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Deloitte Bullying Claims Show Big Four Cultures Resist Change

March 10, 2021, 9:46 AM

Accounts of bullying and harassment that sidelined two top managers at Big Four firms in the U.K. have exposed the tensions that persist in their pressure-cooker working environments despite promises to promote equity and work-life balance.

Even before the Covid-19 pandemic, the accounting firms have tried to burnish their reputations as great places to work despite grueling travel and work schedules and intense pressure to add clients and revenue. Challenges combating workplace harassment are not unique to the accounting profession, and the pandemic-driven switch to remote work has only exacerbated the risk of bullying and discrimination for many companies.

But the recent high-profile missteps by senior leaders at Deloitte and KPMG underscore just how hard it is to change culture and maintain it amid a historic overhaul in how work is done.

“When you have someone as high up as the head of HR or someone as high up as the head of U.K. operations saying really inappropriate things in such a public way, that really speaks to a broken or toxic culture,” said Thomas Fox, a corporate compliance expert based in the U.S.

Deloitte U.K.'s deputy CEO Dimple Agarwal announced she would step aside from her leadership roles but remain with the firm amid an internal investigation after reports of bullying, aggressive behavior on phone calls and demands that her employees who very long hours. The move comes just weeks after KPMG’s U.K. chairman Bill Michael resigned after telling staff to “stop moaning” about the pandemic and ridiculed the concept of unconscious bias in a video call.

Both Deloitte and KPMG have zero-tolerance policies for both bullying and harassment. “We have worked hard to build a culture that encourages our people to speak up and raise concerns—and have the routes to do so—without fear of career penalty or other reprisal,” Deloitte’s U.K. CEO Richard Houston said in response to a request for comment about Dimple’s departure.

KPMG, in a statement, said that it will take action against anyone who doesn’t meet its expectations for how workers should treat one another. “All allegations of discrimination and bullying are taken extremely seriously and investigated, and where the complaints are upheld, appropriate disciplinary action is taken.”

Accounting Problem

Bullying is inevitable within organizations with a strict hierarchy like the largest accounting firms, where the reward for making it to the top is a huge payday, said Ken Charman, CEO uFlexReward, a data company which tracks and compares pay figures across companies.

Big Four staff are expected to meet certain fee-for-service targets. Those who don’t bring in revenue will miss out on promotions or even more lucrative assignments. It’s a reward structure that Charman said contributes to bullying.

“This is a constant Darwinian contest of survival of the fittest,” Charman said in an email. “We need a much better Big4. Let’s hope the generation coming through will finish off this archaic system of tutelage and abuse based on the dream of the million pound pay day.”

Public accounting firms are notorious for demanding workloads, which have compounded challenges to increase diversity throughout the industry. Amid the pandemic, the firms have provided expanded leave and daycare options to ease the strain on workers, especially those with children.

The Big Four has been plagued with bias accusations as well, particularly in the U.K. Fewer than 1% of their partners are Black and less than a quarter are female. All four reported pay gaps between their White employees and workers of color over 30% compared to the average gap of 2.3% in 2019, according to the Office for National Statistics.

Workplace Conflict Common

Workplace conflict is common and increases when workers are under mounting pressure, said Ben Willmott,head of public policy at the Chartered Institute of Personnel and Development. The group found in a survey that 35% of people had experienced conflict over the past 12 months, and 15% reported bullying, he said.

“The pandemic will have shifted the needle on some of these issues,” said Edward Haigh, managing director at Source Global Research, which tracks the consulting industry. “We have to see it as an opportunity and also realize a lot remains to be done. In big organizations, it doesn’t happen overnight and takes a long time to change things within an organization, particularly when it’s cultural.”

The shift to all remote work and workdays full of video calls only adds to the stress and increases the risk of unacceptable behavior, said Fox, the U.S. compliance expert.

Fox said companies need to redouble efforts to ensure compliance with workplace policies including providing staff a way to report complaints and to reach out to employees to check on their well-being.

Companies can mend a toxic culture, but the tone needs to be set at the top.

“If they don’t behave in the right way then company policies are just bits of paper,” Willmott said. “Things are much more transparent now, with social media and Glassdoor, meaning staff can easily air grievances. That makes it much harder for companies to ignore problems.”

Covid Pressure Cooker

Holding employees accountable, especially those in top leadership roles, demonstrates to workers that their complaints will be taken seriously and that anti-harassment or bullying policies are working, said Alison Konrad, who researches organizational behavior at the Ivey Business School at Western University.

Fears about job security, “Zoom fatigue” and the pressure to be available any day of the week or time of day all add to worker’s stress. Managers should be more forgiving and accommodating right now, she said.

“The job of the culture isn’t to make us perfect, it is to show us a vision of an ideal, motivate us to strive for that ideal,” Konrad said. “And then when individuals inevitably cross the line, hold them accountable.”

Beyond Accounting

Women have been disproportionately affected by the pandemic, and have been leaving the workforce at much higher rates then men over the past year. This could lead to long-term impacts for pay and promotions for women and mothers, in particular, beyond the pandemic, said Lorna Borenstein, who runs a Grokker, a company that advises companies, including CVSHealth and Delta Air Lines, on work-life-balance solutions.

“People are burned out, and what we’ve seen is the strain of the pandemic and the workplace culture is leading to that burn out,” Borenstein said.

“This isn’t just Big Four accounting firms. It’s a pervasive and nefarious trend,” she said. “You see companies saying, ‘We’ve increased gender and representation,’ but then you don’t see signs they’ve made progress. It’s not one industry; it’s systemic.”

Mounting evidence suggests that there is a business case for leaders to stop bullying, said Nichelle Carpenter, associate professor at Rutgers University, who specializes in workplace counterproductive behavior and leader and worker performance. Particularly during the pandemic, workers will be observing their leaders’ behaviors, she said.

“We can see when it’s not aligned with the company vision,"she said. “hat is associated with morale and performance.”

To contact the reporters on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com; Michael Kapoor in London at correspondents@bloomberglaw.com; Amanda Iacone in Washington at aiacone@bloombergtax.com

To contact the editors responsible for this story: Bernie Kohn at bkohn@bloomberglaw.com; Jeff Harrington at jharrington@bloombergindustry.com

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