KPMG (B): Risk and Reform Harvard Case Solution & Analysis

Under the leadership of Tim Flynn, Chairman and CEO of KPMG, the business made several changes in compensation, governance, and culture in order to address the underlying reasons for actions that occurred prior to him becoming CEO that led to the accounting giant paying $456 million to the federal government over allegedly selling illegal tax shelters.

These changes included a common compensation bonus pool for the whole firm and rewarding people for professionalism as much as for company development; strengthening government by adding a lead director to the board, removing the chairman and deputy chairman from board member choice, and creating different committees for professional practice, ethics, and compliance and businesses; and enriched its ethics and compliance program through human resource processes (e.g., recruiting, orientation, training, and exit interviews), executing regular and mandatory ethics courses, active company direction in these lessons, and establishing multiple routes of communication for workers to raise concerns with an explicit "no retaliation" policy.

In January 2007, 86% of the employees were proud to work for the firm, compared to 60% in 2005. Employee turnover was at an all-time low. And the Tax Practice, the source of the problems, was the fastest growing such practice in the Big Four accounting firms at 18%.

PUBLICATION DATE: January 08, 2009 PRODUCT #: 409075-HCB-ENG

This is just an excerpt. This case is about FINANCE & ACCOUNTING

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