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Janet Truncale presented Carmine Di Sibio with luggage tags at a humorous farewell party at New York’s Glasshouse last week, cheekily hinting that he would have to get used to commercial travel again.
Truncale finally got the keys to EY’s corporate jet on Monday, seven months after she was chosen to succeed Di Sibio as global chief executive of the Big Four accounting firm. Now she must also 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 the farewell party, ruling out immediately reviving the plan, dubbed Project Everest, which would have spun off EY’s consulting business to free it from conflict-of-interest rules that prohibit it from working with EY’s audit clients.
But her alternative growth strategy, which she dubbed “All In,” was criticized in some quarters for offering too few details while dodging some of the biggest questions Everest had raised.
Executives at rival companies are watching closely to see whether Truncale can restore direction to the $50 billion organization or steal disappointed partners or clients.
“They’ve had a lot of time to prepare and we need a lot more substance,” said one person watching a webcast in which Truncale outlined the strategy for EY’s 14,000 partners.
The person said they exchanged disappointed messages with other listeners during the 75-minute conversation as they struggled to figure out concrete plans and became confused about Truncale’s stance on Everest.
Rumors have swirled within the company in recent months that the project is back on track, with people pointing to cost-saving layoffs or other structural changes to argue that work is back on track. Truncale tempered such talk with a staff memo on Thursday, in which he said the company would need to recommit to working together as one organization.
However, she said in the webcast that the problems that set the Everest climb in motion still persist, according to several partners, reinforcing the impression that she is open to reconsidering some kind of split in the longer term.
“The idea that it’s not off the table, but that there’s nothing on the table, is not satisfying for those who want it to come back or for those who thought it was a bad idea,” the webcast listener said.
Because EY controls most of America’s largest technology companies, including Google, Amazon and Oracle, the consulting arm is at a disadvantage for big IT projects compared with rivals that can partner with those firms. Truncale on Thursday pledged to make “differential investments” in other services to expand the consulting arm, such as business transformation, managed services and sustainability consulting.
In a memo to EY’s 400,000 employees, Truncale indicated she would put more meat on her bones in the coming months. People with knowledge of the decision-making process said the work to tie together the global strategy with plans for individual countries and business lines was still in the early stages. The slow pace has frustrated some senior executives under Truncale, the people said.
In a statement, the firm said there would be “an ongoing dialogue with EY partners and people” as “All In” is rolled out. One person said thousands of employees and partners had already provided input into the strategy through hundreds of hours of workshops, discussions and surveys.
Truncale’s ambiguous position on Everest has left some hoping for a spin-off or sale of the consulting business, and for the personal financial windfall Everest once promised in the form of cash payments to audit partners or equity stakes for people in a new independent consulting firm.
The landscape will certainly look different later in Truncale’s four-year term. American managing partner Julie Boland, accused by Di Sibio of blocking Everest, has two years left until the end of her own term. In the UK, a leadership race is already underway to replace the retiring Hywel Ball.
At the same time, EY is in the midst of another operational overhaul, aligning its structure by sector. While advisory and audit work for financial services clients has already been consolidated under a single management team in some regions, there will soon be greater coordination across other sectors, from consumer and health, to industrial and energy, to technology, media and telecom. Over time, that could shift the power dynamics within the firm.
A key test of “All In” will be whether the high-performing partners remain energetic and committed to the business.
When a senior partner recently decided to leave, a colleague tried to dissuade him by claiming that Truncale would realize Everest 2.0. The proposal did not work.
“During Everest, everyone was hanging around, waiting for the payout,” the former partner said. “Now there’s a huge leadership vacuum and I know a lot of partners, high-performing partners, who want out. As the market improves, the pace of exits will increase.”
Laura Empson, a professor at the University of London’s Bayes Business School who specialises in the management of professional services firms, said Truncale’s vague strategy could prove itself if a robust decision-making process were put in place.
“The resolution of intractable conflict comes from a careful process of consensus building among people who collectively have much to lose,” she said. “The act of building that consensus is not necessarily seen as an act of leadership until it is finally resolved.”