Barry Salzberg became CEO of Deloitte LLP in June of 2007, after serving for four years as U.S. managing partner, and has steered the Big Four firm toward increased revenues, while launching a number of new initiatives in the firm's practice areas and culture, including its much-heralded plan to build a large learning and development facility in Texas.Accounting Today sat down with Salzberg a little after his first anniversary as CEO to discuss Deloitte University, "green" consulting, mass career customization and more.
What were some of your primary goals going in as CEO?
Salzberg: My primary goals were to focus on our clients, on our people, on profitable growth, and on how we do business. Each of those four things had a series of tactical initiatives that I felt we really needed to drive. That was the platform on which I was elected as CEO, and it was the platform that I executed in the first year.
A year out, what would you say?
Salzberg: A year out, I'm thrilled with the results. I would be surprised if it was not market-leading growth for the Big Four firms globally. One key focus area was to re-energize our commitment to clients with what we're calling the Deloitte Client Experience.
The year also included a significant decision to invest in our people in a number of different ways, with the most significant being the approval by my board of my recommendation to invest in a learning and development facility, which right now we're calling Deloitte University. And we made a significant investment in the concept of workplace flexibility with our emphasis on mass career customization. We invested in social networking for our people, so we have D Street, which is our equivalent of Facebook. We created a Deloitte Film Festival, which was a way for our people to connect with one another and create a video about "What's Your Deloitte" in a very competitive environment, and a whole variety of other accomplishments in the talent agenda. We had our highest profitable growth ever.
Did you find that growth by executing better in areas you were already in, or did you shift the emphasis to new areas?
Salzberg: I think it's probably a little bit of both. Because of our multidisciplinary portfolio, we are able to generate opportunities that bring value to clients. For example, tax and consulting can team together, and our forensic people can team together with our audit people. There's been a series of opportunities that have been created because of that.
Last year, we created a corporate sustainability service line focusing on serving the market in its efforts to go green and to deal with environmental issues. We purchased a couple of businesses that we were not in before, and that generated new business.
Is the sustainability business the result of an acquisition?
Salzberg: No, we developed that on our own within our consulting business, recognizing a marketplace need and some competencies that we had in a number of our service areas and bringing them together under one umbrella. It essentially dovetailed with our personal commitment as an organization to our own greening efforts. I think right now we're probably about 60 or 70 percent of our way through that office-greening program. That spawned the service line at the firm, and the service line produced a decent revenue for us, but we're looking to triple it in a very short order.
What are your plans for the next year?
Salzberg: Globalization is taking on a much higher level of importance. More and more clients are moving their businesses to other parts of the world. Our people are demanding, in their own way, a global experience, whether through assignments on global clients or deployments overseas, and all of that seems to be converging much more quickly than what we've seen in the past.
Second priority is the talent space and our investment in Deloitte University. We're undergoing a transformation in the development of our curriculum, in the development of methodologies for training, and there are exercises underway for us to roll that out before Deloitte University becomes operative. And that will take on a high level of attention this year, as will "mass career customization," our way of looking at workplace flexibility. It's individualizing a person's career plan to appropriately take into account their personal issues and needs to either dial up or dial down in their career.
In the past, it was a corporate ladder and you had to go rung by rung by rung all the way up. Now we're looking at it as a corporate lattice, and individuals can figure out where and how they migrate, sometimes laterally, sometimes up a little bit, sometimes across, as they move on in their career paths. Last but not least would be diversity, with women included in the definition of diversity.
Can you tell us a little more about how Deloitte University came about and what you hope to achieve with it?
Salzberg: [We held] focus groups, we spoke to students, we went to companies that had their own learning and development facilities, and we had a focus group of Arthur Andersen people who had their own facility when they were in business in St. Charles, Ill. We socialized this with our people broadly and it became very apparent that this was something that was well-endorsed and viewed positively by our partnership.
My view of this as I started driving it was that it would, first, transform our culture to have learning and development at the heart of our people strategy. We did enough work to know young people really want to be trained. ... Second, we believe that in tough times in the past, often training was the [first] expense to go. If things got tough and you needed to watch your belt, you said, "Don't send people to training." ... I wanted to make training and development a fixed cost, and the way you do that is you build a big, expensive facility and there is no way that our partners will not send their people to it, because it is their money.
I looked at it as a way to foster teaming. It was a single facility where I could bring audit people and consulting people. They can get trained and they can socialize together. I believe a significantly high percentage of our people are just eager for Deloitte University to open up.
We expect to open the doors in 2011. I hope to be able to put the first shovel in the ground in the beginning of 2009.
What has Deloitte done to get ready for the switch to International Financial Reporting Standards, from both a practitioner's standpoint and an educational standpoint?
Salzberg: We've taken this very seriously, because it's [a huge opportunity] and enormously challenging to us in our profession if we don't. And so we have dedicated resources to defining our strategy, preparing the training programs and delivering them, creating out-of-the-box ideas to assist the business world in convergence. For example, we have a consortium of academic institutions that we're partnering with to help develop their IFRS curriculum for schools, and we've started a very serious program internally of resource deployment and opportunity identification.
You mentioned the Deloitte Film Festival. How successful was that in attracting entries? Were people filming here in the New York office?
Salzberg: They were [filming] all over the place. We wound up with 400 entries. I think it was a home run for us. It got our energy level up, it got partners working with interns, and it got functions working with each other. I probably watched 150 or 200 myself. It was addicting. When I started to watch them, I couldn't wait to see the next one. The winning video was a satire on our emphasis on food at meetings. It was just wonderful and it was all done in good taste - which of course I was worried about in the very beginning, because you never know - and we posted them on YouTube.
What about your social network?
Salzberg: D Street. You put your profile on there, so you have a little bit about who you are, your background, your location, your expertise, do you speak another language, your hobbies - just a whole variety of information - and it becomes a social networking opportunity for our people to go on and blog. You can search through it, and say, "Who speaks German?" in case you need to have somebody that speaks German for a particular client matter. It's moving to full implementation.
How come Deloitte is the sole remaining holdout as far as retaining its consulting unit, especially in the post-Enron era?
Salzberg: We were about to separate our consulting practice, and we chose not to after we assessed the economic impact, and the strategic opportunity following the Sarbanes legislation to keep your consulting practice and, rather than separate your firm, to separate your client base. That is essentially what we decided to do.
You are able to keep your consulting business - admittedly with an addressable market less than 100 percent because of the scope-of-services limitations in Sarbanes, but there's no prohibition in Sarbanes that you can't have a consulting business. You just have to make sure that you serve the right clients, because you can't serve your attest clients with much of the consulting work that a consulting business would do. From the point of view of serving clients, having a consulting business has proven to be extremely helpful.
One year out, even though it was structured a little bit differently than when you were MP and Jim Quigley was CEO, how would you characterize the differences in your management philosophy between the way Jim ran Deloitte, and the way you've run it in the past year?
Salzberg: That's a tough one. We're two different people. Jim and I never worked together really before four years ago, so we were kind of put together by our board as a team. And we got to really respect each other's style. Jim is much more even-tempered than I am. Much more. He puts much greater emphasis on consensus-building. I am a consensus-builder, but on a scale of 1 to 10, he's a 10, and I'm less than a 10. We have a very different way of delegating and remaining involved in overseeing the delegation. Some people would say I'm intent on details. Jim would be less intent on details. Jim's history is audit, my history is tax, so that just brings a different thought process to the table. But we've complemented each other extremely well.
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