Andersen Could Face 'Brain Drain'

The Washington Post
Kirstin Downey Grimsley

As federal regulators, congressional investigators and state accountancy boards probe allegations that accounting giant Arthur Andersen destroyed documents relating to Enron Corp.'s collapse, some of the firm's 85,000 workers as well as young recruits are worrying bout their own futures as well.

Ransford, a Houston-based consulting firm that specializes in financial-services recruiting, says it has received about 1,000 re{acute}sume{acute}s and job inquiries from Andersen employees in the past week, up from the 30 to 40 it would normally receive from that group.

Meanwhile, some college students who have accepted jobs and internships at Andersen are expressing doubts about whether they should go there.

Ed Ketz, an associate professor of accounting who works with graduate business students at Penn State's Smeal College of Business Administration, thinks the loss of promising job candidates and good employees could be as damaging to Andersen as government investigations and legal liability from the mounting number of lawsuits the firm faces.

"Andersen's biggest problem in the short term could be a brain drain," he said.

Andersen has long been one of the most prestigious of the nation's Big Five accounting firms, known for plucking the best graduating seniors from the nation's large state universities. Many accountants join the firm straight out of college and stay for decades, climbing up the ranks and moving from office to office. Even when they depart the firm, often by landing good positions in financial departments at client firms, they are known as "Andersen alumni," and many maintain long-term connections with the company.

That makes the sudden flow of resumes highly unusual. "It's a phenomenal number," said Dean McMann, Ransford's chief executive. "This is pretty unprecedented."

He said most of the people contacting his firm are partners or senior managers, predominantly from the East and West coasts. The job seekers are expressing concern about the scandal's implications for their own professional reputations, he added.

"People want to have pride in their work, and if the brand is tarnished, it's hard on people -- and this brand is under pressure," McMann said. "People there are more concerned about the brand effect than anything else."

Andersen spokesman Patrick M. Dorton said that workers are "asking questions, good questions," and that such worries are "natural," given the circumstances.

"Some [employees] are concerned," he said. "It's natural to be disappointed when you see this kind of media coverage out about a firm you love."

James Benjamin, head of the accounting department at Lowry Mays College & Graduate School of Business at Texas A&M University, said three students who expected to go to Andersen for accounting internships have asked him whether they should do it. Last year, 60 Texas A&M graduates went to work at Andersen.

"They "are nervous about their careers," Benjamin said.

Mark Dirsmith, a professor of accounting at Smeal, said Andersen typically hires 10 to 20 of the business school's graduating seniors every year. He said that in the past week, three students who have been offered jobs with the firm have contacted him to ask whether they should look elsewhere.

"They're asking 'Will there be an Andersen?' " he said. "My response is that it is a very solid firm. . . . But the big thing in everybody's mind is the loss of credibility."

Dorton said the firm's top executives are communicating regularly with their workers via e-mail, voice mail and staff meetings to keep up morale. "The motto of our firm is 'Talk straight, think straight,' " he said. "Our CEO is dealing with this issue by our motto."

Carl Berquist, Andersen's managing partner for the Mid-Atlantic region, which extends from Philadelphia to Richmond and includes Washington, said the 2,000 workers employed in this area have been shaken by the negative publicity. But he said he did not believe any were thinking of resigning. Overall, he said, "morale is good."

"I've not heard of anybody talking about leaving," he said. "And nobody I know has said they've gotten a resume from somebody in my office."

Berquist said many of his employees have been comforted by their clients, who know they do good work. "The place where they are getting solace is their clients," he said.

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REPORTERS & EDITORS: For more information, please contact Wyatt DuBois in the Smeal College of Business Media Relations Office at 814-863-3798 or wed112@psu.edu .

Penn State's Smeal College of Business offers highly ranked undergraduate, MBA, executive MBA, Ph.D., and executive education opportunities to more than 5,500 students at all levels. Featuring academic departments of accounting, finance, marketing, insurance and real estate, management, and supply chain and information systems, the college is also home to major research centers such as the Center for Supply Chain Research, the Institute for the Study of Business Markets, the eBusiness Research Center, the Farrell Center for Corporate Innovation and Entrepreneurship, the Center for Global Business Studies, and the Center for the Management of Technological and Organizational Change.

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