Like an episode from the Borgias, a blood feud at accountancy firm Grant Thornton spilled out onto the streets this week. Chief Executive Sacha Romanovitch was subject to a brutal corporate assassination, that saw her performance appraisal leaked to the media amid an extensive whispering campaign that accused her of running a ‘socialist agenda’ in putting a ‘higher social purpose’ ahead of profits. After four weeks of skirmishes, her 185 partners called time on her tenure.
Response? Unsurprisingly the commentariat came out in favour of Romanovitch. In her four years in charge, multiple profile pieces described her as a breath of fresh air in contrast to an unreconstructed profession that has failed to understand the winds of change. She had advocated for industry reform and called out the cosy relationship between auditors and their clients. There was more than a whiff of misogyny as the boys hounded out the industry’s only woman in charge.
Impact? This is seemingly another blow for those who want business to become more purpose-driven and align more closely with the needs of society. But as Romanovitch’s plaudits piled up, profits reversed. Her popularity among employees and high-profile outside the business could not protect her from the wrath of the constituency that mattered. Her partnership had lost patience in her belief that changing the model today would accrue greater profits tomorrow.
What could have been done differently? Romanovitch’s assassins have caused the brand incalculable damage and the fact they were willing to do so sheds light on the tension between short and long-term horizons in the business model. While Romanovitch extolled the virtues of a more egalitarian “John Lewis-style” partnership, the reality is that Grant Thornton, like other partnerships in finance and law, has an elitist structure which conflicts with concepts of long-term value. Partnerships typically don’t retain profits – they are distributed – meaning that investment and growth capital is often debt financed. Real value accrues typically to those who have been in the company longest, meaning that power is held by those with the shortest time horizon and closest to the exit.
When we seek to achieve business change to futureproof our organisations so that they withstand changing mores, we ignore at our peril the certainty that corporate purpose must continue to deliver value today. When it is too easy to say that we will all flourish if only businesses could become more closely aligned with the needs of society at large, we undermine the real challenge to win the arguments and overcome entrenched power structures. Romanovitch’s vaulting ambitions to change her business and an entire industry were probably the right direction. But her fall reminds us that it is very often not the future we need to worry about. It is those closest to us in the here and now that wield the greatest power over our ambitions.