LONDON — A year after Watson Wyatt & Co. Holdings announced it was taking over European consultant Watson Wyatt LLP, the latter is transforming its business to focus on more profitable ventures.
The revamp is also related to another radical shift in the company — an exodus of personnel at all levels around the time of the acquisition.
The U.K.-based group has easily doubled its annual rate of personnel turnover to about 20% since January 2005. At least a dozen high-level consultants have left the firm. Among the most recent was Paul Thornton, director and senior European partner, who announced his retirement in January, a year before his term expired. Mr. Thornton's sudden departure occurred on the heels of the abrupt resignation of U.S. region manager Alan Whalley, who had been European managing partner.
Messrs. Thornton and Whalley did not comment on their departures, but other former Watson Wyatt employees said three issues predominated:
• Employees believed there was a rewards discrepancy as a result of the transaction — 47 voting members were due to collect an estimated $370 million in cash and shares, while about 180 non-voting members received about $90 million. While Watson Wyatt declined to comment on this issue, former employees said this divide caused resentment among non-voting members, who believed in an "implied promise" that they would get a bigger portion of the deal. They also added that a few individuals who made a lot of money also had more incentive to quit.
• The deal ended the U.K. group's limited partnership structure, which had provided more incentives for length of service. This caused some who might have considered leaving to finally take the plunge.
• Employees worried about job security and changes in office culture because they perceived that control of the company would shift toward the United States. Sources said it's still too soon to tell if this fear will be realized.