Live from the Archives: The Big 4 and a Living Wage
There is ongoing dialogue about whether Big 4 pay is too low — it is — and about the obligation of companies when they outsource, including closer to home. What about vendors and business partners?
This was published on my legacy blog re: The Auditors on April 8, 2008, yes, 16 years ago! Today is Labor Day and I thought I would give new readers a chance to go back and look at my early work, now found at francinemckenna.com. I started writing there in October of 2006 and stopped publishing new material when I went to work full time at MarketWatch in 2015. I also posted comments on my work and travels between 2015-2019 there, until I started this newsletter at the end of 2019.
Look around. Jump in! The water is still warm, but winter is coming.
There’s an ongoing dialogue related to my Big 4 Blind Items post.
Specifically, someone added a comment regarding outsourcing/off shoring work by the Big 4 to India and other lower wage countries. My comment, regarding my experiences while a Managing Director for KPMG Consulting/Bearing Point in Latin America, is there, too.
However, that got me thinking about the obligation of companies when they outsource closer to home. I’m curious about their commitment to insure those workers are paid a a living wage.
Now, we’re not talking about the Big 4’s professional staff. As has been well documented here, salaries for even entry level employees are very high by cafeteria worker standards, however contrived they might be to reduce the ability of these employees to negotiate in true free-market fashion.
I had a long talk with a representative from the group that is supporting cafeteria workers at the Aramark-run cafeteria in the PwC headquarters on Madison Avenue in their struggle to consider union representation. We discussed various approaches that could be used to exert more pressure on PwC leadership to encourage Aramark and their client Goldman Sachs, who has a significant investment in Aramark, to negotiate on good faith with this group.
One suggestion I had was to look at the US PwC Ethics and Code of Conduct Policy and to determine whether it mentions an obligation for PwC clients and vendors to live up to the same standards. It’s not as unusual as you might imagine.
In fact, with a little research, I found this:
KPMG report that since becoming a Living Wage Employer the turnover of cleaning staff has reduced by 50%. A recent survey found that better employment conditions lead to a better motivated workforce. “I used to wake up in the night and feel sick thinking about work”, said one cleaner. Now that pay has improved “I feel proud to work in the hospital”.
A Living Wage Employer recognises the responsibility it has for all the people it employs (directly or indirectly) and makes sure they are paid a Living Wage with fair employment conditions.
This means making sure that all staff, including contracted support staff, are:
1. Paid at least the Living Wage
2. Eligible for at least 20 days paid holiday a year plus bank holidays.
3. Eligible for at least 10 days full sick pay per year.
4. Allowed free access to a trade union.
The Living Wage Employers:
PricewaterhouseCoopers
BioRegional
Macquarie
Barclays
Westway Development Trust
KPMG
Greater London Authority
The Big Issue
IPPR
ACEVO
Child Poverty Action Group
Queen Mary University of London
And this:
Stockton firm introduces living wage
A STOCKTON-BASED housing group claims to have become the first North-east business of its kind to adopt the “living wage”, designed to lift those in work off benefits.Staff at North Star Housing Group will see their minimum wage of £5.52 per hour boosted by 13%, while contractors will be required to guarantee a living wage for all their employees as part of the tendering process.
The living wage was originally introduced by London Mayor Ken Livingstone to ensure Londoners were not paid at a rate that kept them in or near poverty. Since 2001 a limited number of high profile companies, including Barclays and PriceWaterhouse Coopers, have adopted the policy for all low-paid staff, including cleaners and security guards…
This past Tuesday, Dennis Nally, Chairman of PwC US, spoke at Penn State University. A catering cook who works for Aramark in PwC’s headquarter office came to Penn State to talk to him about the situation. She has been personally preparing his lunches for the last two years, and they had never met face-to-face until Tuesday. She explained that she and her co-workers have been asking Aramark, since November, to remain neutral during a fair process to decide about union representation. She said that Aramark has responded by threatening and intimidating workers, and that many of her co-workers are afraid of losing her jobs. Because the situation has become critical, she asked Mr. Nally to use his power as the client to intervene on behalf of the workers.
Mr. Nally responded that PwC has been “dialoguing” with Aramark about the situation, and that he would certainly mention the conversation he had with her once he returns to the New York office. He said also that he is concerned about the situation, just as much as he would be if these were PricewaterhouseCoopers employees.
After the event, the Dean of Smeal Business College actually asked him about Aramark and the labor problems it’s bringing to the firm. I am trying to obtain the video and will post it as soon as it becomes available.
So PwC, are you really a Global Firm?
Act like one and be consistent in your approaches to contracted employees. Step up and let your client, Goldman Sachs know that they are embarrassing you by not encouraging Aramark management to negotiate in good faith. Stop allowing Aramark to perpetuate a two-tier wage and benefits program amongst their various Aramark sites in the New York metro area.
Postscript
Aramark still runs the cafe at PwC Headquarters on Madison Avenue in New York. In fact it runs many food service and catering operations at several facilities. Aramark even has its own pages on the PwC website!
The company has a long and strong relationship with PwC which includes many executives with PwC pedigree including its current and most recently former CFOs and its Senior Vice President, Global Supply Chain & Group Purchasing Organizations.
Aramark is audited by Deloitte since 2021 and before that KPMG.
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