Former Andersen Workers Find Job Switch Taxing

On May 13 a year ago, about 1,000 former Andersen partners and staff gathered for breakfast in a Hyatt Regency ballroom. They were there to mourn the death of the once-venerable accounting firm and to celebrate rebirth as new employees of what had been one of their biggest competitors, Deloitte & Touche.

“I was just happy I had a job,” said Joshua Harris, who also was glad to see so many of his colleagues at the all-day affair, which included panel discussions on Deloitte's way of conducting business.

Each place setting included a briefcase monogrammed with the firm's name.

The briefcase has been put away, along with Andersen souvenirs Harris collected during his two years there. In January, Harris and two other Deloitte tax accountants from Andersen opened their own tax firm in downtown Chicago.

Their departure is illustrative of the upheaval still hitting the accounting industry a year after Andersen's collapse. The movement is especially acute among former Andersen employees who had little time to get over the trauma of their firm's demise before being thrust into new work cultures.

Some have shed the life preservers offered by Deloitte. After years of working in Andersen's aggressive, sales-oriented culture, they couldn't get used to Deloitte's more conservative ways. Others learned that big public accounting firms no longer were safe harbors where people could work hard for several years and eventually become partners.

“The culture is different, the people are different, the hierarchical structures are different,” said Michael Pickens, regional director of the recruiting firm AccountPros Executive Search in Chicago.

Some branched out on their own, like Harris. Others moved to smaller companies, like Brad Hammerman, a 25-year-old tax accountant; the accounting firm he joined has 25 employees.

The turnover has been particularly noticeable in Chicago, where Andersen was headquartered. Deloitte hired about 20 percent of Andersen's 5,000 local workers, including most of those in its vaunted tax practice.

Although the integration has been challenging, Jim Wall, Deloitte's head of human resources, said he is pleased with the progress of assimilation. It's not surprising, he said, that some former Andersen folks have left. He estimates that turnover among former Andersen employees in the first year is nearly 20 percent.

But he said that departure rate is only slightly higher than Deloitte's annual turnover. More important, he said, only a handful of the 200 Andersen partners who joined Deloitte–the people closest to the clients–have left.

With Andersen's meltdown, Deloitte has emerged as Chicago's dominant public accounting firm, with about 2,600 employees. It took over most of Andersen's national tax practice and about 60 percent of the audit clients from Andersen's crown jewel Chicago office.

Deloitte officials are careful to say that growing the firm more than a third by taking on the Andersen employees was not an acquisition. “A lot of people chose to join us,” Wall said.

But some might say that Deloitte's integration task was as difficult as a merger, and in some respects even more daunting.

The two came together in lightning-quick fashion. Shell-shocked Andersen employees below partner level had almost no control of their situations. They either followed the partners they reported to or they would be out of a job.

In some areas of Deloitte, some questioned who was taking over whom.

Deloitte brought over about 500 Andersen tax professionals, more than double the number of professionals in its Chicago tax department.

Andersen's ranks were so overwhelming that Deloitte initially housed them in a separate building–the Aon Center across the street from its headquarters in the Prudential Plaza–until it could figure out a more efficient office layout.

For the first two months, Andersen employees had virtually no interaction with their new Deloitte colleagues. They went to lunch with the same Andersen co-workers and reported to the same partners.

It was as if nothing had changed. The joke around the office was that the Aon Center had become “Andersen East,” meaning east of their old address on Monroe Street.

At first there wasn't much work. Former Andersen employees could not bring their client files with them–at least in the beginning.

Once Deloitte began integrating the two tax departments, the firm moved tax professionals from its headquarters to the Aon building.

That stirred some resentment among Deloitte employees, former workers say.

Some former Andersen employees felt there were too many tax professionals for the amount of work, though Deloitte officials disagree.

“I wasn't very busy,” Hammerman said. “I needed to go somewhere smaller, where I could have more interaction with partners.” He now works for Africk Chez PC in Deerfield.

Other differences came into play. At Andersen, the managers regularly took their staff to lunch at upscale downtown restaurants like Nick's Fishmarket. Lunch meetings at Deloitte were held at casual restaurants like Bennigan's.

Deloitte's thriftiness extended to pay raises. Average raises for those below partner were 5 percent, say former employees, who were used to 10 percent to 12 percent raises at Andersen.

“That symbolized to me that it wasn't going to be business as usual,” said Wesley Naviaux, 32, who partnered with Harris, 25, and Jeremy Dubow, 26, to start an accounting practice, Naviaux, Dubow & Harris LLC.

Others could not get used to Deloitte's bureaucracy. Business consultant Michael Klayman said Deloitte often took a long time approving new clients. In one instance, the legal department took six weeks to review a potential client for possible conflicts of interest. At Andersen, the same review would have been completed in a week.

“Deloitte is much more conservative, much more by the book,” said Klayman

Not that Deloitte's approach is wrong. Klayman, 37, believes Andersen's aggressive, salesman-like culture also led to its demise.

“But it also made for a more challenging place to work,” he said.

“It made for a place that had an edge to it.”

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