Alumni Profiles
The Network - April 2012
J.Thomas Presby
A key figure in the modern history of Deloitte, retired Partner Tom Presby is best known for launching the Financial Services Center in the 1980’s and for leading the organization’s expansion into Central Europe in the early 1990’s. He later served several years as the organization’s Deputy Chairman and Chief Operating Officer before retiring in 2002. We visited with Tom recently to talk about his long and adventurous career with Deloitte and to catch up on the work he’s been doing recently.
What was your first role at Touche Ross?
I was hired in the Dayton, Ohio Office as a consultant in 1963; however, at that time, the organization’s policy was that all newly minted MBA’s had to start on the audit staff. Frankly, I was happy to do that, because I was interested in accounting and financial reporting and wanted to have that background. As soon as I passed the CPA exam, I left the Dayton office and went to the New York consulting practice.
Where did some of your early consulting engagements take you?
A day after arriving in New York, I was deployed to Broken Arrow, Oklahoma for a year to the world’s largest windmill factory. After that, I was assigned for a year to an engagement at the Department of Defense in Washington. Next came London for a year, and then back to New York. I was admitted into the Partnership in 1972 and served as a Management Consulting partner in the New York office until 1976 when I was asked to transfer to Europe to lead the organization’s European region. I was based in Paris. When I returned three years later, I was appointed Director of Marketing in the US.
Was it unusual for a Partner to become director of marketing?
It was a new idea but I was not the first; the first was Bill Gaede. I was the second Partner to have that role. After about a year and a half or so in that job, our Managing Partner, Russell Palmer asked me to become Executive Director of Touche Ross International, which I did for a little over a year.
You are given a lot of credit for the idea of industry specialization. How did that idea first come about?
When I led marketing, we had “industry” programs in construction, banking, and other industries where industry knowledge was relevant. I extended the idea to the notion of industry practices with professionals who could not only sell services in a particular area, but could actually deliver them as well. It made a big difference in our credibility and our results.
How did the idea go over at first? Were other organizations focusing industry-by-industry?
At the time, the idea of an industry practice was not widely accepted. Good auditors believed they could effectively audit anything; i.e. a bank one day, a retailer the next and a brokerage firm on the third day. Partners wanted variety and resisted being branded as specialists. There was and still is some validity to the generalist model, however, in my opinion, it was clear to me that specialization was the right way to build expertise, serve existing clients better and, above all, grow the practice.
So what happened to the idea after you introduced it?
Actually, it was a good conversation with some of the Partners in Charge of the larger offices. At the time, we did try some ideas in offices that had concentrations of clients in the same industry. That said, I had no mandate to implement industry programs in the offices and by and large I lost most of the arguments; the generalist culture prevailed. Fortunately, I was able to find enough like-minded partners and supportive top leadership who were willing to give the idea a try. The real catalyst, though, was during the spring of 1982- two large longstanding clients purchased two Wall Street brokerage firms. The firm was successful in obtaining the audit assignments but we were faced with two enormous Wall Street firms and dubious capacity to serve them. That’s when we created the Financial Services Center. To make the point, we moved the Center to a new downtown office in the World Trade Center – the heart of Wall Street - totally separate from the existing New York office.
How quickly was the Center accepted within the financial services industry?
Our consulting services caught on immediately. We had a unique service offering of “Hotline” support for investment bankers, regulatory consulting services for CFOs and General Counsels, and litigation support and liquidations services for law firms and broker dealers. Our traditional audit, tax and management consulting services took more time. We survived our first two big brokerage firm audits and within a few years numbered over 400 professionals.
How did you arrive at your next role, leading the organization’s expansion in Central Europe?
The fall of the Berlin Wall coincided with the Deloitte/Touche Ross merger. Suddenly many of our largest clients needed help in places where there were no offices and where few partners had actually ever visited; places like Prague, Warsaw, Budapest, and Moscow. Our European partners asked me to come back to Paris and start those offices, which frankly I was very happy to do. I was ready to do something new, something entrepreneurial.
What was your biggest challenge in getting those offices started?
It was hard to find people willing to go to Central Europe. They didn’t want to risk their careers; however, because there were a lot of retirements around the merger, I was able to get a core group of the newly retired partners to come and start the offices. We also had a number of professionals who were of Central European origin who spoke the national languages as their native tongues, and they were only too happy to join us in their “home” countries. So we started with these expatriate partners and staff and then hired Central Europeans into the offices. We opened four offices in the first year and were profitable in the second. By the third year, we had over 1,000 people and 15 offices.
What similarities were there for you between opening the Central Europe offices and launching the Financial Services Center?
Personally, both experiences were the best I had at Deloitte. They were entrepreneurial ventures where I got to work with great people — new and seasoned professionals. It was exhilarating and very satisfying – and far from the home office in Wilton. In Central Europe, we created a whole new profession and transformed the business communities and the lives of the people that worked with us.
What was your role after returning from Europe?
When I came back in 1995, I was promoted to Deputy Chairman and Chief Operating Officer. This role was essentially my final job before retiring in 2002. I enjoyed the global role and it was great to have colleagues everywhere in the world.
You now sit on multiple boards of directors. How did you get involved with that?
I retired from Deloitte on Friday, June 7, 2002. Thanks to a long-standing personal and business relationship, I was offered and started my first board position on the following Monday. That was the year of Sarbanes-Oxley, and I decided that I would try to specialize in chairing audit committees. I wanted to be as good at it as I could be and so I specialized. I figured that if that's all I focus on, I am likely to do it better than if I were to spread myself out over different activities and board committees.
Today, I sit on five public company boards and chair all of the audit committees: Tiffany & Co., INVESCO, First Solar, World Fuel Services, and Examworks. Generally, directors – for competitive reasons - cannot sit on multiple boards within the same industry, so instead of specializing by industry, I’ve specialized by function – audit committee. The National Association of Corporate Directors recently named me to its “Directorship 100” list of the most influential directors. I might add that my former partner and CEO, Ed Kangas, was also recognized by the NACD this year. In addition to board service, I also do some investing with a group of longtime friends.
Speaking of specialization, do you think the need for industry focus has changed at all?
I think it is generally acknowledged that industry focus is here to stay. Deloitte, as well as the other Big Four firms, has many focused teams– some by industry and some by functional activity - that are extremely effective. I am a big fan of the firm; its partners; and its specialized teams. I am proud that Deloitte does professional work at every company with which I am associated.
At what point in someone's career do you believe they should declare an industry specialization?
I don’t have any hard and fast rule but I would say that two or three years is a good point. It is amazing how effective young professionals can be when they deal from a base of specialized knowledge. So I would say specialize early, but not too early. And there's nothing to stop a professional from changing specialties one or even many times during the course of a career.
What advice would you give someone considering joining Deloitte or who is just starting off their career at Deloitte?
I am probably biased by my own career path but I would say start as an auditor. There's no better way to learn about business, financial reporting, internal systems and generally how businesses work.
What do you like to do in your free time?
I really have a great situation. I work about 50 or 60 percent of the time and I enjoy it immensely. I enjoy riding my motorcycles, playing racquetball, spending time at our weekend house in Connecticut, and just being with my wife, Elaine and family — especially my five-year-old grandson, William. I was recently asked in an interview to describe myself in a few words; my response was “old and bald but not yet dead.” I would like to keep it this way for a while.
