Recruiting Through Socialization

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Organizational Change at Arthur Andersen

• October 18, 2005

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Personal Background

• Internal Audit Director at Presbyterian Health
  Services
• CPA
• Graduate of UNM
• Recently moved back to New Mexico

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Rules for today

• Please ask questions

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What Happened??!?!?!?

• Setup Special Purpose Entities (SPEs)
• Keep Debt off Balance Sheet
• Artificially Inflate earnings

• Responsible for External Financial Statement
  Audit
• Indicted for properly shredding documents

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The Beginning

• Most employees (in other offices) thought that
  this was just a phase and we would soon get back
  to normal.
• Losing Clients
• Bad Press
• Management told everyone in the firm that we
  would fight this and survive
• Rally, Ads in Newspapers
• Updates daily
• Letter writing to Congress and President

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Thoughts at This Point..

• At first in the Enron/Andersen debacle I am
  thinking that things will just pass and that my
  job as well as my teams clients would remain
  intact
• As the saga continued I saw a change in the
  attitude of management and began exploring my
  options
• Other people (below management level) within the
  firm started panicking and thought that more than
  likely our possibility of survival would be
  remote.

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Team Atmosphere

• My division within the Phoenix office was 18
  people strong (450 total people within the
  Phoenix Office)
• We had all worked together for about the last 2
  years
• We were all very close (families, kids)
• We were depressed at the thought of not being
  able to work together again.
• Team members felt that too much change in the
  team dynamic would conceivably be something bad.

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Change Occurred at Lightning Speed.

• 2 weeks after management said we will get
  through this the follow changes were announced
• All travel had to be approved by a office
  managing partner
• 7,500 nation-wide layoff were planned for the
  next week
• Expenses were not paid unless approved by HR
• No discretionary spending was allowed
• Our Recruiting department turned inside out
• These changes made everyone have an uneasy
  feeling.

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Stress and Decision Making

• Since Accounting Jobs are plentiful, professional
  staff had no problems getting job offers, but
• Not sure if they would like the new job
• New people
• New process
• New everything
• Fear of the unknown causes stress.
• Non-professional staff (admin, rank and file)
  had a much harder time finding employment.
• Andersen paid extremely well for Non-professional
  Jobs (way above market!)
• Same issues as above
• Decisions had to be made, you dont want to be
  the last person on the sinking ship.
• Offers (Not just pay!)
• Family
• Un-needed stress
• Has to be done (no choice)

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Current Status

• After all the dust settled my highly profitable
  division was purchased by a large public company
  and spun-off into a subsidiary.
• All team members with the exception of one were
  retained
• We retained all of our tools
• We are in a new company but we feel much more
  empowered now that we are guaranteed employment
  for a period of time.

A new division of Robert Half International.
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Any Questions?
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