The leadership debacle at PwC that destroyed trust

The leadership debacle at PwC has been thoroughly scrutinized and its devastating impact graphically described by the Switkowski Report. An extensive Senate investigation has also examined in detail the catastrophic failure of leadership at the top and the lesson is clear that the few at the top have undone generations of commitment and work by the many.

Once again, we have a sad and tawdry tale of executive greed and self-interest, wiping away the achievements of those who lived by the purpose and values of the firm – the very values espoused by these leaders who brought the firm into such disrepute. It’s a classic example of the validity of ex chief of the army, David Morrison’s thesis that “the standard you walk by is the standard you accept”. It seems that no senior leader (partner) pushed back, objected or raised the alarm when confidential information from the Taxation Department was used to promote business development for the firm.

This was not only a betrayal of the workforce, and of the community they had pledged to serve, but has also cast a shadow over an entire industry and especially the key players within. Whilst it was probably an industry that needed a shake up, as self-regulation had clearly failed, this was also a strategic failure by the four major incumbents (KPMG, EY, Deloittes and PwC) that they had not together established standards and practices for maintaining and building key stakeholder trust.

As was the case with Qantas, leadership at the top is so important to the brand and reputation of a firm. Those at the frontlines can cause problems and do harm, but it is relatively manageable compared to the incredible damage that can be unleased at the top. Poor behaviour by individuals can be addressed and usually can be contained and resolved. Problems at the top are harder to detect, as they are driven by the powerful and protected by the culture.

This case highlights a real problem and that is how completely senior leadership teams can be seduced into believing that they are not the problem. ?It may be easy, with collective hubris, to believe that problems lie elsewhere and It’s not unusual for those at the top to endorse leadership programs that they themselves don’t attend and espouse values that they themselves don’t adopt. ?Switkowski reported that “PwC had a culture that tolerated poor behaviours by partners” and was “a case study in untrammeled greed let loose in a boys club.” Similar stories were revealed across AMP and the big banks by the recent Royal Commission into the financial services.

As the consequences of the leadership failure at PwC continue to reverberate through the community, we are reminded how ultimately these leaders will be remembered for the sad legacy they have left behind. This scandal demonstrates the precarious nature of trust and validates the notion that trust is hard won, but easily lost. PwC is now a classic case-study in how mistrust can quickly spread like a virus from a local problem to a global problem and one of such magnitude that it necessitated global intervention.

Kevin Burrowes, the CEO appointed by the global firm to stem the bleeding and fix the mess reported that “FY23 was a challenging year for PwC Australia. A year that unearthed behaviours we are not proud of and threw into question our governance, culture and accountability practices. It was a year defined by the revelation that a number of our now former partners had failed in their professional, ethical or leadership responsibilities.”

It is well established that culture flows from the top – from the values, beliefs and practices of the senior leaders and is brought into focus by the leadership team. Importantly, hope is also inspired from the top and from the belief in those being led that the leaders are motivated by purpose and the collective good, rather than by narrow self-interest. In this way senior leaders have an obligation to be not only exemplars of the practices and principles they espouse, but also custodians of the culture and values they endorse.

Ultimately, it is the being (character) and doing (capabilities) of leadership that are first and foremost expected of, and required by, senior leaders. Authenticity grows when leaders speak with the heart and the head and is measured when what they say is what they mean and what they mean is what they say. When character and capability are closely aligned in a leadership team trust is built and culture is set.

Kevin Burrowes in his end of the year report finished on a positive note that “it will also be remembered as the year significant action was taken, in order to reset. We are committed to taking the actions required to rebuild trust.”

?Let’s wish them well with this, but we might take from ACDC the caution that “it’s a long way to the top if you want to rebuild trust”.