17. The Value Proposal to the Employees

In the Andersen Culture the employees were persons; they were treated as persons and so they were called, not with the impersonal “workers” or with the offensive “resources” that came to use later, even at Andersen itself, in its last years. They are still called that in many companies, something hardly compatible with the motivation needed by any professional.

At Andersen, persons were called by their own names, or generically by category (assistants, seniors, managers…) or by specialization (auditors, consultants, tax advisors…). They were also mentioned as “professionals” in general; or “employees” or “personnel” when referring to the whole Firm’s staff, including the splendid and efficient support personnel (secretaries, archives, administration, etc.). All of them, without exception, were treated as persons.

Respect from the first day

Fresh graduates, in spite of their inexperience, were treated as professionals in equality from the first day. The Firm wanted them to contribute value from the very beginning and rewarded them for that value. The motto was: You make the effort and I reward you. And it worked.

To be hired by Andersen was already a success, after a selection process well known for its severity. And such a success was perceived in the personal, family and social spheres of the freshmen. To be admitted into the elite fed their self-esteem and made up for perhaps having to reject a more lucrative offer. On the other hand, Andersen’s salaries were always in the market’s upper quartile. Not many Arthurs had former classmates earning more than them.

But also, entering Andersen was only the beginning. Although work was hard, it was done in an unbeatable atmosphere; promotion opportunities were real, based in a strict meritocracy and the possibility of reaching the top echelon, be a partner, could be more or less far off, but in principle was within the reach of all professionals.

First name all over

One of the main unexpected things for the newly arrived was that in Andersen they were treated as colleagues from the very first day. One sample of that, to the surprise of most (especially in the 60, 70 and 80s) was the use of first names by all. This first name basis, even towards managers and partners, was a sign of trust and respect, which almost everybody judged very positively.

The message was clear; here we are all professionals and we will treat you as a professional; but we will also demand a professional response from you.

A high performance work environment

A high performance work environment

Work was done on that basis in a perfectly defined and regulated environment, where nothing, or very few things, was left to chance. To begin with, the professional met a homogenous, highly qualified, team. That was the result of the Firm’s bid for the persons and the application of the career’s model. The human and academic requirements made from the new professionals were very demanding; all of them had at least one B.A. degree with high marks, a proven gift for analysis and problem resolution and a high capacity for team work.

Strict application of the “up or out” principle ensured that they were all at the same level of competence and ability. It was like working in an army, in a special force unit. This made work easier. The productivity indexes achieved by Arthur Andersen’s teams were, and still are, the benchmark to beat in the professional services sector. Many clients were surprised at the quantity and quality of Andersen’s production in a very brief period of time. The surprise was stronger in countries like Spain, used to a bureaucracy that entailed, and still entails, suffering from low national productivity indexes.

Only Andersen was able to do the more complex jobs in terms and deadlines that nobody else dared to undertake.

This way the professionals reinforced their pride of belonging, their professional value. They increased what has later been called their employability.

All along his professional life, an Arthur had always very clear references about his personal situation, as any worker likes to have available.

What was his role in the organization

First thing he was conscious of the category in which he was classed.

Each category was identified by one letter:

• Assistant: A
• Senior: S
• Manager: M

Inside each category several levels were established. They were numbered from lower to higher level, beginning at A3, so that a usual scale was: A3, A4, S1, S2, S3, M1, M2, M3, M4, M5, M6, M7, M8. From there, either he was promoted to partner or entered the senior manager category.

Every level corresponded usually to one year. Each professional knew exactly where he stood. And everybody knew everybody else’s rank.

Which group he belonged to

The group was defined by at least three concepts:

• Office: Madrid, Barcelona, Chicago, ...
• Type of practice: auditing, consulting, tax advice, ...
• Industry sector: banking, manufacturing, construction, ...

Which clients/jobs was he assigned to

The job was the element life revolved around in Andersen: The La Caixa audit, the ERP implementation at Ferrovial, the tax design in the public floating of Inditex, etc.

The assignment to a job carried with it the assignment to a project team, always consisting of:

• 1 partner
• 1 manager
• 1 or more seniors or project leaders
• 1 or more assistants

The names of each project’s partner and manager were known to all and had great importance. For the assistants, the team leader’s (senior) name was also relevant. In the course of the project the professional suffered, learned and so carved out his career. Some projects were more desired than others, because of the characteristics of the client, of the work or the team or a combination of them.

The methodology, the tools and the work planning made work much easier, but nevertheless hard work was needed along the strict working plan, with very tight deadlines, and knowing how to interact with the customer and the team was essential.

Each job had perfectly defined planning with stages, tasks and personal assignments. The Firm had very sophisticated tools, such as the Auditing Guidelines, Method 1 or Tax Advice Guidelines, according to the type of service to provide.

The career, perfectly defined and supported

The professionals were sent for training from their first working day. First thing was the accounting course, celebrated by all the former Arthurs. The course assured homogeneity in the prime material, the Firm’s human capital, and did away with the initial fear of the freshmen to come on stage. Everybody who took the famous Accounting Course keeps a good memory of it, both in the technical and in the human side. On the first because by the time the course ended the participants, economists or engineers, had true knowledge of accounting. On the human side, it was the first contact with his comrades. A contact that bred friendships that often lasted all their lives.

But the accounting course was only the beginning; the professionals followed a strict training schedule all along their career. Very few companies gave or give the amount and quality of training that Andersen offered his personnel. This training continued all along their professional life, including the partner career.

The high points were the training stages in the Saint Charles center in Chicago or the seminaries in business schools so prestigious as Harvard, IESE or Insead, as examples.

At Andersen, training was a serious matter. The professional could not complain of the support he received in his career. It was not only the training, but also the fact that since the first years he was always assigned a tutor or coach that gave him orientation and helped him to progress properly and to get points in his career towards partnership.

The career to partnership was neatly traced from the first day. The perfect career plan called for promotion to senior after less than two years at the assistant level, to manager after less than three years as senior, and to partner after 5 to 8 years as manager. From the first day, the fastest careers to partner took 10 years, starting the count when beginning the assistant stage. The average careers took 12 to 14 years, which meant reaching the partner stage at 35 to 40 years old. On the other hand, very few careers lasted more than 15 years. Cases of partner appointments past 40 years of age were very rare.

Between 22 and 40 years old, the person’s higher capacity and productivity age, Andersen had all its professionals running ahead like greyhounds after the juicy prize of the appointment as partner, which was known as partnership.

Firm and individual

At Andersen the individual felt protected by the group, by the Firm itself. The professionals were conscious that their personal value was reinforced by their belonging to the group, belonging to the Firm. This produced a virtuous circle, since the Firm improved the individual and the individuals improved the Firm.

This is a very important point and a consequence of a philosophy that comes from the unity and cooperation principles, amongst others. A consequence of the esprit de corps, that gives a specific imprint to many organizations that have reached a level of excellence. An example of that is captured in the U.S. Marine Corps’ motto Semper Fidelis (Always Faithful) which in fact has a very strong meaning: “we’ll never let you down”

This reinforcing philosophy “all for one, one for all” that drove towards cooperation and team work, reflected on the way to approach the projects and to carry out the professionals’ evaluation.

There was an intense cooperation on the projects, like soldiers that fight together and put their lives in their comrades’ hands. The evaluation did not look only to their individual merits but on what each individual had done for the group. The brilliant but individualists professionals were not valued as the best.

One of the main functions of managers and team leaders was to balance the individual’s merits with the groups’. The two extremes should be avoided: isolated geniuses or team workers without individual contributions. As in any group that tries to obtain an optimal performance.

All this is possible and effective only when the individual feels protected by the group and the Firm and vice versa, and only when the group works really as a group.

The freshmen experience had also military similarities; like rookies sent to the battlefield, they faced complex projects from the first day, going through a hard trial. They came out either defeated or reinforced by having brought forward what seemed impossible beforehand, through hard work and joint group suffering. This created personal friendships lasting a lifetime, since nothing unites two persons more than having suffered together. On the other hand, the feeling of victory when successfully finishing a project, after days work and pain, defied description. All was justified and the esprit de corps was reinforced.

From “I” to “We”

Using “we” instead of “I” is an identity sign of successful organizations. “We” is synonymous with unity and cooperation.

When unity is broken, as happened with Andersen on the Andersen Consulting separation, the negative impact on cooperation comes immediately and then the use of “we” is abandoned. Furthermore, the Andersen Consulting separation contributed to the break in the virtuous circle Firm-individual, individual-Firm. The individual started to get over the group, the “I” started to get over the ”we”; an internal race to outstand, to be bigger, began.

The race was inspired by the split in two business units (both wanted to be bigger, better and more profitable than the other), but that unhealthy rivalry spirit spread to the individuals. In the end, that frantic race led to the rise of partners like David Duncan, in charge at Enron, elevated to the altars of success by the fee amounts he generated, no matter how.

Duncan was the result of a culture that had nothing to do with the original Arthur Andersen culture, and was about invoicing, growing and making a lot of money. Duncan set the example to follow. Duncan, and other partners with similar attitudes, caused the destruction of the columns that supported the Andersen building. The Firm had lost its moral compass and was fatally wounded by the venom of the fratricidal conflict. It had taken decades to build it but collapsed in a few months.

Androids or Arthurs

Some people used to name the Arthurs as “androids”, with a restricted personality, unable to think by themselves, acting as robots. We never felt that way, nor did any of the exArthurs we know.

It was rather the other way around. The Firm helped them to develop their own personality, trained them and gave them the means to be great professionals, in or out of the Firm.

It is true that the Andersen culture moved around some specific patterns, but gave response to all possible demands. Each one had to manage by himself.

The group was the Firm

Really the persons, the group, were the Firm. They represented and portrayed the Firm, and were proud of it. They had the feeling of having superpowers. Together they were invincible! They could overcome anything and anybody! They were the most powerful Firm on Planet Earth! Beyond manuals and instructions, that was their great force.

The impact of Saint Charles

We have already explained what the Saint Charles training, near Chicago, meant. It was for any employee an honor and an exhilarating experience. Especially for the non North Americans.

Perhaps for some it was American in excess. But for the big majority even that had charm. A place for training, but also to have fun and above all to get acquainted with all possible groups in the Firm. And we mean all, since those that took courses at St Charles had contact with dozens of different nationalities, mixing assistants and seniors, managers and partners, without barriers, in absolute comradeship.

The rooms were spartan, without TV, designed just for sleeping so that guests will meet only in the classrooms, meeting rooms, dining room, bar, sports fields or corridors. Rooms were all the same like in a monastery, and the partners were treated the same way than any other employee.

The St Charles stage made a mark in the memory of all those that had the privilege of attending and supposed a shot of Andersen culture into a vein.

The difficulty in the integration of expert personnel

Andersen was a Firm designed for molding individuals from the start of their professional life, to make the individual adapt to the Firm’s ideas and standards, not the other way around. This is quite common in many firms with a similar profile of a strong and specific company culture, not to be questioned; or, if at all, only internally questioned. A slow integration process, that takes time before being admitted “inside” and in a certain way stigmatizes those without the pedigree of having been “born” professionally in the Firm.

The difficulty in the integration of experienced people from outside into the company is, as mentioned earlier, one of the weak points of this type of company model. That does not mean it is impossible if some basic patterns are followed when recruiting and placing the professional in the organization.

The candidate should be passed through an eligibility process to ensure that his social behavior and psychological profile fit the company context. The integration process must be authorized and followed up closely. Also required is the backing and patronage by one or two high executives or partners, that should present, and help the safe landing of, the newly hired person. At whatever level; the higher the level, the more help is needed.

In the 90s, Andersen embarked desperately on the deployment of new consulting lines to compensate the stagnation and “commoditization” of the auditing practice and to recreate in a certain measure a new Andersen Consulting. Without a clear course, it went into Human Resources, Health, ERP implementation, including SAP, Insurances, Corporate, Data Systems Safety, Information Systems Security, Systems Architecture, Electronic Commerce, Derivatives, etc. Some of the practices were developed by “native” Andersen people, but others had to be staffed through new recruitment of expert and specialized consultants from the market. It was not easy, at a time of accelerated consulting growth and astronomical salaries, without knowing clearly how to reply when asked about the Firm’s consulting strategy, spread between Andersen Consulting, auditing and Business Consulting, with the result of confusion in the market and amongst the professionals to be recruited.

The experienced professionals joined as seniors, managers, and even partners (mostly local partners) and their integration was in general traumatic. Their ignorance and, sometimes, their challenge of the prevailing norms and culture, shook the Firm’s foundations, more in some countries than in others. In the US much more than, say, in Spain or Europe in general, but everywhere in the world the new arrivals posed a problem, both for the Firm’s defenders and for themselves.

They were not always properly chosen, properly received or properly treated. Some of them wanted to change a Firm that for years had been based on the opposite: the persons should change, not the Firm! Many saw that as a threat. Others considered that they did not deserve to share the Firm’s heritage and that their joining had been a mistake. In a Firm based on the professional pyramid and the regulated members’ progress, the arrival of unknown people into the same or superior organizational levels was not in general any good news.

Probably the Firm tried to go too fast beyond its limits. Time showed that it had not been a good idea, because it contributed to the collapse of the columns supporting the corporate building.

A way of life

Definitely, Andersen was not only a place in which to work, it was a way of life, even a way of being in the world.

Young graduates barely 22 years old joined Andersen with the anticipation of having obtained a job for life. In that regard, to be hired was already felt as a privilege. That is the starting point of a career to success that would culminate on reaching the partner stage (between 35 and 40 years old) or on joining as executive a great company after leaving the Firm, voluntarily or otherwise. It went like that from the 50s to the 80s. Thousands of happy cases can corroborate this. In the 90s things changed because both society and the Firm changed. Personnel rotation grew to unknown extremes and the concept of “a job for life” was buried for good.

Many successful organizations, with innovative and distinct entrepreneurial philosophies, coincide in offering the same type of proposal to their staff. We think, for instance, of Mercadona, the first Spanish supermarket network, whose progress to the leading positions in the distribution industry in Spain has been and still is an interesting study subject.