[Updated with message from CEO Brad Preber to Grant Thornton staff.]
Yesterday evening as I was on my way home from picking up some Red Robin for dinner for me and my family, we got a text on the tipline that Grant Thornton partners in the U.S. are taking a 25% pay cut. That was news to me. I had seen that GT in Australia and in the U.K. were cutting partner and staff pay/hours to avoid mass layoffs during the COVID-19 crisis, but nothing about what was going down at the Purple Rose of Chicago.
But the tip seems legit. A source told me this morning:
I can confirm partners and principals are having monthly draws reduced by 25% through the end of Grant Thornton’s fiscal year (July 31, 2020). Partners and principals will also contribute to a capital call. No mention of potential layoffs or bonus cuts, but it’s not like there is much to cut from bonuses to begin with. Overall, leadership has been open with information and seems to be working to keep morale high during the last stretch of busy season.
Here’s the message that CEO Brad Preber sent to GTers regarding “keeping our business strong through the coronavirus pandemic.” Thanks to the tipster who sent us this:
To my teammates,
In my messages throughout this COVID-19 crisis, I have reiterated three priorities for our firm: first, to take care of our people; second, to be there for our clients; and third, to keep our firm strong. We have discussed at length the many steps we have taken on our first two priorities. It is our third priority I write to you about today.
Like every business in America and around the world, we are beginning to prepare for the likely effects of the global pandemic and the resulting economic slowdown.
While our firm was on a path for record financial performance in fiscal year 2020, and today our financial resources are more than sufficient, we are acting in an abundance of caution given the uncertainties of the road ahead. To ensure our firm has the financial means and flexibility to come through this crisis in a position of strength and leadership, the leaders of the firm are taking steps to maintain ample liquidity and ensure a strong balance sheet. These include reducing discretionary spending, pursuing opportunities to help clients navigate the current crisis, and participating in federal stimulus and regulatory relief programs.
The National Leadership Team also has worked closely with the Partnership Board over the past week on a number of steps we are asking leaders, partners and principals of the firm to take to address the uncertainty of the economy brought on by the virus.
Consistent with our attitude of “showing the way,” our leaders and the owners of the firm have acted to further strengthen our balance sheet and liquidity. This, we believe, is an approach grounded in our understanding of “servant leadership.” Accordingly, we are taking the following actions:
- We are reducing scheduled interim profit distributions to partners and principals during the coronavirus pandemic, with the majority of partners and principals having monthly draws reduced by 25% through the end of Grant Thornton’s fiscal year (July 31, 2020).
- As an additional demonstration of stewardship and confidence in the firm, partners and principals will contribute to a capital call, in effect making an incremental investment in the firm. This will enhance the firm’s already strong balance sheet should market turmoil dramatically worsen.
- All six managing directors on our firm’s National Leadership Team have volunteered to take a 20% cut in their salary payments through the end of the fiscal year. They are doing this as an act of solidarity with the firm’s partners and principals.
For purposes of decision-making, our financial goal this year is 100% focused on taking care of our people, serving our clients and keeping the firm strong. We will continue to develop plans to keep the firm strong, depending on the length and severity of the COVID-19 crisis and the economic slowdown.
Finally, I’ll note that sharing these decisions with all of you, even as they only directly impact the firm’s partners, principals and leaders, reflects a greater openness that we are used to in a private partnership. I am taking this step, given these extraordinary circumstances, in the hope that greater transparency in a difficult time will help us all build a spirit of unity with one another so we can work together to overcome our challenges and come out of this situation even stronger than before.
As always, I cannot thank you enough for the amazing work you and all our teammates are doing under very difficult conditions to serve our clients and support one another. You have my deep and enduring gratitude.
As always, our virtual doors are wide open, so if GTers have anything else to add about what’s been happening at Preber & Co., give us a holler by email or text using the contact info below.