Report reveals PwC’s ‘shadow side’, where greed overruled values

A disproportionate focus on making money, and an ‘overly collegial culture’ where misdemeanours were swept under the carpet, contributed to the downfall of leading government consultants PwC, according to a review.

Ziggy Switkowski

The report, by Ziggy Switkowski, says the firm’s strong cultural aspirations were accompanied by a ‘shadow side’ where bad behaviour went unchallenged as long as the money was coming in, and mistakes were buried rather than taken as an opportunity for learning.

PwC in May commissioned Dr Switkowski’s review of culture, governance and accountability at PwC, which in January was found by the Tax Practitioner’s Board (TPB) to have shared confidential Treasury information with clients.

The release of his report on Wednesday comes after a Senate inquiry said in an interim finding in June that PwC had engaged in a deliberate and aggressive strategy to cover up the misuse of confidential tax information.

‘Unravelling of trust’

Dr Switkowski’s report says PwC is currently ‘navigating a brutal unravelling’ of trust resulting from its behaviour.

It identifies a number of key shortcomings that contributed to what he calls the ‘TPB matters’.

These include investing excessive power in the then CEO, who was elected following a presidential-style campaign and possessed ‘relatively unchecked authority’, and an aggressive growth agenda that occurred at the expense of the company’s values.

There was also a lack of independence within the governing body, and “a disproportionate focus on revenue growth and market leadership as the strategic imperatives”.

The aggressive growth agenda overshadowed and occurred at the expense of the firm’s values and purpose.

Ziggy Switkowski

Meanwhile, an ‘overly collegial culture’ suppressed constructive dissent and created blind spots, and a willingness of partners to tolerate the bad behaviour of ‘rainmakers’.

Dr Switkowski said that overall, PwC had a high-performance, results-focused culture and high levels of care within teams.

“However when cultural strengths are overplayed, the potential for ‘shadow sides’ emerges,” he says.

“While the firm’s strategies in recent years have also included elements relating to people and culture, financial performance and the growth agenda have been prioritised over purpose and values.”

PwC responds

PwC has released its response alongside Dr Switkowski’s report, along with a statement of facts.

In an open letter the company’s new CEO Kevin Burrowes apologised, and said PwC took full accountability and was committed to rebuilding trust.

PwC says it will now adopt ASX corporate governance principles where feasible, appoint at least three independent non-executives including a non-executive chair to its governance board and revise the CEO election process.

The scandal has seen the departure of a number of PwC partners including its former CEO.

In June 2023 the company announced it had sold off its government business.

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