- Payouts to partners at the Big Four consultancies are falling.
- Annual returns are being affected by a slowdown in sales and an increase in the number of partners.
- Partners at EY, Deloitte, and PwC all saw declines of around 5% in their share of profits.
Partner payouts at the Big Four consultancies are falling as demand for professional services declines and firms increase the number of partners.
At EY, partner payouts in the UK, where the global consulting and accountancy firm is headquartered, were down 5% this year. UK partners received an average of £723,000 ($938,000) compared to £761,000 ($987,000) the previous year.
The firm said in a press release that the decrease in pay reflected a rise in the number of partners during the 2024 financial year. EY now has 903 partners as of June 2024, up from 866 at the same point in 2023, the FT reported.
Revenue growth at EY fell from 16% in the previous financial year to just 3% in FY2024. The drop in performance was driven by declines in some of EY’s key divisions, with its consulting and strategy business decreasing by 4% and transactions decreasing by 13%.
“With depressed UK and global deal activity and weak levels of corporate confidence during FY24, we have responded to the market to ensure we have the right platform for continued long-term growth and profitability,” said Hywel Ball, EY’s outgoing UK managing partner.
Senior employees at the Big Four consultancies, which are all privately held, can be promoted to partner status, and some are offered equity ownership in the business. In addition to salary and bonuses, equity partners traditionally receive a share of annual profits.
At PwC and Deloitte, partners have also seen their payouts drop this year as growth slows.
UK partners at PwC took home an average of £862,000 ($1.11 million) this financial year, 5% less than the same period in 2023. PwC reported that its total revenue growth was down to 9% compared to 16% growth in 2023.
At Deloitte, partner payouts were down by 4.5% to around £1 million ($1.3 million), leaving equity partners taking home roughly £50,000 less than the previous year.
The fall in pay comes as the Big Four — which consists of Deloitte, EY, KPMG, and PwC — attempt to balance operations following the end of the pandemic-era rush on advisory services.
Many consultancies hired rapidly to meet soaring demand in the early 2020s. As the workload slowed, revenues declined. The major firms have been making adjustments in order to balance operations, such as delaying start dates for new hires and laying off employees. However, the impact of policies is not expected to be immediate.
Despite the current slowdown in growth, many firms believe AI will provide a necessary boost to business as more companies look to consultants for advice on how best to get started and optimize their operations.
Read the full article here
