Changing From the Inside

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Through most of the 1990s, Accenture operated on a steep top-down managerial model. All of the company's partners and managers reported directly to the CEO, for example. While that worked early on, it started to show signs of stress as revenue approached $10 billion. So in mid-2000, the company split the CEO duties in half, creating a new chief operating officer position and naming 30-year veteran Stephan James to the role.

"The primary impetus was size and the need to delineate responsibility more effectively," says James, who's responsible for executing strategy and making sure Accenture operates efficiently. To do that, he works closely with the different market units and service lines to find new ways to keep costs down and things like utilization and productivity up.

"We are in 46 countries and have a number of service lines and market units, so we're technically a portfolio of companies," says James, who monitors utilization at least every two weeks to stay on top of operational issues. (For the record, the company's utilization rate currently hovers at around 70 percent, well above the level most services firms have been operating at lately.)

But despite its depth, breadth and efficiency, Accenture has not been immune to the effects of a tough economy. In fact, one of James' most difficult actions as COO came in March of last year when the company was forced to trim its headcount as it responded to market conditions and prepared for life as a public company.

"We began sensing in March that we had a lot less work than we had people," James says. "This was almost entirely in the United States."

To pare its ranks, Accenture employed a three-pronged strategy. Because the company routinely dismisses between 3 to 5 percent of its employee base annually due to poor performance, those employees were the first to go. The company then deferred the start dates of newly recruited staffers to coincide with demand swings in the market. Then, the company created a FlexLeave program, where staffers were given the option of taking sabbaticals on a 20 percent salary. While close to 1,700 employees took the opportunity, Accenture still needed to trim some more fat from its operations. That meant layoffs.

The bulk of the layoffs that happened over the summer were U.S.-based internal support positions, an area that James says needed the most restructuring. The company tried to avoid affecting its client-facing operations, such as sales and business development.

By September, the company announced to staffers that there would be no more layoffs. James believes it was important from a companywide standpoint to do that. "Otherwise, people start looking over their shoulders and wonder what's going to happen [next," he says. "As it relates to people serving clients on a daily basis, we think we have done what is necessary."

A New Spin On Outsourcing

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