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Firm repeats a denial that it plans redundancies as senior executive exits “voluntarily” without another job.
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HR chief quits, EY partners told to ‘draw up lists’
20 April 2023
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The human resources chief at EY has quit without another job and lead partners have been told to make lists of staff who need “performance management” as the firm struggles to regain its balance following the collapse of plans to split.
Sources at the firm told Accountants Daily that no-one would be safe from the lists, which would be drawn up by lead partners running service lines – who sit atop the 700-plus Australian partner hierarchy – and used to inform a headcount reduction.
“They have been asked to come up with a list of people who need to be performance managed,” the sources said. “That’s code for people who haven’t hit targets – that includes partners, directors, senior managers, people who are meant to bring in revenue and are not hitting targets.”
Earlier this week sources said EY Australia would be unable to avoid job cuts following the failure of Project Everest because the firm’s 13,000 global partners wanted to recoup the $US600 million it cost.
The plan to split the company collapsed after opposition from its US branch, which has already confirmed it would slash around 3,000 jobs while the UK division has told staff to brace for cutbacks in July targeted at “inefficiencies”.
If the US level of redundancies applied to EY Australia, more than 400 jobs would go.
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“They’ll make up the $US600 million by sacking people,” the sources said. “The cuts will come from core business services such as marketing, communications and HR.”
EY Australia repeated its previous denial that there were no plans to reduce headcount and said business was good despite the economic conditions.
“There is no question we are in a very different market to the past couple of years, with headwinds and uncertainty ahead of us,” a spokesperson said.
“We are still experiencing solid growth and demand for our services across many parts of our business. We have pulled back on recruitment where necessary. We do not currently have any plans for reductions in our headcount.”
Sources at the firm also said human resources chief Elisa Colak was leaving “voluntarily” without another job next month after almost eight years at the firm, including five-and-a-half years as Oceania head of talent.
One source said executives “at the highest level” had tried to persuade Ms Colak to stay.
In an internal memo seen by Accountants Daily, EY chief operating officer Craig Robson said he would miss her “wise counsel”.
“It is with a great deal of disappointment that I advise you that Elisa has decided to take a change of direction in her career and chosen to finish in her role with the firm at the end of May,” he said.
He thanked her for the “massive difference” she had made to the business and to staff personally as a “driving force” through “even the most difficult times”.
Project Everest had been about a year in the planning and the firm’s partners were due to vote on the plan later this year.
When the project collapsed, EY issued a confusing statement that said it was still committed to “changes that allow all of our businesses to thrive”.
“A core tenet of Project Everest has been that we have businesses that need to be operated differently to reach their full potential,” it said in an email to staff. “Winning in a rapidly evolving market and better preparing ourselves for a future transaction will require us to adapt our governance, operating model, cost structures, capital investments, and go-to-market approach.”
The global job cuts come after a series of scandals involving the firm that have resulted in fines and bans.
Early this month, EY’s German branch was fined €500,000 and restricted in the work it could undertake after its failure to uncover fraud at failed payments company Wirecard.
Last year, that fine was dwarfed by the $US100 million penalty imposed by the US Securities and Exchange Commission after it uncovered years of exam cheating involving hundreds of staff.
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