This week my colleague Daniel Konstantinovic reported on a PwC strategy to hire 100,000 new workers over the next five years, focused on environmental, social, and governance (or ESG) consulting.
ESG has become a burgeoning concern as investors demand increased accountability from companies across all industries and sectors. For companies who do business in the U.S. in particular, it's becoming harder and harder to skate by or greenwash their commitments to socially responsible operations. The Biden Administration has already reversed a controversial Trump-era rule that limited retirement plans' ability to consider ESG when making investments. And the SEC has created the position of "senior policy advisor on climate and ESG" whose job it is to root out spurious and fraudulent claims around corporate disclosures related to climate and ESG. So, three takeaways from the big hiring announcement, and what it means for business under the Biden Administration:
1. Business is booming (but will be held responsible)
Even for PwC, which already employs 284,000 people around the globe, a 100,000 worker hiring push will have the firm growing by 35% when all is said and done. The $12 billion investment the firm is making in growth is a bottom-line calculation; a bet that these issues are not going away and that the regulatory environment around them will only get more complex in the years to come, especially in the U.S. and EU. PwC Global Chairman Bob Moritz also told Reuters that "every employee of PwC has to be familiar with the issues," meaning he anticipates that even a 100,000 boost in headcount won't be enough to meet the demand for ESG services in the years ahead. This isn't, in other words, just about the growth of ESG as a business line — it's about the growth of the economy overall.
2. The Big Four aren't going anywhere
PwC and it's main competitors — EY, KPMG, and Deloitte — are the IBMs of corporate consulting: no one ever got fired for hiring them. Almost any company of any size, public or not, leans on accounting and consulting services to keep their businesses upright and in legal compliance. Most large public companies hire multiple firms — one to serve as their auditor for financial statements, and others to provide strategic business advice around compliance, tax, and other regulatory matters. Hiring multiple firms reduces potential conflicts of interest and opportunities for fraud, even if they all offer roughly the same capabilities. The firms are often called on to check each others' work too, providing further opportunity for fees on top of fees. If you add in smaller boutique firms (that provided smaller scopes of capability) like Bain, McKinsey, and others, millions of workers around the world are in consulting, leading to our third point.
3. These companies launch careers that power the entire global economy
While startups and Silicon Valley will always carry a cachet for the entrepreneurial minded, and the rise of the creator economy is allowing entertaining people of all stripes to earn serious money, the brightest business-minded college grads who need the security of a steady paycheck and the chance to learn how businesses really work gravitate towards consulting precisely because they hire massive amounts of workers year after year. While they occasionally all have layoffs of eye-watering numbers, given their massive headcount, these are actually relatively small percentages of their workforce. The lass mass extinction in public accounting/consulting was during the 2008 financial crisis. And what the Big Four learned at this time was that the layoffs were a massive overreaction. The need for consulting services grew as companies navigated both the economic collapse and rebound. And the firms were in poor position to capitalize on it. By letting valuable talent out the door in a panic, the firms had to spend time rehiring workers and rebuilding their recruiting pipelines, rather than being a ready state to take all the business flowing through their doors. As one recruiter told the Financial Times back in 2010, as the recovery was underway, “if everything goes wrong, the last person out of the door will probably be an accountant.”
And those accountants, consultants, lawyers, MBAs, etc. have exactly the skill sets that startups and creators will need as their businesses scale and grow. Businesses regularly pluck blue-chip consultants for their finance departments precisely because they have world-class training and either a depth of focus on an important topic, like tax or auditing, or a broad variety of experience that allows them to be a Swiss-army knife accountant or CFO, able to handle whatever complicated topic comes their way. Not to mention they usually know exactly who to call back at the firm they came from, if they need outside help. People with this kind of classical business training also go on to launch their own businesses, and lean on their past experience seeing the insides of businesses they consulted for, to help them avoid pitfalls that might fell other less-experienced workers.
While you wouldn't want to read too much into one hiring announcement, PwC's investment is also a gauntlet thrown down to its competition, and a pretty big indicator about what the next few years of economic activity hold—more growth, more regulation, more jobs, and more opportunity to profit. It's one of the clearest signs yet that a post-COVID world is slowly emerging from the ashes of 2020-21, and smart money is gearing up to take advantage of the opportunity.
About the Data:
Thinknum tracks companies using the information they post online, jobs, social and web traffic, product sales, and app ratings, and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.