Big Four giant KPMG downgrades equity partners
Big Four giant KPMG has begun demoting UK senior equity partners – members who hold a stake in the firm and share its profits – and instead offering them lower status salaried partner roles.
KPMG, which last year paid its equity partners on average £800,000 each a year, has reportedly been inviting the partners for “career conversations” as a strategic move to slash the equity partner headcount, according to the FT.
“Over a two-year period we will have created more than 200 new roles in our partnership, and we look forward to more partner promotions during our next financial year,” A KPMG spokesperson told CityAM. “As you’d expect in a dynamic business like ours, all partners are performance managed.”
Over the last few years there has been an uptick in all Big Four firms shifting away from handing out equity partner promotions, instead offering the salaried partner roles which do not offer partners a stake in the company and its profit.
EY has also demoted “a small number” of its senior equity partners to the salaried rung since 2022, an EY spokesperson told CityAM.
The move shifts away from the widespread industry method of pushing senior equity partners towards retiring or stepping down when they’re under performing.
Big four falling short across the board
Across the professional services sector, consulting is increasingly being hit the hardest.
The Big Four – Deloitte, EY, KPMG and PwC – have been coming under increasing pressure as the consulting industry changes shape, facing slowing demand, regulatory scrutiny, and competition from private-equity backed boutique firms, some set up by ex-partners.
The impact of AI is also seeping into the industry, and the firms are dealing with a fall in fees whilst also trying to sketch out how to utilise the technology and not fall behind others who are actively integrating it.
PwC revealed that following a fee decline in its consultancy division, it is running to draw up a blueprint to standardise its consulting services across the business.
The equity partner demotions follow KPMG in March sharing that due to “current market conditions” leading attrition rates to be “very low” the firm plans to fire 500 members of staff in its auditing arm in a round of redundancies.