John Connolly’s successor: Who’s got the X-factor?

It could all come down to that difficult-to-define, you know it when you see it, X-factor in the decision on who should go forward in Deloitte’s final partnership vote.

John Connolly, the man who has been at the helm of the UK’s second largest accountancy firm, Deloitte, is standing down next year. The decision on who will take over will emerge after all 676 partners have voted to approve the single candidate that will be put forward by the firm’s board.

But who that candidate will be has yet to be decided – Deloitte lifer Martin Eadon or David Sproul, the man from Andersen?

It is not going to be an easy choice. As one insider told Accountancy Age recently, there was little space between the two candidates. Both had made presentations at the firm’s partner conference in July, stressing the need for a focus on developing and recruiting talent as well as building a strategy to compete in the global market.

As such, it would be too simplistic to say this was a battle between two camps – Andersen versus Deloitte, or indeed tax versus audit. The Andersen merger took place some time ago and any residual ‘them and us’ attitude has long since gone, helped no doubt by a period of healthy growth in fees and partner profits. And likewise, it is not a case of audit versus tax – Eadon is an audit partner, Sproul is head of tax, but their roles on Deloitte’s UK executive board and internationally mean that both candidates have experience that goes far beyond their particular disciplines.

Nor can the contest be described as old guard against a new generation. Both were born in the 1950s – a time of austerity that seems appropriate for the current econ­omic climate.

So who are the candidates, what is their experience?

In his penultimate annual report, just published, Conn­olly outlined four key components of the firm’s strategy:

* A focus on exceptional quality and a passion for client service;

* A broader and deeper range of capability than our competitors, delivered to clients through integrated and innovative solutions;

* An environment where our people can develop and excel; and

* A global mindset and culture that emphasises teaming and high performance.

Both candidates have relevant experience that will help them deliver this strategy.
For instance, Eadon’s role as managing partner for clients and industries certainly ticks the box for client service, while Sproul, in an interview with Tax Adviser magazine, obser­ved he had the best of both worlds dividing his time between advising clients and helping to run the firm.

Certainly Sproul’s previous role of leading the firm’s talent initiatives will stand him in good stead in terms of providing the right environment to develop the firm’s staff and leaders of the future.


International experience

Internationally, they both score well.

In his role as head of tax for the EMEA region, Sproul helped launch an international tax centre of excellence in Dubai last year. At the time he said: ‘My visit to the region and to clients here demonstrates the investment Deloitte is making in the Middle East and acknowledges the grow­ing role we expect Middle East companies to take on the global stage.’

More recently, Eadon was at the forefront of the acquisition of a management consultancy practice, Exsigno, in Switzerland. As chairman of Deloitte in Switzerland, Eadon said: ‘This is an important part of our ambitious growth strategy in Switzerland. Deloitte will now have a combined strength of more than 1,000 of the best professional services people in the Swiss market, significantly extending our capability.’

Talking of acquisitions, it will be interesting to see whether either of the contenders share Connolly’s passion for cutting a good deal.

Connolly, of course, had a corporate finance background before becoming senior part­ner 11 years ago (incidentally, Eadon was reported to have had a tilt at the title back then as well). He was well versed in the art of deal making, a skill he brought to the fore during the Andersen merger.

Deloitte-eadon-boxBut Eadon was in a senior position on the firm’s board at the time, so would have also been closely involved in the negotiations, as was Sproul on the other side.

Indeed, Account­ancy Age reported at the time that Sproul, who was second in command at the troubled firm, was in the unenviable position of having to tell some 1,500 Andersen employees that their jobs were at risk ahead of the tie-up with Deloitte in 2002.

A year later, Eadon was also in an equally unenviable position, this time over a client issue. In March 2003, The Times reported how the wall outside Eadon’s London home had been spray painted with threats from animal welfare activists demonstrating against Huntingdon Life Sciences – Deloitte was the company’s auditor, but resigned after completing the 2002 audit.


Exclusive club

Whichever candidate eventually secures the crown, they will join an exclusive, well paid club that will have seen a complete turnover in mem-bership over the last four years. Either partner would have little trouble fitting into this group of Big Four senior partners.

In terms of age, they would sit in the middle. Mark Otty, Ernst & Young’s UK senior partner and area managing partner for the firm’s Europe, Middle East, India and Africa region, would still be the youngest – he was 41 when elected at the end of 2005.

KPMG’s Griffith-Jones was 51 – the same age that Sproul is now – when he secured
the top slot four years ago, while PricewaterhouseCoopers’ Ian Powell is a year older than Eadon.

Either Eadon or Sproul will add to the spread of disciplines in this club. Powell’s immediate background is in reconstruction, Griffith-Jones used to head up KPMG’s corporate finance function, while Otty has covered most disciplines during his spells in South Africa, Canada and the UK.

Deloitte-sproul-boxWhat is also clear is that it is an all-male club, an issue that Sproul himself was concerned about during his time as managing partner for talent. Back in 2005 he wrote in the Financial Times about how more needed to be done to ensure that cultural practices support employers’ good intentions, a subject he would be able to influence further if elected to the top position.

On the subject of influence, Eadon’s regulatory experience, such as involvement with the Financial Reporting Review Panel, will place him in a good position to influence government thinking on regulatory matters.

Likewise, Sproul’s position as one of the leading corporate tax specialists in the UK has added weight to the debate on the reform of the UK tax system, especially in terms in encourage multinational businesses to remain in the UK. Sproul is quoted in the CIOT’s Tax Adviser magazine as saying: ‘If you stand back and look at the UK economy, then it can’t be a good thing if the tax system is encouraging UK companies to leave, or non-UK companies not to establish in the UK.’

So the candidates are equally matched, and it could come down to that elusive X-Factor. The winner will become a national, and international, figurehead not just for the firm but also for the profession.

The current senior partners have sought to influence the debate on the future of auditing – and whoever comes out top in this leadership race will be expected to create a similar impact and stand out from the crowd. It could be this factor that will win the final judges’ vote.

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