EY Split Sets Stage for Big Labor Shuffle Among Big Four

Ernst & Young’s plan to break out its consulting practice as a global advisory behemoth threatens to unleash a shakeup of the labor market for accountants and consultants at the Big Four firms and beyond.

EY staffers are already dipping their toes into the job market, reconsidering their own careers and the type of employers they want to work for as their firm’s top leaders set the stage for a historic restructuring.

Professionals on the partner track are particularly in demand as the firm’s competitors line up to nab top talent.

“You’ll see a wave of promotions, you’ll see departures from EY, and you’ll see hiring from EY because they’re going to be out there poaching as well,” said Tom Rodenhauser, managing director with Kennedy Research Reports, which analyzes the consulting industry.

EY plans to spin off its advisory and tax strategy practice into a stand-alone public company in a combined debt and equity deal through which it expects to raise almost $30 billion.

As the firm’s global partners prepare for a vote to advance the split, EY staffers are contemplating their next career moves. Their options include jumping to other firms or perhaps starting their own practices, said Geremy Cepin, a principal in the professional services practice at Korn Ferry.

“For EY people, it’s been a very trying year,” Cepin said. “There’s been a lot of back and forth and a lot of strains and stresses and sleep lost, I’m sure, wondering, ‘What’s going to happen to me? I’m not a partner, I’m not getting a big payout at the end. Maybe it’s time to do my own thing.”

So far, fewer than 10% of the EY staffers who’ve left the firm in recent months cited the planned split as a reason for quitting, , said Trent Henry, vice chair for talent with EY’s global arm. The decoupling has helped the firm to recruit new hires and keep current workers, he said, with retention rates rising in the second half of 2022.

“The brand potential that that has for people to work through a transaction like this is really exciting,” Henry said. “Our new recruits tell us when they join, they’re really motivated by Everest,” he said, a reference to the firm’s moniker for its restructuring strategy.

Still, the drip of EY staff departing the firm could pick up in the months before any formal restructuring as workers learn how they will be directly affected.

“People stay because of the people,” said Ally Zimmerman, an assistant accounting professor at Florida State University. “So they’re going to wait to see what happens to the partners, what happens to the people that they work with. And if those people move, they are going to move.”

On Track

Professionals on track to someday join EY’s partnership are most likely to be recruited by the firm’s rivals—senior consultants and non-equity directors won’t get million-dollar paydays if the deal goes through, making them “prime candidates,” Rodenhauser said. They also might prefer to work in a traditional private partnership rather than a public company version, he added.

For EY’s current partners, the breakout of the consulting and tax strategy practice into a stand-alone business represents a chance to cash in. Audit partners and some tax partners will take home a payout of two to four times their annual compensation, while consulting partners are in line to receive lucrative equity stakes in the new public company.

EY’s audit and consulting business will see demand for their services mount, and revenue with it, once they are free to compete for the same set of clients and customers take advantage of more choices in the market, firm leaders predict.

“EY is going to be very aggressive on its side,” Rodenhouser said. “The other Big Four may see this as an opportunity, but I think EY really believes that they have a greater opportunity. And they’re going to make a hard pitch to the rest of the industry, to the rest of the market, that theirs is the next big thing. And honestly it kind of is.”

Smaller firms will also vie for EY staff. Among their targets are tax professionals who feel left out by the split, which would send tax strategists to the new public company and delegate compliance experts to the audit practice.

“We view ourselves on the tax side as being a viable alternative,” said Mark Vorsatz, chairman and CEO of Andersen Global, a fast-growing, tax-only firm with offices around the world.

EY will face a challenge in attracting “people who are going to want to do that work,” he added.

Resignation Recovery

Turnover in the accounting field has leveled off since millions of American workers quit their jobs as the “great resignation” upended the labor market in 2021 and through the first half of 2022.

An economic downturn could curb demand for accountants and consultants. But hiring demand is expected to remain strong this year even with accounting firms being more selective about whom they hire and a bit stingier with the wages on offer.

“The bleeding has sort of stopped, but they’re still short of people,” said FSU’s Zimmerman,, who predicts that staffing shortages and demand for skilled employees could push up wages for accountants.

That’s good news for Zimmerman’s accounting students who’ll enter the job market later this year.

A shrinking supply of newly minted CPAs has magnified the challenge of filling open slots as accountants left their jobs in record numbers a year ago. The Big Four accounting firms have spent billions in the US boosting wages to fill openings and dissuade staff from leaving for bigger paychecks that sometimes doubled their wages.

Weekly average wages for CPA firm workers rose more than 6% in 2021 and jumped nearly 10% in the first half of 2022, according to Bureau of Labor Statistics employment figures.

But beyond paying more, there could be an unexpected boon to any hiring shakeup: Firms could scoop up skilled minority professionals along the way.

“If people do decide to leave EY, they might target more black accountants than they do others,” said Mithu Dey, associate professor of accounting at Howard University. “This would be a good way of increasing their diversity numbers at the upper levels.”

-with assistance from Irina Anghel in London.