Smoke and mergers
Today’s restructuring by Ernst & Young might be more interesting than it is significant. The firm is following in the footsteps of KPMG and Deloitte in ‘merging’ some of it practices though in scale it may take gold.
It proposes integrating 87 national practices in Europe, the Middle East, India and Africa into a single unit. It is undertaking a similar exercise in the Far East. And having already unified the Americas in 2006, it is effectively bringing what were 131 business down to three.
Risk and reward, of course, are the twin drivers here. But, in truth, it is because of unresolved issues around risk and reward that mean this restructuring is more about words than it is about action.
The firms hope that by bringing national practices closer together they can offer a seamless service worldwide and deal better with the argument that the quality they offer not the same the world over. (Remember Grant Thornton and Parmalat? Remember PwC in Japan?)
And reward? Well, improve service and the rewards will surely follow, runs the thinking.
To be a single practice in the truest sense, however, requires the pooling of profit and liaibility.
Now very clever and very expensive lawyers will always be able to find reasons for sharing (or, conversely, localising) liability in the event of a claim on the firm.
But it is up to the firms themselves to share the spoils in a way athat would define them as truly global entities.
We asked E&Y today whether partners within the Europe, Middle East, India and Africa Area would share profits.
We were told: ‘The EMEIA area will operate as a single unit, led by a single area executive team with one shared strategy and sharing of costs and investments/ All 3,300 partners across EMEIA will have a common approach to performance evaluation and compensation.’
That sounds like a ‘no’, then.
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