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Janet Truncale handed Carmine Di Sibio luggage tags at a joke-filled retirement party at New York’s Glasshouse last week, brazenly hinting at how she’ll have to get used to traveling in advertising again.
Truncale finally picked up the keys to the EY corporate jet on Monday, seven months after he was tapped to succeed Di Sibio as global chief executive of the Big Four accountancy firm. Now he also has to pick up the pieces from last year’s collapse of his plan to split the company in two.
She launched her own strategy on Thursday, just hours before she was due to retire, ruling out an immediate revival of the plan, dubbed Project Everest. It would separate itself from EY’s consulting business to free it from conflict-of-interest rules that prevent it from working with EY’s audit clients.
But its alternative strategy for growth, labeled “All in”, has been criticized in some quarters for being tight-lipped on detail while sidestepping some of the biggest questions raised by Everest.
Executives at rival firms are watching closely to see if Truncale can restore a sense of direction to the $50 billion revenue organization or if they will be able to pick off disillusioned partners or clients.
“They’ve had a lot of time to prepare and we need a lot more content,” said one person who tuned in to the webcast in which Truncale outlined the strategy to EY’s 14,000 partners.
The person said they exchanged disappointed messages with other listeners during the 75-minute call as they struggled to discern specific plans and left confused by Truncale’s stance on Everest.
Rumors have swirled inside the company in recent months that the project is back on, with people pointing to cost-saving layoffs or other structural changes to claim work is back on track. Truncale quelled such talk Thursday by telling employees that the company should “recommit to working together as one organization.”
However, she said in the webcast that the issues that sparked Everest remain, according to several partners, reinforcing the impression that she would be open to reconsidering some kind of split in the long term.
“The idea that it’s not off the table, but that there’s nothing on the table, doesn’t satisfy either those who want it back or those who thought it was a bad idea,” said a webcast listener.
Because EY audits most of America’s biggest technology companies, including Google, Amazon and Oracle, its consulting arm is at a disadvantage for large IT projects compared to competitors who can work with those companies. On Thursday, Truncale promised “differential investment” in other services to expand the consulting arm, such as business transformation, managed services and sustainability consulting.
In a message to EY’s 400,000 employees, Truncale said it would put more meat on its bones in the coming months. People familiar with the decision-making process said work to weave a global strategy together with plans for individual countries and business lines was still in its early stages. The slow pace frustrated some executives under Truncale, the people said.
In a statement, the firm said there would be “continuous dialogue with partners and EY people” as “All in” was launched. One person said thousands of employees and partners have already contributed to the strategy through hundreds of hours of workshops, discussions and surveys.
Truncal’s ambiguous stance on Everest has left some still hoping for a spin-off or sale of the consulting arm — and the personal financial gain Everest once promised through cash payments to audit partners or equity stakes for those in the newly independent consulting company.
Later in Truncale’s four-year tenure, the landscape will certainly be different. American managing partner Julie Boland, whom Di Sibio accuses of blocking Everest, has two years left on her own term. The race is already underway in the UK to succeed the outgoing Hywel Ball.
At the same time, EY is undergoing another operational review, which unifies its structure according to sectors. While advisory and audit activity for financial services clients is already consolidated under one management in some geographies, there will soon be greater coordination in other sectors, from consumer and healthcare to industrial and energy to technology, media and telecommunications. Over time, this could shift the power dynamics in the company.
A key test of “All in” will be whether high-performing partners remain energized and committed to the firm.
When one senior partner recently decided to leave, a colleague tried to dissuade him by insisting that Truncal deliver Everest 2.0. The playground was not working.
“During Everest, everyone was hanging around the hoop waiting to get paid,” said a former partner. “There’s a huge leadership vacuum now and I know of a lot of partners, high-powered partners, who want out. As the market improves, the pace of departures will increase.”
Laura Empson, a professor at the University of London’s Bayes Business School who specializes in the management of professional services firms, said the implementation of Truncale’s fuzzy strategy could still prove effective if a robust decision-making process was in place.
“A solution to an intractable conflict comes from a careful process of building consensus among people who collectively have a lot to lose,” she said. “The act of building that consensus is not necessarily considered an act of leadership until it is definitively resolved.”