EY to centralise power in Europe in break from typical Big Four model
EY will centralise power in a new European executive team, in a move that breaks away from the typical model employed by Big Four firms.
The European executive team will pool resources from across the region, the Financial Times first reported.
Big Four firms typically operate a federal model, with profits and resources largely kept within the confines of national firms or small subregions.
Separate legal entities will be retained in each country despite the centralised power, a typical move by the Big Four and one that protects them from liability in on area leaking through to the rest of the business.
People briefed on the plan told the FT that the central European team will decide on partners’ pay, and that it was hoped the move would cut management costs.
The regional grouping will include Germany, France, the Netherlands, Italy, Spain and 20 other western European and north African countries.
The centralised power is scheduled to launched on July 1 and does not include the UK.
Big Four firms have faced criticism that they operate in a way that it global when it suits them, and local when it suits them.
Atul Shah, professor of accounting and finance at City University, told Morning Wire: “This is rearranging the deckchairs on the Titanic.
“To regulators, they have always been giving warnings that if you close one down, we will be the Big 3 – so leave us alone, as we are ‘too big to fail’.
“Fundamentally, it’s the leadership culture and aggressively commercial model of these firms which is broken and this cannot be fixed by changing ownership structures.”
In a statement, EY said: “The new Europe West region will allow us to better serve EY clients across this newly combined market.
“This will also bring accelerated development of EY people with access to professional mobility, diversity of knowledge and experience.”