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Deloitte has told its UK employees that it will promote fewer people, reduce the average salary rise, and cut bonuses for the consulting arm as the Big Four firm’s profits disappointed.
Employees in Deloitte’s consulting arm will not receive full bonuses, which will be reduced on average by 20 per cent, and partners’ pay levels will also be affected, according to an email sent to employees on Tuesday by the firm’s senior UK partner Richard Houston.
The firm’s overall profits for the financial year were “below our original plan” though “slightly ahead of last year”, Houston wrote in the memo, seen by the Financial Times.
The Big Four firm’s consulting business “faced a particularly challenging year and fell materially short of its performance goals”, Houston wrote. Meanwhile, its audit practice also performed below its profit plans. The memo did not detail what actual profit had been achieved.
“At the start of FY25, we expected greater economic stability and a gradual return of growth opportunities. But an early election, geopolitical complexity and unexpected economic headwinds — like changes in trade policies — have continued to cause market uncertainty,” Houston wrote.
The firm’s deals business and its tax and legal arm have performed above profit expectations and so will be in line for full bonuses.
Deloitte’s decision comes amid continuing struggles for the Big Four firms’ consulting arms, which continue to navigate a post-pandemic slump in demand for business. Firms have had to cut employees hired during a pandemic boom in consulting projects.
Deloitte’s global revenues in 2024 only increased by 3.1 per cent, its worst performance in 14 years, driven by a significant slowdown in the firm’s consulting division. The firm’s UK consulting business also contracted last year.
Deloitte had slashed its travel and expenses budget at the end of last year to mitigate the slowdown, which Houston recognised in the Tuesday memo “has not been easy”. Some teams have been “unable to be together in person for much of the year”, he said, but the cuts had directly helped the firm pay its bonuses this year.
Next year, Deloitte will increase UK employees’ salaries by 2.9 per cent, compared to the 5 per cent pay rise for the previous year, according to the memo, reflecting a “need for caution given the current market outlook”.
The firm will also promote around 5,500 employees compared to the 6,800 promotions last year, and above 7,000 the year before that.
The firm’s bonus structure has shifted, Houston said, and will begin to include a performance element based on business line in addition to those based on firm-wide and individual performance. The change was “a deliberate shift from prior years to reflect the variations in performance across our businesses”.
Deloitte UK said: “Amid ongoing market uncertainty, we are pleased to be able recognise our people for their hard work with salary increases, bonuses and promotions this year. This is alongside other benefits such as fully funded private medical insurance, recently enhanced family policies, and our commitment to offering flexibility and choice in our ways of working.”
