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PwC has warned its 26,000 UK staff that it will pay lower bonuses in some divisions, hand out smaller pay rises and curb the practice of half-day Fridays as the Big Four firm struggles with “challenging market conditions”.
Ian Elliott, chief human resources officer, wrote in a note that “our bonus pool will be similar to last year” but “a number of areas” will see “a reduction in the average bonus per head”, while some would also see lower pay increases .
PwC also cut a pandemic benefit that allowed employees to take a half-day on Fridays during the summer, reducing the benefit from eight weeks last year to six weeks. This policy was in effect for 12 weeks in 2022.
“Given the market conditions, it is especially important that we balance carefully [summer working hours] with the needs of our clients, teams and work commitments continuing to take priority,” Elliott said in a separate statement.
Some partners expected the firm’s new management to drop summertime benefits entirely this year, with one senior partner saying it was disrupting business with clients.
This is the second year in a row that employees have received disappointing pay updates and warnings of cut raises and bonuses.
Most UK employees have had a 3 per cent rise since July this year, PwC said in a statement to the FT. Last year, salaries increased by up to 6 percent, and in 2022, the company increased half of its employees by a sudden 9 percent.
The latest pay round at PwC shows how some of Britain’s biggest professional services firms are curbing wage growth after UK inflation fell back to 2 percent in recent months and soared above 11 percent at the end of 2022. in the City of London, where law firms are still aggressively raising salaries for junior lawyers.
According to people familiar with the matter, PwC has frozen entry bands for its graduate-level consultants, while increasing the number of junior consultants rated as “unfocused” in performance reviews, effectively holding them back from raises and bonuses.
Many of those deemed off track have now been placed on performance improvement plans (Pips), the people added. The firm’s first-year associate consultants are paid around £33,600 in London and £31,000 in its regional offices.
One PwC associate said: “Management screwed up with over-recruitment and now we have to pay for it. [There has been] an overemphasis on billable hours, which was used as a deciding factor in promotions, even though we were assured that this would not be the case.
“They are offering us voluntary redundancy packages and deploying Pips if we stay because we have been unfairly rated ‘off track’ under their targeted distribution model for performance appraisals. This has led to unfair evaluations, delayed promotions and significant impacts on our morale and mental health.”
Associates can still get a raise depending on where their salary is within the group. Good performers can be promoted to a higher band, which comes with an automatic raise, said one person briefed on the pay review.
The Big Four recently launched a round of “quiet redundancies” in the UK, as the FT previously reported , while associate promotions have also been delayed due to a lack of work.
PwC’s UK partners were paid an average of £906,000 in the year to June 2023, down from £1.03m the previous year.
PwC said: “We continue to invest heavily in our people. The vast majority received a bonus and a three percent pay rise, and our summer working hours are back on, albeit for a shorter period. Bonuses are discretionary and there will always be instances where they will not be awarded, such as when performance expectations are not met.”