A temporary chief executive has been appointed in charge of Andersen Worldwide, the international accountants and consultancy group which is wracked by a power struggle between two factions. W Robert Grafton, chairman of the board of partners, becomes acting boss in a compromise appointment by the board, designed to buy it time to resolve a […]
A temporary chief executive has been appointed in charge of Andersen Worldwide, the international accountants and consultancy group which is wracked by a power struggle between two factions. W Robert Grafton, chairman of the board of partners, becomes acting boss in a compromise appointment by the board, designed to buy it time to resolve a deep-seated dispute which is threatening to split the whole organization in two. The battle is between the information technology specialists at Andersen Consulting and the accountants at Arthur Andersen & Co. They have been at each others’ throats over the split of money from consultancy fees and the fact that they increasingly find themselves fighting for the same business. With a 100,000-strong worldwide workforce and a turnover of $9.5bn there is a lot at stake in the Andersen acrimony. As Andersen is the type of organization that companies in trouble turn to when they are beset by problems, the fact that it cannot resolve its own difficulties has raised eyebrows. However, Andersen has a problem that most companies do not face – a democratic structure. Top appointments need to be approved by a two-thirds majority of the 2,700 partners, scattered across 79 countries. And the Andersen Consultancy partners were outraged when earlier this year the board nominated Jim Wadia from Arthur Andersen to take over from present chief executive Lawrence Weinbach when he retires next month. Andersen Consultancy has been the fastest growing part of the organization and the 1,000 Consultancy partners now bring in more revenue than the 1,700 partners on the accountancy side. They managed to block Wadia’s appointment and were rewarded when the board turned to George Shaheen, managing partner at Andersen Consultancy as its nomination. To boost their candidate, Consultancy partners bombarded the accountancy partners with e-mail, extolling Shaheen’s virtues. The accountants only glowered at their computer screens and voted in force to block Shaheen’s appointment. What they feared was reports that Shaheen wanted to overhaul an income sharing scheme under which Arthur Andersen partners are subsidized to the tune of around $100m a year by the Consultancy side. Now the board has to find a way to heal the divisions. After appointing a temporary chief executive, it set up a high level group to examine key organizational issues and report back by next spring. Only when the serious problems dividing it have been resolved, will there be any hope of electing a permanent new chief executive.