It has been a demanding and turbulent year for John Connolly, chief executive and senior partner of Deloitte. But his outspoken and often contentious views have clearly earned the respect, and in many cases admiration, of Accountancy Age readers. More than 1,000 votes were cast by readers and, despite a strong shortlist, Connolly was an emphatic winner.
Regarded by some as a bit of a bruiser, Connolly has spent his whole professional life with the firm. Earlier in his career he ran an office for the firm in the Middle East, was partner-in-charge of its Leeds office and a regional managing partner. Before taking up his current role he was head of the London office and UK managing partner. He specialises in corporate finance and has worked on many mergers. His expertise in this field was doubtless put to good use during the firm’s merger with Andersen UK, an operation which saw Deloitte move up to second place in the Big Four.
As head of the only Big Four firm to retain its consulting arm, he has sparked controversy with his contention that the others have quite simply got it wrong on this issue.
Under Connolly, Deloitte remains committed to maintaining a consultancy practice as part of the firm’s integrated service offering. Connolly believes a consulting capacity delivers real benefits, both by offering the maximum range of services to clients and because of its attractiveness to ‘our own people’.
The competencies and skills of a consultancy enhance the overall business, he says. He believes a multidisciplinary approach provides significant competitive advantages, and notes that in 2004 other firms have started to rebuild consultancy arms under the guise of ‘advisory services’. The strategy also ensures Deloitte is in a strong position to respond to the demands of the market. ‘Our consulting practice, while still emerging from shrinking markets, is beginning to benefit from greater opportunities and a small upturn in the market,’ he says.
Connolly notes that the consulting world has changed radically from the 1990s. ‘The players have changed and buyer behaviour has moved on.’ He also detects a greater emphasis on projects more closely aligned with business strategy and those that clearly deliver demonstrable results, particularly in terms of profitability. Demand for IT consultancy continues to flourish.
Connolly concedes that while committed to an integrated services approach, Deloitte would not offer restricted consultancy services to existing audit clients. Indeed, he doubts if clients would accept them.
He believes that a much better understanding of the regulatory environment has been achieved in the last two years, and the general outlook for the future growth of the industry is decidedly positive.
Earlier this year Connolly sparked further controversy with his contention that the Big Four failed to display sufficient transparency in their consulting activities. His highly contentious remarks caused, and are continuing to cause, huge debate within the Big Four and within the profession at large. Accountancy Age readers clearly respect his courage in speaking out in such a candid and forthright manner. His comments have ensured this issue will remain at the forefront of debate within the profession.
Connolly’s perspective continues to be assessed, questioned and discussed by all involved, and may ultimately lead to firms changing the way they categorise the work they carry out. His authoritative voice will doubtless contribute significantly to the debate.
The last few years have proved a period of considerable change and complexity for the profession, and Accountancy Age readers are clearly impressed by the way Connolly has steered Deloitte on a course of growth and enhanced revenue.
The firm’s 2004 report & financial statements note that Deloitte’s revenues have more than doubled over the last five years. Connolly has focused on broadening the range of capabilities of professional services provided, while simultaneously increasing the client base in chosen markets.
When he took over as UK senior partner of Deloitte & Touche in 1999, the firm was at the bottom of the Big Five league table.
Connolly, the highest paid UK accountant in practice with a wage packet worth £2.9m, believes the firm’s results reflect its focus on quality and well-balanced business profile, and represent a satisfactory performance given tough trading conditions.
Activity across the four business practices – audit, tax, consulting and corporate finance – held up well with good revenue growth in the corporate finance and tax practices particularly. The audit business won a number of new engagements and benefited from increased activity arising from regulatory changes.
Deloitte has also benefited from good market share in the financial services, technology, media, and telecoms sectors, and is well positioned to take advantage of opportunities arising from improvements in transaction activity and corporate sector investment.
Connolly asserts that the firm’s culture is built on teamwork, integrity and demanding performance targets. To achieve this goal, Deloitte has made significant investment in an enhanced benefit programme for staff and has set challenging targets to increase the diversity of the firm. The integration of nearly 3,400 people from Andersen in 2002 added significantly to the pool of talent.
The emphasis on people management is further demonstrated by the launch of an initiative to harness the full talent of his diverse workforce, combined with the appointment of a talent leader to the firm’s executive board.
Connolly’s win is confirmation that intellectual rigour, clarity of thought and independence of mind are key attributes for success in the profession. Broad shoulders – which enabled Connolly to survive the Barlow Clowes scandal of the 1980s, where Deloitte and Connolly served as auditor – are vital too.
These are the qualities all firms should cherish and foster.
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