PwC’s ‘challenging’ year hits pay and spoils summer Fridays

PwC has warned its 26,000 UK staff that it will pay lower bonuses in some divisions, hand out smaller salary increases and curb a practice of half-day Fridays as the Big Four firm battles “challenging market conditions”.

Ian Elliott, chief people officer, wrote in a memo that “our bonus pool will be similar to last year” but “a number of areas” would see “reductions in average bonus per head”, while some would also see lower pay rises.

PwC has also curtailed a pandemic-era perk of allowing staff to take a half-day on Fridays during the summer, reducing the benefit from eight weeks last year to six weeks. The policy was in place for 12 weeks in 2022.

“Given market conditions, it’s especially important that we carefully balance [summer working hours] with the needs of our clients, teams and work commitments, which should continue to take priority,” Elliott said in a separate memo.

Some partners had expected that the summer working hours benefit would be dropped entirely this year by the firm’s new leadership, with one senior partner saying it was disruptive to a client-facing business.

This is the second consecutive year in which staff have received disappointing pay updates and a warning about a reduction to raises and bonuses.

Most UK employees received a 3 per cent increase this year effective from July, PwC said in a statement to the FT. Last year, pay rises were as high as 6 per cent, and in 2022 the firm handed out bumper raises of 9 per cent to half of its employees.

The latest pay round at PwC highlights how some of Britain’s biggest professional services firms are restricting pay rises after UK inflation fell back to 2 per cent in recent months having soared above 11 per cent at the end of 2022. It also shows a stark divide within the City of London, where law firms are still aggressively hiking pay for junior lawyers.

PwC froze the entry pay bands for its graduate-level consultants, according to people familiar with the matter, while there was an increase in the number of junior consultants being ranked as “off track” in performance reviews, in effect blocking them from raises and bonuses.

Many of those deemed off track have now been placed on performance improvement plans (Pips), the people added. The firm’s first-year associate consultants are paid about £33,600 in London and £31,000 in its regional offices.

One PwC associate said: “Leadership messed up by over-hiring, and now we have to pay for it. [There has been] an overemphasis on chargeable hours, which was used as a deciding factor in promotions even though we were assured it would not be.

“We’re being offered voluntary redundancy packages and put on Pips if we stay, due to being unfairly rated ‘off track’ by their targeted distribution model for performance reviews. This has led to unfair evaluations, delayed promotions, and significant impacts on our morale and mental health.”

Associates can still get a pay rise depending on where their salary sits within a band. Good performers can progress to a higher band, which is accompanied by an automatic raise, said one person briefed on the pay review.

The Big Four firm recently launched a round of “silent lay-offs” in the UK, the FT previously reported, while promotions for associates were also delayed because of a lack of work.

PwC’s UK partners were paid an average of £906,000 in the year to June 2023, down from £1.03mn the previous year.

PwC said: “We continue to invest heavily in our people. The vast majority received a bonus and a 3 per cent pay rise, and our summer working hours are continuing once again, albeit for a shorter period. Bonuses are discretionary, and there will always be cases where they are not given, such as where performance expectations are not met.”