Partners have no hiding place
BDO Stoy Hayward has demonstrated this week that partners in accountancy firms are not immune from the recession.
I don’t mean that in a glib way that their incomes will fall because revenues will be down. I mean they could pay with their jobs.
This is not to say that partners have not been sacrificed already – they have. But BDO’s very formal announcement, that a restructuring will cost 10% of partners their positions, brings it home with all the delicacy of a bank bail-out that things have got to change.
Of course partners are not just made redundant. They are invited to resign. The result is the same. Resistance is futile.
Of course it’ll cost. Asking partners to take the long walk means stumping up their equity and that’s not mere pocket money for them or the firm.
The details remain shrouded in mystery. Firms don’t like to let that sort of thing out in the open. Simon Michaels says the cost is manageable. What we don’t know is whether the firm will do it from reserves or whether they will have to raise extra money to do it. Given BDO’s performance of late though, going to the bank
One thing is sure it will cost and the firm must believe it is worth it.
It means more for the partners left behind of course. Profitability should see a bit of a boost and pretty quickly too. Remaining partners will no doubt feel some relief at that.
If the firm was a corporate it would also look better from the outside too. Leaner, fitter, trimmed down ready for the next step. All the hard conversations finished and decisions taken.
An observer might take note of a firm that had done that.
As this was such a public culling of partners, their opposite numbers in other firms must be wondering whether the same thing will happen to them.
Given the paucity of great results for most in the last Accountancy Age Top 50 survey it would be no surprise to hear of managing partners deciding they had way too many partners thinning the profit share.
Let’s be clear though. Those shown the door will not necessarily be bad partners. There’s any number of reasons why you might get the message that you’re surplus to requirement. It will be a good time for the search recruitment people.
That said partners everywhere will be feeling slightly anxious about the BDO news.