The Guardian's 'Long read' today features extracts from Richard Brook's new book, Bean Counters: The Triumph of the Accountants and How They Broke Capitalism. I admit much is familiar, although welcome: to many it will be news.
I liked this paragraph, which to me summed up the problem with these firms:
A newly qualified accountant in a major firm will generally slip into a career of what the academic Matthew Gill has called “technocratism”, applying standards lawfully but to the advantage of clients, not breaking the rules but not making a stand for truth and objectivity either. Progression to the partner ranks requires “fitting in” above all else. With serious financial incentives to get to the top, the major firms end up run by the more materially rather than ethically motivated bean counters.
In effect, these firms have a Darwinian system that ensures those with ethics don't stay. That resonated very strongly with my own experience. The cost to society of this perverted form of Darwinian selection has been very high indeed.
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Quite right – even today, young people with ethics and values use the Big 4 to get a qualification and most leave straight after they qualify, and cannot wait to break free from its chains. What a paradox when these firms are facing such a profound ethical crisis, as those with a greed ethic rise to the top.
Totally agree. The sad part is morality has been very subjective. What is ethical for you may not be ethical for me, vice versa. What matters is how much u can bring to the kitty doesn’t matter what technical value addition or the kind of solution given. Is this client a cash cow? Give a damn to expertise. More weightage to targets and numbers. Sad pattern..
Adding to the above, I know of a chap working for one of the big 4 – in Germany as it happens – after working 16 hr days for decades – he had a breakdown of sorts and now works 12 hr days – his colleagues make fun of him and his “career” such as it ain’t is over. This is another aspect of “survival of the fittest” – or would that be: “work until you drop”. I have zero respect for the “big 4” both incompetant and money extraction machines – an interesting combo.
Shame the author didn’t do any real research around this point. As a partner in a big 4 firm I can say it simply isn’t true.
But ample of us have done such research
And we think it is
Precisely. You “think it is” but in reality it isn’t.
What research has been done. Who was interviewed? In the absence of proper research you might as well be writing for the daily mail.
Mike
Are you really willing to say that those of use who have looked at the Big 4 for years – and yes, have done our research – are making it all up?
I suggest you’re gett8ing desperate if that is your defence.
But you’re welcome to present evidence as to why I’m wrong. But I mean evidence.
At the same time you might like to explain the desperate shortage of women in senior positions and the gender pay gap that may also hint at this issue
Richard
Mike says:
“Precisely. You “think it is” but in reality it isn’t.” Of course it is, Mike. Don’t be silly.
” In the absence of proper research you might as well be writing for the daily mail.”
And who would you have conduct the research you would believe ? Independent delegates from the Big Four, I expect. After all, who else would be qualified to meet your criteria ?
I note you haven’t answered the question. How many big 4 partners did this “ample” (ie unknown number) of people interview?
As for gender pay gap I think the issues with addressing this in the short term are well known and obvious, no firm can instantly promote hundreds of women into senior positions to fix the issue
The diversity of the partners in Murphy deeks Nolan dosent look like something to write home about either
Murphy Deeks Nolan never had less than 66% of partners female
I was always outnumbered
And they were on equal pay pro rata hours
I think any research we have done is vastly better than yours
And re research of Big 4 partners – most requests are declined. Maybe you are not aware
It is disappointing that you consider “diversity” to only relate to gender.
I don’t
As is readily apparent from all my writing
Mike says:
“It is disappointing that you consider “diversity” to only relate to gender.”
I think the holes in your crap filter are too big, Richard.
Having worked at a big 4 firm for four years, I can say it very much does!
Identified material issues not referred to in audit report to preserve relationship.
Likely money laundering not reported (as far as I am aware in any case).
Inadequate internal scrutiny of audits.
Inadequate audit work performed as recovery rate was becoming too low.
Turning a blind eye to lack of disclosure of controlling parties.
In real life Darwinian selection the constraint on big predators at the top of the food chain is the availability of prey.
By the time the Big Four run out of prey there’ll be not much left standing. And as currently constituted, governments are feeding them in a sort of protected big game reserve.
They’ll make nice trophy fireside rugs when the big game hunters are off the leash.
‘And they were on equal pay pro rata hours’
Good.
However I don’t think the current reporting on gender pay gap is done on a pro rata hours basis.
I agree
That needs to be put right
Without that adjustment for hours worked, published gender pay gap information is meaningless.
J. Arthur Rank says:
“…‘And they were on equal pay pro rata hours’. Good.” Yes it IS good. It’s something at least and a considerable something.
“However I don’t think the current reporting on gender pay gap is done on a pro rata hours basis.”
I think that’s right, but it’s not necessarily a good measuring and reporting system and it’s not necessarily capturing the information we need to know. I think I’m right in saying that current reporting requirements only apply to companies employing above an arbitrary numerical threshold.
I regard this as a problem and one that is endemic in a world where there is an increasing belief that everything can be counted and priced. If you feel your own company’s interests are being shown in a bad light by these figures you have my sympathy. If we aren’t asking the right questions we’ll get daft answers.
and Bill Clarke says:
“Without that adjustment for hours worked, published gender pay gap information is meaningless.”
I don’t agree it’s meaningless. It tells us something. The important thing is to work out what it’s telling us, and what if anything we need to do about it. I’m not at all confident that process is happening.
We have unemployment stats that are similarly useless, telling us we don’t currently have an unemployment problem, when quite clearly we do have a massive problem of unemployment and underemployment. We have millions of people doing jobs that don’t match their qualifications and abilities and don’t match their income needs, which is why something like 70% of the population has it’s income supplemented by some form of government benefit.
Barbara Castle was addressing this problem in the late 1960s and we still haven’t got to grips with it fifty years later. Governments have consistently failed to deal with the problem or it’s implications.
Gender Gap pay stats are a blunt instrument perhaps, but if it’s making the corporate ‘big boys’ uncomfortable maybe we’ll finally get something done about it. Government listens to ‘big boys’ it doesn’t listen to the little people.
Just a comment on a couple of points you raised;
– I understand that the reporting is of median salaries for men/women in companies of 250 staff or more
– this would seem to give some apparently alarming figures e.g. the airline industry gap is around 50% on average. However as only 5% of pilots are women then it is not surprising that many more men are senior etc. and therefore the median is much greater than women. Whether the number of pilots should be 50/50 is another question, however so far as I can tell there is equal opportunity for women to apply for the job.
– it would seem, as you suggest, that the analysis is a gross oversimplification and a much more detailed investigation is needed.
Any company coul have offered an enhanced analysis if it so wished
Your reasoning makes no sense
Richard, you say of JA Rank’s comments regarding gender pay gap figures for the Airline industry that “Your reasoning makes no sense”
I think that somewhat unfair.
I don’t think voluntary enhanced disclosure is the solution we need here.
And I say that because I don’t think the gender paygap is the problem, it’s the symptom of systemic problems in the wider structure of employment and societal attitudes.
Current reporting will throw up some quirks like the predominance of males as pilots. We need to assess why that is and is it rational, or just the result of a historical tendency which has become perpetuated. I suspect the latter. It’s clearly preposterous to suggest women can’t be pilots.
Gender disparities are massive, and in many cases deeply unfair. But it’s a systemic unfairness which goes way deeper than the paygap.
I don’t think ‘we’ are working hard enough to understand and deal with what we have euphemistically called ‘female emancipation’, but which for many women has simply further enslaved them to the labour market. To the cheap labour market at that.
I applaud the efforts to gather information on the paygap, and to tackle the excesses, but I really think we need to be careful what we make of the figures.
Readers of this amazing blog may also be interested in Prof Laura Empson’s incredible research on this topic – it shows how insecurity is hard-wired into the culture of these elite firms, and increases with promotion. https://hbr.org/2018/02/if-youre-so-successful-why-are-you-still-working-70-hours-a-week This insecurity, can then easily become an infectious virus, affecting their colleagues and clients – Empson says that in this toxic environment, they lose all connection with ethics and morality. In effect, the conscience melts into insignificance. She also discusses a profound mental health and leadership crisis, where often the mental problems are blamed on the self, rather than the toxic culture.
Thanks Atul
“…often the mental problems are blamed on the self, rather than the toxic culture.”
This extends well beyond corporate culture it’s prevalent right across the board. Very lucrative it is too, for the pharma companies. Our governments have been driving us all round the bend. And they blame the victims, as ever.
This type of corporate Darwinism is extremely common, and not just in the private sector.
Ethics and ‘fitting into’ a machine controlled by competition laws do not mix. Even in Education, doing what is right and makes most sense is not always welcome if it means HMIs will disapprove or league tables suffer.
As a result, efficiency and common sense, as well as the common good, are by-passed in favour of what the flavour of the month (called an initiative to sound pro-active) happens to be according to the latest Education Minister who needs to leave her/his mark.
Whistleblowers not welcome. Called cynics and stirrers. System then malfunctions…and on and on it goes.
Ok, rant over. Thanks for listening.
Marie Thomas says:
“Ok, rant over. Thanks for listening.”
Though not directly affected in the education arena, Marie, I feel your pain and frustration.
Thanks Andy. But not to worry, after years being a stirring deputy head, I learnt that pain and frustration can be turned into fighting fuel. I used it as well as I could.
[…] Richard Brooks is about to publish a book about the Big Four accountancy firms that, according to CA and professor of practice in international political economy at the University of London, […]
The sad replacements of the one page audit criteria of principles based true and fair view with tick box legal but unethical, legal but not just.
The American jury courts would have a field day of massive fines just look at GEC BP or soon to be R B S in my view