Comp Watch ’12: Sizing Up the Big 4

It's the last day of April, which means that hopefully you've tied up all the loose ends that were left over from Busy Season 2012 (aka the best one yet). The month of May brings flowers, drunken afternoons at the baseball diamond in your fair city, and speculation about your compensation adjustments. Of course, some people can't even wait for May Day to start wondering aloud:

Any ideas on Big 4 raises?
The short version is, "No." But since we know how you guys like to get lathered up about this stuff, we'll recap some of last year's developments and throw in a little speculation for each firm
 
PwC
2011: Last year, PwC unveiled an entirely new structure for determining, discussing, and diffusing explosive situations related to their compensation. It was generally well received, and was analyzed and appropriately spreadsheeted. It introduced ideas like milestone awards for new senior associates, managers, and senior managers. It was a progressive move on the part of the firm who had maybe lost a bit of its swagger spending most of the year as – gasp – the second largest firm.
 
2012: Unless PwC has decided that prestige is something that it's no longer obsessed with, we expect that the firm will reward its top performers handsomely. Plus, that's what they said they would do under the new comp structure, so it wouldn't look very good if they broke a promise after one year. Also, Dennis Nally has gone on the record to "expect growth to remain healthy in FY 2012," so that's a decent sign that things could be good. Granted, some people will never, ever be satisfied but overall, we predict that most soldiers at all levels of Papa Whiskey Charlie will be content with their numbers.
Deloitte
2011: Deloitte spent last year throwing their size around. They had finally jumped PwC in revenues and we're feeling pretty good about it, so if you were a member of Gang Green, you were probably expecting something especially generous to accompany the bloviating. That's what the early rumors were, and partners were given cheat sheets on how to communicate the news, but then in the middle of summer, Deloitte started putting together a new structure that looked a lot like PwC's. That is, Senior Associates would make approximately 1.5x their starting salaries in three years, managers making 2x their starting salary and so on and so forth. Deloitte has always been a "monkey see" type firm, so you might have thought, "oh, this could be okay." But when numbers started coming in, they weren't great – not awful – but not up to the level that a lot of people were expecting.
 
2012: Deloitte's reign as biggest was a one-hit wonder, so you've got to think that they'll make up for their shortcomings by throwing some money at their loyal little Dots. However, recent analysis showed Deloitte to be the growing second slowest for FY2011 and it is only halfway through its "four-year US$1 billion investment program," so that could be cause for concern. The bright side is that Deloitte usually recognizes mistakes when they are made, and isn't afraid to try and make it up to employees.   
Ernst & Young
2011: You could argue that Ernst & Young had the most disappointing year as a firm because it had the slowest revenue growth, but E&Y compensation seemed to have kept pace with its P. Dubs and Deloitte.   There wasn't much in the area of fancy schmancy new structures (unless you're holding out on us), UPDATE: Someone (I'm guessing an E&Y employee with delicate sensibilities) pointed out Adrienne's post from last August that more or less states that 12 years with the firm will make you partner (or something) material. Funny thing, the upward trajectory of the arrow in the document looks pretty simiar to the tornado lookin' thing in the PwC document. Well, whatever. E&Y's top performers across all business lines seemed to have gotten paid last year and we all know that's really what matters.
 
2012: There are a number of signs that E&Y might be the firm to beat this compensation season. They are the go-to firm for some of the sexiest clients out there and they came out of nowhere to top Vault's Accounting 50. To follow up all this publicity with tepid financial rewards for its employees would not look good for the firm and would chase away a lot of talent.
 
KPMG
2011: Now this may sounds certifiably crazy, but one could argue that KPMG had the best 2011. The firm enjoyed the largest revenue growth and was thisclose to jumping Ernst & Young for third place. If you hear Chairman Michael Andrew tell it, if it wasn't for stupid Japan, the House of Klynveld would be enjoying third place right this very second. Last summer, the firm surprised everyone by starting their performance review process much earlier (to stem an exodus, allegedly). The numbers were pretty good by HoK standards and the Early Career Investment Bonus added a new wrinkle to the structure, but that still didn't stop the KPMG kvetching. But then, nothing really does. 
 
2012: It's probably too early to speculate on how KPMG's 2012 is going, as there are five months left in the firm's fiscal year, so it could go either way. That said, the firm has long had the reputation of a bridesmaid, so whatever numbers the other firms put up, you can expect KPMG to lag slightly behind.
 
So that's your kick off post for the 2012 Comp Watch season. Of course, if you've heard rumors already or are in the know about such matters for your firm, the best thing you can do is email us with the details. 

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