EY’s new boss shuffles leadership roles and plans cost cuts

EY’s new boss Janet Truncale has set out her leadership team for the Big Four accounting firm, moving an architect of its failed split from his executive role and signalling plans to cut costs across the global firm.

Truncale named four global managing partners to help run EY when she takes over as chief executive and chair in July, according to an email to partners this week, which said the wider global executive team would be “the same size or smaller” in the future.

Andy Baldwin will leave his current role as global managing partner for client service and instead become a senior adviser, according to the email.

Truncale beat Baldwin and four other candidates for the top job in November, with a brief to heal divisions caused by the failure of a plan to spin off the firm’s global consulting business. Baldwin had been a major player in designing the plan, dubbed Project Everest, alongside outgoing global chief and chair Carmine Di Sibio.

The plan’s failure highlighted long-simmering tensions between EY’s global headquarters and the leadership of its US business, which nixed the spin-off last April after more than a year of work and planning costs that ran to $600mn. In the days after the decision, US chair Julie Boland said she would push for cost-cutting at the global level.

Unlike multinational companies, EY is structured as a network of locally owned partnerships, with the global headquarters overseeing the brand, managing IT and imposing audit standards. The US has often chafed at these central costs, which totalled $6.4bn last year, or almost 13 per cent of the group’s global revenue.

Truncale is planning cuts to that central organisation as part of a broader overhaul of operations, said people familiar with the matter. She could set out a cost-savings target running to hundreds of millions of dollars annually, the people said.

She is also expected to be pressed on other aspects of her strategy at a meeting of senior partners in Florida this week.

Although Truncale had not been a member of the global executive team under Di Sibio, she is his longtime ally and had been a supporter of the plan to split the firm, which would have been the most radical restructuring of a Big Four firm in two decades. Advocates said Project Everest would have freed the audit and consulting sides of the business from conflict of interest rules that limit their growth.

Truncale expanded the number of global managing partners from two to four. They are the most senior roles on an executive team that at present numbers 18 people.

She handed two of the four roles to defeated rivals for the leadership. Jad Shimaly, head of EY Canada, will take on some of Baldwin’s role overseeing client services, and Raj Sharma, head of the US consulting business, will become global managing partner for growth and innovation.

Anthony Caterino, another veteran partner from the US business, and Harsha Basnayake, at present deputy leader of the Asia-Pacific region, round out the inner circle.

In the email to partners, Truncale said Baldwin would become a senior adviser whose “deep knowledge of our organisation will be an asset to me personally” and to the wider leadership team.