Leader: KPMG's cuts set out harsh truth about profits
A dip in profits, as well as more partners, set the tone for KPMG's future direction. But is cutting non-partners right? asks Accountancy Age
HOW HAS A FIRM posting £418m in profits found itself in a position where it needs to look at cutting 3% of its workforce?
For KPMG, it would appear to be a case of simple maths.
The profit figure, relating to its last financial year (ending 30/09/11), equated to an average profit per partner (PPP) of £690,000.
The previous year saw a higher profit and fewer partners, hence £750,000 per partner.
Where are the cuts coming from at KPMG? Below partner level.
Big Four firms can talk all they like about the efforts they make in recruiting grads and opening up opportunities for the non-university-educated, as they have in response to KPMG’s travails.
But from the outside, it seems clear that the engine room of KPMG’s business is likely to take a hit. The cost-cutting will no doubt look to improve the PPP figure, yet surely the most important thing is that quality of service to the client is maintained.
Bearing in mind that PwC and Deloitte partners saw a fall in PPP during the last year (E&Y doesn’t supply figures), KPMG’s latest action does send a shiver down the spine.
As an aside, one wonders how new KPMG chairman Simon Collins felt about fronting up to staff on this issue, bearing in mind he was initially meant to take over from John Griffith-Jones in October.
Kevin Reed is editor of Accountancy Age