di Sibio’s successor. Alongside her newfound responsibility for EY’s corporate jet, she also inherited the aftermath of Di Sibio’s failed plan to divide the firm.
Truncale revealed her plan for the company just prior to the retirement function on Thursday, where she confirmed that she won’t immediately resurrect Di Sibio’s proposal, Project Everest. The defunct project intended to create a separate entity for EY’s consulting business to avoid conflict-of-interest regulations that currently prevent it from servicing EY’s audit clients.
However, her devised growth strategy, ‘All in’, faced criticism for lacking depth and bypassing key issues raised by Project Everest. Observers from other firms are eagerly monitoring to ascertain whether Truncale can instil a clear path for the firm, which generates a revenue of $50 billion. Some are hopeful to capitalise on any discontent within the EY roster or clientele.
Comments from participants of her webcast, where she outlined the strategy to EY’s 14,000 partners, echoed a similar sentiment. Listeners expressed dissatisfaction over the lack of tangible plans and confusion regarding Truncale’s position on Project Everest.
Rumours of Project Everest’s revival sparked within the firm due to structural changes and cost-cutting layoffs. In her recent staff memo, Truncale rejected these speculations, asking the team to ‘recommitted as a unified organisation’. However, she did acknowledge in the webcast that the problems which precipitated Project Everest still persist, a nod noted by several partners. This has led many to believe that she might consider some form of division in the long-run.
EY’s auditing relationships with some of America’s premier tech firms such as Google, Amazon, and Oracle put its consulting branch at a comparative disadvantage on sizable IT projects in contrast to its competition who directly collaborate with these firms. There were assertions made by Truncale on Thursday for “differential investments” in differing services, with the aim of bolstering the consulting sector’s growth, which could span business transformation, managed services, and sustainability counselling.
Unveiling her strategy to EY’s vast workforce of 400,000, Truncale expressed her intent to provide more substance to the strategic plan in the forthcoming months. Insiders revealed that the assembly process of intertwining global strategy with country-specific and business line plans is in its nascent stage. The languid progression has sparked frustration among high-ranking executives subordinate to Truncale.
EY clarified in a statement that there would be continuous communication with their partners and workforce members as the “All in” approach is introduced. Multiple personnel reiterated that there’s already been considerable employee and partner contribution to the strategy via workshops, dialogues and polls spanning several hours.
Truncale’s equivocal stance regarding Everest has fuelled speculation that a sell-off or spin-off of the consulting unit might be on the horizon. This might translate to a significant financial gain, perhaps through cash dividends to audit partners or equity shares for those associated with a potential newly independent consultancy.
The landscape will undeniably look starkly differential later into Truncale’s tenure of four years. American managing partner Julie Boland, who Di Sibio accounted for obstructing Everest, will be ending her tenure in two years. Concurrently, in the UK, a competition for leadership? has kicked off aiming to replace Hywel Ball on his retirement.
Simultaneously, EY is navigating through a separate functional reorganization, aligning its structure with sectors. Albeit consulting and audit work for finance services clients has already fused under singular leadership in select locations, there will soon be heightened coordination across varying sectors, which could include health, consumer goods, and industrials, and on to technology, media and telecoms. This could eventually alter the power balances within the firm.
It will be pivotal to observe how the “All in” policy impacts the commitment levels of high-performing partners to the firm. An anecdote surfaced about a senior partner who chose to leave the firm and despite a colleague’s assurances of Truncale delivering a renewed version of Everest, the persuasion fell flat.
As per the previous associate, during the Everest phase, everyone was lingering near the basket, anticipating their financial rewards. Now, there’s a colossal void in leadership and multiple influential partners, those known for their strong performance, are considering to depart. The pace of exits is predicted to quicken as the market recovers.
Laura Empson, an academic at Bayes Business School, University of London with an expertise in professional services firm management, mentioned that Truncale’s unclear strategy initiation could eventually validate itself if a sturdy decision-making system is implemented.
She shared, “The answer to persistent conflict arises from an intricate procedure of developing a common understanding among a group who stand to lose significantly.” She further added, “This process of building consensus isn’t typically perceived as a leadership act until the situation is conclusively sorted out.”
Copyright The Financial Times Limited 2024