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EDITIONS
Saturday, 15 June, 2002, 22:31 GMT 23:31 UK
Tough times for the 'Androids'
Andersen's head office in Chicago
Andersen has drummed fierce loyalty into its staff

To its critics and rivals, there was always something a little creepy about Andersen.

Andersen in 2001
Key facts
Founded 1913
Revenues: $9.3bn
85,000 staff
390 offices in 84 countries
Some big consultancies and accounting firms are content to be sprawling, democratic, diverse organisations, fostering creativity by hiring talent and allowing it free rein.

Not so Andersen, where, in the words of one former employee, "partners have the company spirit pumping around their veins".

Andersen may once have been the smallest of the so-called Big Five audit firms, but it was also by some measure the proudest.

But as its failed attempts to patch together a merger-cum-rescue-deal proved, melding that zealous culture into another firm is nigh-on impossible.

All for one...

For any firm whose sole assets are the minds of its staff, building a cohesive corporate culture is always going to be crucial.

At Andersen, this focus had become something of an obsession.

Arthur Andersen
The teacher's lessons live on
Although the firm has a loose international structure, it is held together exceptionally tightly by the Andersen brand (or Arthur Andersen, as it was known until last year).

No recent management fad, this: Andersen's "one-firm philosophy" was developed as early as 1924.

To bind staff into the firm, each employee reportedly received an average of 135 hours' training every year, and enormous effort was poured into team-building and morale-raising exercises.

In return for their commitment, they benefited from a far less hierarchical structure than at many rival firms, including an unusual level of openness about the pay and bonus structure.

The vision thing

To the uninitiated, all this had a disturbing side.

Take the obsession with the company's eponymous founder, who launched the firm in 1913.

At times, the veneration surrounding Mr Andersen's memory amounted to a cult of personality.

"Another lesson from our teacher," runs the introduction to a mini-homily on the Andersen website, going on to list his achievements - youngest accountant in Illinois, dazzlingly early entry into the Accounting Hall of Fame, and so on.

"If you believe in your vision, the possibilities are endless," gushed Andersen.

Messy divorce

Recent events seemed to contribute to Andersen's cohesiveness.

In 1997, the firm, then the biggest business-services provider in the world, began the slow process of breaking into two.

Andersen's head office in Chicago
Andersen's culture is highly American
Its Andersen Consulting division was agitating to break away, annoyed that Andersen's core audit business had developed a consulting sideline of its own.

Three years later, the acrimonious divorce came through: in return for paying $1bn and giving up rights to the Andersen name, Andersen Consulting - now Accenture - walked free.

This pitched Andersen down from top to fifth-largest among the Big Five, and left it most heavily exposed to the steady but unspectacular business of auditing company accounts, as opposed to providing IT consultancy, or advising on human resources policy.

Who's laughing now?

For the firm's critics, its strait-laced, stiff-necked image can be a source of ridicule.

Andersen timeline
1913: Founded as Andersen, DeLany & Co
1918: Changes name to Arthur Andersen
1924: Launches "one-firm" philosophy
1940: Launches centralised training programme
1947: Arthur Andersen dies
1954: Launches first IT practice
1955: Opens office in Mexico, its first outside the US
1959: Admits first overseas partners
1979: Surpasses 1,000 partners; becomes world's biggest business services firm
1989: Forms separate consulting practice
1997: Andersen Consulting bids for independence
2000: Split between Arthur Andersen and Andersen Consulting agreed
2001: Changes name to Andersen
2002: Proposed merger with KPMG fails; hit by civil and criminal legal action
2002: Found guilty of obstructing justice
Andersen's well-drilled staff are often jeeringly known as "Androids".

Within the business-services world, consultancy has a far more glamorous image than the workaday drudge of auditing.

But that doesn't seem to put off applicants, for whom Andersen has a particular appeal.

At one stage during the boom years of the late 1990s, Andersen was receiving an eye-popping one million job applications annually.

A recent survey of 6,000 British final-year students - before Andersen Worldwide fell apart - placed Andersen fifth in the list of most desirable employers, after only the UK Foreign Office, British Airways, Accenture and - ahem - the BBC.

Different folks

The curious power that Andersen exercised over actual and would-be staff had been its greatest strength.

But when trying to stitch together a global deal with KPMG earlier this year, it proved a serious handicap.

Reluctant to play along with what seemed to be a centrally agreed stitch-up with what they considered a less prestigious firm, individual Andersen offices drifted instead into deals with other big accounting firms, leaving KPMG with Andersen marriages in South Africa, Japan and Nigeria alone.

KPMG reckons it walked away from Andersen, but it is also likely that getting the young dealmakers of KPMG to work happily alongside zealous "Androids" was just too tricky.

In a business where the only resources are human ones, these sort of considerations could not be more crucial.


The trial

The disintegration

Background

IN-DEPTH
See also:

19 Mar 02 | Business
19 Mar 02 | Business
19 Mar 02 | Business
15 Mar 02 | Business
15 Mar 02 | Business
02 Mar 02 | Business
05 Feb 02 | Business
29 Jan 02 | Business
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