Why do auditing and consulting firms such as the Big 4 need to develop new approaches to recruitment and career?
First, we need to understand how these professional firms were organized and recruited until now. Career at the Big 4 (Deloitte, EY, KPMG and PWC) is based on three pillars: massive recruitment of junior people freshly graduated; pyramid from Junior to Partner, with an up-or-out system; a rather closed world where personal relationships are important, first with your managers and bosses, then with your clients.
At the bottom of the pyramid, junior people perform analytical and recurrent tasks, with an emphasis on productivity. The next level is managerial: it is about managing a team and a mission in order to deliver effectively – in line with the client’s expectations on time and quality - and efficiently – not using too much precious time resources. All the way up, partners are in charge of the client relationship.
Each level is characterized by a set of skills of a different nature. Competence and performance in the level below govern the access to the upper level, where you should quickly achieve the acquisition of the new set of skills (or out).
At least two strong forces are currently and concomitantly pushing the professional auditing and consulting firms to challenge and question their model of organization and career.
The first one is the fast-paced digitalization of their jobs and the consequent deep, structural transformation of the way auditing is performed (as well as consulting, however to a lesser extent). Auditing until now has been characterized by sampling methods for checking and verifying. In the future, RPA (Robotic Process Automation) and even more Artificial Intelligence will enable exponential gains of productivity and reliability, to the point that instead of sampling, it will be possible to screen the complete set of data, thus to detect and visualize all the anomalies. Experienced and skilled humans, at least for now, will still be needed for analyzing and understanding the anomalies.
Thankless tasks and unglamorous jobs traditionally delegated to junior recruits will progressively be taken over by RPAs, or machines.
This transformation is a quantum leap in the way auditing is performed. Thankless tasks and unglamorous jobs traditionally delegated to junior recruits will progressively be taken over by RPAs, or machines in a machine-learning mode. Because it responds to the productivity rule, this revolution is already on going in all professional firms.
The second force driving change is the new generations now entering the labour market, the tech-savvy, young people under 25 years old. Their expectations towards their employers are quite different from their elders.
Firstly, they want an intellectually stimulating job, where they feel they are learning, putting their brain at work and doing something useful for themselves – the job should help them grow. Secondly, they are driven by purpose and want a job that has impact and makes sense in their eyes; either the job should have a social impact and be useful for the society at large, or at least they should see the impact of what they do for their company on a daily basis. Part of the current enthusiasm of this generation for entrepreneurship is to be related to seeking visible impact of their daily activities.
The tech-savvy, young people under 25 years old now entering the labour market have in general completely different expectations.
Thirdly, they are an ever-questioning generation who has been raised to ask and be answered their whys. They do not do without understanding why they (should) do it.
Legitimacy of authority in their eyes does not come with age or experience. They are fully aware that they do not know everything and still have to learn, but they also know that they can do a number of things better than their elders. As a consequence, legitimate authority for them is based on whether they can learn from you – mostly if you are leading by example and inspiring them.
What do the professional firms do to answer these challenges? Have the Big 4 evolved?
At least for a decade, they have seen their ability to attract talents to auditing erode, especially in the best universities and schools. As an answer, they have opened the range of jobs that they offer to junior talents, jobs that used to be dedicated to experienced juniors with at least 3 years of auditing.
One thing to understand is that the Big 4 are much more than auditing firms. They are first and foremost knowledge-based firms, expertise companies. Auditing is their historical core market, however in the past three decades, they have experienced double-digit growth, which has been driven by consulting activities, not by auditing, which is a saturated and bounded market.
Building on their accounting and financial expertise, they ventured into financial advisory and all the jobs around the transactions or “deals”: preparatory work for mergers & acquisitions, due diligence process, independent valuation of companies to be sold/bought, accounting for the acquisitions, post-merger integration of companies accounting and finance systems… This is a long list of expertise activities to be performed.
From there they also ventured into processes improvements and management consulting: they started with finance processes improvements, then operational processes improvement, operational excellence and strategic consulting.
Big 4 firms have progressively opened all these branches and professions to junior recruits, either directly or by offering “graduate programs” that enable the junior recruit to spend 6 to 8 months in three different jobs or branches. They also have started to explore further talent management and career issues.
Will they need to go beyond?
My strong conviction is that the new generation, who hardly sees itself in a hierarchical mode, will shake the whole organizational pyramid. Big 4 firms might end up re-thinking entirely their recruitment and career schemes.
Because they are knowledge and expertise providers, human capital is crucial to them, it is their beating heart. Maybe they will have to start thinking skills beyond talents: what skills will the talented need tomorrow? Who are the profiles, junior or senior, who detain these skills?
Those among the Big 4 who are not “open” in terms of recruitment, who do not go and capture expertise, know-how, skills and talents where they are, will no longer be able to add value and bring solutions to their clients.
The closed, entre soi world will have no choice but to give way to more openness. In an open innovation era and a world where knowledge is built collectively, those among the Big 4 who will not be “open” in terms of recruitment, who will not go and capture expertise, know-how, skills and talents where they are, will not be able anymore to add value and bring solutions to their clients.
Some of the professional firms have already begun this "revolution" in their organization, with very active incubators, innovation departments, "off hierarchy" profiles, who weave relationships and networks with the existing hierarchy and will boost their business tomorrow.