We’re just spitballin’ here.
[Grant Thornton] said on Friday its average profit per partner fell 8% from £403,000 to £373,000 in 2017/18.
Ouch! Of the top six accounting firms in the United Kingdom, this puts Grant Thornton sixth, by quite a bit, in average partner pay for the 2017-18 financial year:
And there’s more bad news for GT:
[P]rofits before tax at the firm declined 8% to £71.6m in 2017/18, and revenue fell 1.8% from £500m to £491m.
When Sacha Romanovitch joined the firm as CEO in 2015, the firm reported profits of £82m and revenues of £521m.
Even KPMG U.K.’s profits and revenues increased this year, which is remarkable given all the scandals the firm’s been involved in—both in the U.K. and around the world.
And Grant Thornton will be replaced as the fifth-largest accounting firm in the U.K. by BDO, once Bravo Delta Oscar and Moore Stephens finalize their merger next year.
It’s no wonder a disgruntled Grant Thornton employee reportedly sent an anonymous memo to several media outlets in September that contained Romanovitch’s performance review. The document, which the publications were told represented the views of 15 partners or directors at Grant Thornton, said Romanovitch was pushing a “socialist agenda” and had instilled a “culture of fear” at the firm where there are severe repercussions for speaking out. The memo also said the firm was “out of control” and has “no focus on profitability.”
After taking over as CEO, Romanovitch put in place a “shared enterprise” model—a huge departure from the usual partner-owned and run structure of professional services firms—in which all of Grant Thornton U.K.’s 4,500 employees would have a say and a stake in how the firm is operated. She also repositioned the firm to focus on “profits with purpose,” which meant dropping unsavory clients in an attempt to grow sustainably.
Economia reported that Grant Thornton’s lackluster performance this year was due to “one-off portfolio disposals which had delivered revenue in the previous year, as well as a number of contracts that had come to an end and had not been replaced with similar work.”
These included the end of three large public service contracts, with a combined revenue of £20m, six small portfolio disposals and decisions taken about clients the firm no longer wished to work with.
Romanovitch, the first female chief executive of a major U.K. accounting firm, announced on Oct. 15 that she wasn’t going to seek a second four-year term as Grant Thornton’s CEO.
I’m sure Grant Thornton’s partners, who now make an average of £158,000 less than the partners at GT’s biggest mid-market competitor, BDO, would agree.