Big Four accounting giants KPMG and EY have begun demoting senior equity partners in the UK, moving them from profit-sharing roles to lower-status salaried partner positions. This strategic shift aims to reduce the equity partner headcount and adapt to changing market conditions.
KPMG's Career Conversations
KPMG, which paid its equity partners an average of £800,000 each last year, has been inviting partners for “career conversations” as part of a plan to cut the number of equity partners, according to the Financial Times. A KPMG spokesperson told City AM: “Over a two-year period we will have created more than 200 new roles in our partnership, and we look forward to more partner promotions during our next financial year. As you’d expect in a dynamic business like ours, all partners are performance managed.”
Industry-Wide Trend
Over the past few years, all Big Four firms have increasingly shifted away from granting equity partner promotions, instead offering salaried partner roles that do not include a stake in the company or its profits. EY has been downgrading equity partners to salaried positions since 2022. This move moves away from the traditional method of pushing underperforming senior equity partners into retirement or resignation.
Pressures on Consulting
The professional services sector, particularly consulting, is facing significant challenges. The Big Four – Deloitte, EY, KPMG, and PwC – are under pressure from slowing demand, regulatory scrutiny, and competition from private-equity-backed boutique firms, many founded by ex-partners. The impact of artificial intelligence is also reshaping the industry, with firms grappling with falling fees while trying to integrate new technologies to stay competitive.
PwC recently announced plans to standardize its consulting services after a fee decline in its consultancy division. The equity partner demotions follow KPMG's announcement in March that it would lay off 500 staff in its auditing arm due to “current market conditions” and low attrition rates.
These developments highlight the ongoing transformation within the Big Four as they navigate a rapidly evolving business landscape.
