PwC delays promotions as part of Covid-19 freeze
Big Four firm PwC has announced that its annual staff appraisals in the UK have been deferred until the autumn. The news, which comes as the British consulting industry prepares for a large drop in revenues thanks to coronavirus, means that pay-rises, bonuses and promotions for staff will be postponed until then.
The UK’s consulting market was already enduring its slowest growth in seven years when Covid-19 hit, suggesting tougher times await in the coming months. Recent research by Source Global Research suggests that the UK consulting market could see a revenue fall of an estimated 28% over the course of 2020 – plummeting from £8.6 billion in 2019 to as little as £6.1 billion. That retraction would see the market shrink to its smallest size since 2013.
In a bid to offset the worst impacts of this jarring drop in income, many firms have drafted emergency plans for the coming months. Most prominently, the start of April has seen professional services giant PwC announce it has delayed its UK staff appraisal programme, which usually commences after March 31st. The move amounts to a freeze in promotions, pay-rises and bonuses for staff in a bid to avoid the need for redundancies at the Big For company.
A voice-note from Senior Partner Kevin Ellis to staff, transcribed by City A.M., stated, “I want to reassure you that we will use the power of our partnership to do all we can to protect your jobs and salary security, which means asking the partners to accept the financial impact of this.”
The firm has 22,000 staff in the UK, more than 2,000 suppliers and around 27,000 clients. To protect those relationships, measures to preserve jobs and help external suppliers are understood to include the delaying profit distributions to partners. Partner profits at PwC UK increased 7.4% to £765,000 for the year to 30 June 2019, with total profit for the year hitting £1.016 billion. Elsewhere, Ellis also reportedly chaired a partnership-wide video call last week, alongside Chief Operating Officer Warwick Hunt, to lay out further possible measures to preserve cash.
The freeze on promotions is not entirely universal, it should be noted. PwC said promotions would still take place where staff members had achieved further qualifications, for example passing accountancy exams. At the same time, the firm has also continued with its recruitment of graduates, and a cohort of 186 new recruits were brought on board at the start of April.
Delaying partner distributions is an option being examined by a number of major law and accountancy firms as a way to conserve cash and ride out the crisis. Magic Circle law firm Allen & Overy has launched a partner cash call, while delaying the distribution of profits alongside a freeze in lawyer and support staff pay. Meanwhile, Grant Thornton also recently asked its 4,500 UK employees to volunteer a 40% reduction in their pay to avoid redundancies.
