PwC Australia partners are now judged on a range of measures that go beyond billings, a back-to-the-future change part of a suite of reforms that the firm’s inaugural independent chairman says is designed to prevent a repeat of the tax leaks scandal.
“What we’re seeing is a recalibration,” Green said in his first public comment on the firm and his role. “PwC has always tried to be purpose-driven, but along the way, the focus tilted too far to revenue and other behaviours crept in.
The changes we’re making mean that the ‘how’ you do something is just as important as the ‘why’ – leading to a greater focus on culture. It sounds simple, but it’s critically important when it comes to checks and balances.”
The firm’s mishandling of the public revelations regarding the extent of the leaks caused a political and public uproar in Australia in mid-2023 that led to the partial break-up of the once-dominant PwC Australia. Hundreds of partners and thousands of staff departed, and profit slumped by a quarter that year. ‘Significant amount of change’
In an interview about his first six months as the first independent chairman at a big four firm, Green said the smaller partnership had led to a shift in culture.
He was also optimistic that changes to the way PwC managed and appointed leaders, its new “balanced scorecard” to assess performance and an emphasis on new “focus behaviours” of curiosity, collaboration and challenge would help it reform itself after the scandal.
“Certainly, the firm has undergone a significant amount of change, and our partnership group is much smaller,” he said. “Regarding our partnership today – I am exceptionally impressed by the quality of our partners and their focus on clients and people. We are headed in the right direction.”
Many of the changes bring the firm in line with best practice among the big four and the wider corporate community. These include PwC now having a board with independent members who have authority over the CEO, a merit-based appointment process for leadership roles and revised performance indicators that go beyond financial metrics.
However, PwC Australia is not covered by the Corporations Act because it is a partnership. Green will be independent of the partnership, but the director duties within the act are not enforceable by the corporate regulator.
“We’re a high-performing business with high-performing people, and we don’t want to lose that,” he said.”
— John Green, PwC Australia chairman
There is also the question of the influence he can have in an operation effectively being run from overseas.
Green, 72, is a former executive director at Macquarie and has been a partner at two law firms, now known as Ashurst and Herbert Smith Freehills. He is also the chairman of UOW Global Enterprises, which operates the overseas campuses of the University of Wollongong.
Previously, he was deputy chairman at QBE and has held several board positions, including with financial services company Challenger and the engineering company now known as Worley.
Green, an amateur magician, is also the author of six thrillers and was the chairman of Pantera Press, an independent book publisher he co-founded, which was sold after he took up the chairman’s role at PwC.
PwC’s problems ‘not unique’
Green said the changes to PwC’s governance,
many of which required a partner vote, would tackle the key issues identified by Ziggy Switkowski’s review of the firm’s governance and culture following the tax leaks scandal.
He said the problems identified by the report included PwC having “no objectivity and independence in [its] governance structure, supreme control by an individual CEO with no checks and balances [and] a primary focus on short-term financial measures”.
The governance issues at PwC described by Switkowski were similar to other corporate scandals in Australia, Green said.
“My reaction to the [Switkowski] report was ... that I’d read it before, and that what we were seeing at PwC was not a unique problem. We’ve seen it in corporate Australia repeatedly,” he said.
“[It’s] about companies that have intrinsically different approaches to governance, accountability, culture, that have operated against their best interests but they haven’t seen it.”
Green would not be drawn on outstanding issues relating to the tax leaks matter, such why PwC global still refused to release its report into the involvement or not of overseas PwC partners in the scandal to parliament, and the Australian Federal Police and
professional body investigations into the leaks. Nor would he comment on those involved in the tax leaks matter or the leadership position during those years and when the matter became public.
“What I’ll say is, I’m not going to talk about the past. I’m here to be part of the future,” he said.
He emphasised that he was “not commenting on the quality of the people [who had left the firm] because I don’t know them.” The number of partners at PwC Australia has fallen from almost 900 in 2023 to about 650 in 2024. Dozens more have also left this financial year.
The firm’s new balanced scorecard includes five measures: making it a “best place to work”; rebuilding a “healthy brand”; ensuring that clients receive a quality experience; ensuring the business is sustainable in its adoption of new technologies such as artificial intelligence; and financial outcomes in terms of profit and revenue.
Karen Lonergan, PwC Australia’s new chief people officer and a former Stockland executive, said culture change would be “a long game”.
“We are seeing the buy-in building across the board as we broaden our approach to defining and measuring sustainable high performance,” she said. “The ‘3Cs’ are working to give our people key behaviours to anchor around and are now built into our performance review processes and will flow into our reward and promotional processes.”
Lonergan said the new balanced scorecard had redefined “high performance” at the firm.
“It means people must perform consistently, across all domains of the scorecard, to get the highest performance ratings. This is a key cultural-change lever,” she said.
Former partners sceptical
Former PwC partners, who requested anonymity to speak freely, expressed scepticism about how much the firm’s culture had changed. They say it had always had some version of a balanced scorecard and questioned how far it had moved beyond its focus on financial performance.
“There’s always been a balanced scorecard of outcomes that cascades from the strategy,” one former partner said.
“But at the end of the day, the disconnect is what the partner can actually contribute to the outcome ... so it’s not clear it will lead to changes in behaviour or how partners are rewarded.”
Another who also questioned whether the culture had changed noted that many in the firm were “still in denial” about the extent to which the tax leaks matter was caused in part by PwC’s culture.
Green acknowledged the tension between the firm’s aspirational culture and the need to be a profitable business in a difficult consulting market, but remained upbeat.
“Yes, financial performance remains an important factor – we’re a high-performing business with high-performing people, and we don’t want to lose that,” he said.
“What the balanced scorecard does is elevate behaviours so partners are measured against them as well. It’s about making sure the ‘how’ they do things is being tracked and measured, as well as the ‘what’.
“To get the highest performance rating, you must have performed consistently across all the domains of the scorecard.”
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