News: PwC announces plans to slash up to 600 jobs in the UK amid decreased attrition rates

Strategic HR

PwC announces plans to slash up to 600 jobs in the UK amid decreased attrition rates

The majority of the job cuts will be focused on junior and mid-level positions, in line with the firm's workforce structure, which has a larger number of employees in these lower tiers.
PwC announces plans to slash up to 600 jobs in the UK amid decreased attrition rates

PwC is considering reducing its workforce in the United Kingdom by as many as 600 positions, prompted by a sharp decline in the rate of employee resignations within the company. The company is preparing to introduce a voluntary redundancy program targeting 500-600 individuals. 

However, if an insufficient number of employees choose to depart voluntarily, PwC may need to implement mandatory job cuts, reported Financial Times.

PwC had been the lone exception among the Big Four accounting firms in the UK, avoiding substantial staff reductions. However, company executives took action in response to a decline in the number of employees voluntarily resigning in recent months. Consulting firms experienced a great resignation phenomenon in 2021 and 2022, coinciding with a surge in demand for their services. 

Nevertheless, they have more recently encountered challenges related to escalating costs, reduced demand for certain services, and an abundance of employees choosing to retain their positions as job openings at startups and technology firms have become scarcer.

According to FT, PwC's attrition rate, which represents the percentage of employees leaving the firm each year, has recently dropped by 5 percentage points and is presently hovering around 10 per cent. 

Even with the upcoming round of redundancies, the number of departures would still be lower compared to what it would be under normal attrition levels. These job cuts, which are expected to impact approximately 2.4 per cent of PwC's total workforce of 25,000 employees in the UK, will primarily target the firm's advisory business. 

A small number of positions within the tax department are also anticipated to be affected. It's worth noting that the audit division will remain unaffected by these changes. Employees across the hierarchy, ranging from directors (the most senior tier below partners) to those in junior positions, are expected to be impacted by these cuts. A larger proportion of the reductions will be concentrated in junior and mid-level positions, which aligns with the firm's structure that has a larger workforce in these lower tiers. 

PwC UK's Chair, Kevin Ellis, informed the Financial Times that the firm opted to initiate the redundancy round instead of postponing or rescinding job offers extended to a significant number of recent graduates and school-leavers.

According to Ellis, the decision to prioritise job cuts over delaying opportunities for those just starting their careers was influenced by a sense of "fairness." They wanted to ensure that individuals embarking on their professional journey and who haven't yet received training wouldn't have their prospects abruptly curtailed. Moreover, slowing down the hiring process could negatively impact the firm's diversity and social mobility initiatives since new hires tend to bring more diversity to the organisation as a whole. 

Ellis further explained to FT that refraining from hiring for expanding teams and keeping existing staff in their current roles rather than making necessary job cuts would create an imbalanced and unsustainable business structure. Individuals in their first year at PwC will not be affected by the redundancy program. 

Moreover, those choosing voluntary severance will receive a more generous severance package compared to those subjected to compulsory redundancy. In PwC's most recent financial year, partners received an average compensation of £906,000 even as profits remained stagnant. 

When questioned about the decision to make redundancies rather than impacting partner profits, Ellis emphasised the need for the firm to remain competitive across all levels, including partner positions. 

He argued that running a profitable business is essential to contribute to society, whether through funding apprenticeships or supporting educational programs in schools. 

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Topics: Strategic HR, #Layoffs, #HRTech, #HRCommunity

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