Grant Thornton to lay off up to 60 staff after poor 2018
One of the UK’s largest auditing and advisory firms has announced plans to make more than 50 staff redundant as part of a restructuring operation. The redundancies in the British wing of Grant Thornton follow a troubled year at the firm, which saw it implicated in a major accounting scandal, while discontent among its Partner team forced out its CEO.
2018 was a difficult year for Grant Thornton UK. Having overhauled the firm’s partnership structure to make it a John Lewis-style profit-sharing scheme for all staff rather than just Partners, CEO Sacha Romanovitch was ousted from her role at the head of the company by a group of anonymous Partners and Directors at the firm, infuriated by what they saw as her of pursuit of a “socialist agenda.”
Following that, the tenure of new CEO David Dunckley got off to a rocky start, as it coincided with the emergence of a multi-million black hole at the heart of a client’s accounts. Patisserie Valerie has since collapsed, while months later, Grant Thornton forfeited its position as the UK’s fifth largest professional services firm, with the news that BDO and Moore Stephens were poised to clinch a merger deal in the near future. The deal between the duo will create an entity with a gross annual revenue of approximately £600 million.
On the back of that performance, Grant Thornton UK has announced that the financial year saw revenue fall by 1.8% from £500 million to £491 million, while profits tumbled by 8% to £71 million. As a result, the average profit per Partner also shrank from £403,000 to £373,000. According to a release accompanying the results, the “disappointing” performance was the result of one-off portfolio disposals and contract terminations, including Grant Thornton’s £2.1 million loss on Geniac, a platform it invested in to support back office functions for small businesses.
Following its poor performance in 2018, Grant Thornton UK is now planning to make 50 to 60 staff redundant as part of a continuing restructuring effort for its operations. This will largely see roles in brand, marketing and communications and in people and client experience functions downsized, for which the firm is consulting staff on until 10 April.
According to a spokesperson for Grant Thornton, “The next phase of this transformation is to ensure our teams provide the right level of support for profitable growth and create an environment that makes it easier for our people to do great work. Sadly, this will result in a reduction of a number of roles in these functions and the firm has begun a consultation period with those who are impacted. This is not a decision we take lightly and it has not been easy, but transformation is essential to ensure we build a long-term, sustainable future for the whole firm.”
While it looks to get its house in order, however, 2019 has seen a number of new headaches emerge for Grant Thornton. In February, the firm was ordered to pay former audit client AssetCo £5 million in legal costs and £21 million in damages for negligence involving the company’s 2009 and 2010 audits. Meanwhile, one of its larger audit clients, Interserve, fell into administration in March, as shareholders refused a rescue deal for the beleaguered outsourcer.
Grant Thornton also faces mounting criticism concerning its auditing of Sports Direct. The firm was expected to step aside, pending an investigation from the UK’s competition watchdog; but with the Big Four unwilling to step in at the controversial retailer, Grant Thornton presently remains in its role despite facing an FRC probe on the matter.
