KPMG cuts 5% of U.S. workforce

KPMG is reducing headcount further after earlier layoffs this year, cutting approximately 5% of its U.S. employees.

In February, the Big Four firm laid off nearly 2% of its workforce, or nearly 700 people, mostly in its advisory business (see story). Last September, the firm had over 39,000 employees in the U.S., according to Reuters. A spokesperson confirmed to Accounting Today that the New York-based firm is reducing its headcount by approximately 5% between now and later this summer. 

"We remain confident in our growth prospects as we continue to compete and win in the marketplace," said the KPMG spokesperson. "Economic headwinds, coupled with historically low attrition, led us to this decision. We do not take this decision lightly. However, we believe it is in the best long-term interest of our firm and will position us for continued success into the future. We are focused on supporting our impacted colleagues with severance, access to health care and well-being benefits, and career transition services. We will continue to strategically invest, focus on quality, deliver excellent services and solutions, and innovate for the future."

Tannen Maury/Bloomberg

KPMG US chair and CEO Paul Knopp sent an internal message to employees about the job cuts Monday. "Today, I'm sharing difficult news about a decision we have made to reduce our U.S. workforce by approximately 5 percent," he wrote. "I do not take this decision lightly. We have reached this conclusion after already taking other measures and following considerable deliberation and deep reflection on our firm's values. I regret that the workforce reduction is necessary and want to provide you with the context for it. Over the past few years, we've achieved strong growth, and we set an ambitious FY23 plan to capitalize on the demand for our services and solutions."

He sees opportunities ahead for the firm. "While our pipeline of opportunities is strong and we continue to win in the marketplace, we are experiencing economic headwinds that are not unique to our business or firm," said Knopp. "Additionally, we planned for a level of attrition that has not materialized. These economic headwinds, coupled with historically low attrition, translate into a significant mismatch between the size of our workforce and the measure of resources that will be needed to deliver services in the coming year. The workforce reduction is designed to address that mismatch."

Other major firms have also been laying off employees in recent months, including Ernst & Young, which cut 3,000 jobs in the U.S., or close to 5% of its workforce, after calling off the global split of the EY network (see story). Deloitte also cut 1,200 jobs, or 1.5% of its U.S. workforce in April, according to the Financial Times and Reuters.

Knopp said he had tried to have the job cuts affect as few people as possible at KPMG. "I do not underestimate the impact this decision has on the lives of our colleagues and friends," he wrote. "We aim to impact as few people as possible as we align the appropriate complement of resources and skills with our business priorities to continue to compete, win and grow in the market. As difficult as this decision is, I believe it is in the best long-term interest of our firm and will position us for continued success into the future."

He called on the vice chairs in charge of the different practice areas of the firm to host all-hands meetings on Monday. Many employees found out Monday if they were laid off, but others won't know until later this summer.

"I've asked each Vice Chair to host an all-hands meeting today to share more about the business-specific dynamics and timing of notifications in their groups," said Knopp. "I want you to know that those impacted in Audit, Tax and Digital Nexus will be notified today. Those impacted in Advisory and the other process groups will be notified later this summer." 

Knopp thanked those employees who were being impacted. "To our colleagues who are impacted: Thank you for everything you have done to support our clients, communities and firm," he wrote. "We are truly grateful and wish you the best. We will support you with empathy and resources to help in this transition. Our purpose and values guide our actions during these difficult times. We will treat our departing colleagues with the compassion and respect they deserve as alumni of the firm. They will receive severance, access to extended health and well-being benefits, and career transition services. I am confident in our business and the opportunities that are in front of us. As we move forward, we will continue to invest in the future and, as always, lead with our values and strong culture."