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McKinsey & Company is a global
management consulting Management consulting is the practice of providing consulting services to organizations to improve their performance or in any way to assist in achieving organizational objectives. Organizations may draw upon the services of management consultant ...
firm founded in 1926 by
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
professor
James O. McKinsey James Oscar McKinsey (June 4, 1889 – November 30, 1937) was an American accountant, management consultant, professor of accounting at the University of Chicago, and founder of McKinsey & Company.Flesher, Dale L. and Tonya K. Flesher.McKinsey, ...
, that offers
professional services Professional services are occupations in the service sector requiring special training in the arts or sciences. Some professional services, such as architects, accountants, engineers, doctors, and lawyers require the practitioner to hold professi ...
to corporations, governments, and other organizations. McKinsey is the oldest and largest of the " Big Three" management consultancies (MBB), the world's three largest strategy consulting firms by revenue. The firm mainly focuses on the finances and operations of their clients. Under the leadership of
Marvin Bower Marvin Bower (August 1, 1903 – January 22, 2003) was an American business theorist and management consultant associated with McKinsey & Company. Under Bower's leadership, McKinsey grew from a small engineering and accounting firm to a leader ...
, McKinsey expanded into Europe during the 1940s and 1950s. In the 1960s, McKinsey's
Fred Gluck Frederick W. Gluck (born 1935) was a longtime top senior partner and director at management consultancy McKinsey & Company, serving as managing director (chief executive) from 1988 to 1994. At McKinsey he introduced the concept of fifteen “cent ...
—along with
Boston Consulting Group Boston Consulting Group, Inc. (BCG) is an American global management consulting firm founded in 1963 and headquartered in Boston, Massachusetts. It is one of the Big Three (or MBB, the world’s three largest management consulting firms by rev ...
's
Bruce Henderson Bruce Doolin Henderson (April 30, 1915 – July 20, 1992) was an American businessman and management expert. He founded Boston Consulting Group (BCG) in 1963 in Boston, Massachusetts and headed the firm as the president and CEO until 1980. He c ...
, Bill Bain at
Bain & Company Bain & Company is an American management consulting company headquartered in Boston, Massachusetts. The firm provides advice to public, private, and non-profit organizations. One of the Big Three management consultancies, Bain & Company was fou ...
, and
Harvard Business School Harvard Business School (HBS) is the graduate business school of Harvard University, a private research university in Boston, Massachusetts. It is consistently ranked among the top business schools in the world and offers a large full-time MBA p ...
's
Michael Porter Michael Eugene Porter (born May 23, 1947) is an American academic known for his theories on economics, business strategy, and social causes. He is the Bishop William Lawrence University Professor at Harvard Business School, and he was one of t ...
—transformed
corporate culture Historically there have been differences among investigators regarding the definition of organizational culture. Edgar Schein, a leading researcher in this field, defined "organizational culture" as comprising a number of features, including a ...
. A 1975 publication by McKinsey's John L. Neuman introduced the business practice of "overhead value analysis" that contributed to a downsizing trend that eliminated many jobs in
middle management Middle management is the intermediate management level of a hierarchical organization that is subordinate to the executive management and responsible for ‘team leading’ line managers and/or ‘specialist’ line managers. Middle management is i ...
. McKinsey has a notoriously competitive hiring process, and is widely seen as one of the most selective employers in the world. McKinsey recruits primarily from the world's top business schools and was one of the first management consultancies to recruit a limited number of candidates with advanced academic degrees (e.g. PhD, MD) and deep field expertise, and who have demonstrated business acumen and analytical skills. McKinsey publishes a business magazine, the ''
McKinsey Quarterly The ''McKinsey Quarterly'' is a business magazine focused on management and organizational theory. It is written primarily by McKinsey McKinsey & Company is a global management consulting firm founded in 1926 by University of Chicago profess ...
''. McKinsey has been the subject of significant controversy related to its business practices. Among other things, the company has been criticized for its role promoting OxyContin use in the context of the opioid crisis in North America, its work with
Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
, and its work for authoritarian regimes like Saudi Arabia.


Historical


Early history

McKinsey & Company was founded in
Chicago (''City in a Garden''); I Will , image_map = , map_caption = Interactive Map of Chicago , coordinates = , coordinates_footnotes = , subdivision_type = Country , subdivision_name ...
under the name James O. McKinsey & Company in 1926 by
James O. McKinsey James Oscar McKinsey (June 4, 1889 – November 30, 1937) was an American accountant, management consultant, professor of accounting at the University of Chicago, and founder of McKinsey & Company.Flesher, Dale L. and Tonya K. Flesher.McKinsey, ...
, a professor of accounting at the
University of Chicago The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the b ...
. He conceived the idea after witnessing inefficiencies in military suppliers while working for the
United States Army Ordnance Department The United States Army Ordnance Corps, formerly the United States Army Ordnance Department, is a sustainment branch of the United States Army, headquartered at Fort Lee, Virginia. The broad mission of the Ordnance Corps is to supply Army comb ...
. The firm called itself an "accounting and management firm" and started out giving advice on using accounting principles as a management tool. McKinsey's first partners were Tom Kearney, hired in 1929, and
Marvin Bower Marvin Bower (August 1, 1903 – January 22, 2003) was an American business theorist and management consultant associated with McKinsey & Company. Under Bower's leadership, McKinsey grew from a small engineering and accounting firm to a leader ...
, hired in 1933.
Marvin Bower Marvin Bower (August 1, 1903 – January 22, 2003) was an American business theorist and management consultant associated with McKinsey & Company. Under Bower's leadership, McKinsey grew from a small engineering and accounting firm to a leader ...
is credited with establishing McKinsey's values and principles in 1937, based on his experience as a lawyer. The firm developed an "
up or out Up or out, also known as a tenure or partnership system, is the requirement for members of a hierarchical organization to achieve a certain rank within a certain period of time. If they fail to do so, they must leave the organization. Examples ...
" policy, where consultants who are not promoted are asked to leave. In 1937, Bower established a set of rules: that consultants should put the interests of clients before McKinsey's revenues, not discuss client affairs, tell the truth even if it means challenging the client's opinion, and only perform work that is both necessary and that McKinsey can do well. Bower created the firm's principle of only working with CEOs, which was later expanded to CEOs of subsidiaries and divisions. He also created McKinsey's principle of only working with clients the firm felt would follow its advice. Bower also established the firm's language. In 1932, the company opened its second office in
New York City New York, often called New York City or NYC, is the List of United States cities by population, most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the L ...
. In 1935, McKinsey left the firm temporarily to serve as the chairman and CEO of client
Marshall Field's Marshall Field & Company (commonly known as Marshall Field's) was an upscale department store in Chicago, Illinois. Founded in the 19th century, it grew to become a large chain before Macy's, Inc acquired it in 2005. Its eponymous founder, Mar ...
. In 1935, McKinsey merged with accounting firm Scovell, Wellington & Company, creating the New York-based McKinsey, Wellington & Co. and splitting off the accounting practice into Chicago-based Wellington & Company. A Wellington project that accounted for 55 percent of McKinsey, Wellington & Company's billings was about to expire and Kearney and Bower had disagreements about how to run the firm. Bower wanted to expand nationally and hire young business school graduates, whereas Kearney wanted to stay in Chicago and hire experienced accountants. In 1937, James O. McKinsey died after catching pneumonia. This led to the division of McKinsey, Wellington & Company in 1939. The accounting practice returned to Scovell, Wellington & Company, while the management engineering practice was split into McKinsey & Company and McKinsey, Kearney & Company. Bower had partnered with Guy Crockett from Scovell Wellington, who invested in the new McKinsey & Company and became managing partner, while Marvin Bower is credited with founding the firm's principles and strategy as his deputy. The New York office purchased exclusive rights to the McKinsey name in 1946.


Years of growth

McKinsey & Company grew quickly in the 1940s and 50s, especially in Europe. It had 88 staff in 1951 and more than 200 by the 1960s, including 37 in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
by 1966. In the same year, McKinsey had six offices in major US cities, including
San Francisco San Francisco (; Spanish language, Spanish for "Francis of Assisi, Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the List of Ca ...
,
Cleveland Cleveland ( ), officially the City of Cleveland, is a city in the U.S. state of Ohio and the county seat of Cuyahoga County. Located in the northeastern part of the state, it is situated along the southern shore of Lake Erie, across the U.S. ...
,
Los Angeles Los Angeles ( ; es, Los Ángeles, link=no , ), often referred to by its initials L.A., is the largest city in the state of California and the second most populous city in the United States after New York City, as well as one of the world' ...
and
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, as well as six abroad. These foreign offices were primarily in
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
, such as in
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
,
Paris Paris () is the capital and most populous city of France, with an estimated population of 2,165,423 residents in 2019 in an area of more than 105 km² (41 sq mi), making it the 30th most densely populated city in the world in 2020. S ...
, and
Amsterdam Amsterdam ( , , , lit. ''The Dam on the River Amstel'') is the Capital of the Netherlands, capital and Municipalities of the Netherlands, most populous city of the Netherlands, with The Hague being the seat of government. It has a population ...
, as well as in
Melbourne Melbourne ( ; Boonwurrung/Woiwurrung: ''Narrm'' or ''Naarm'') is the capital and most populous city of the Australian state of Victoria, and the second-most populous city in both Australia and Oceania. Its name generally refers to a met ...
. By this time, one third of the company's revenues originated from its European offices. Guy Crockett stepped down as managing director in 1959, and Marvin Bower was elected in his place. McKinsey's profit-sharing, executive and planning committees were formed in 1951. The organization's client base expanded especially among governments, defense contractors,
blue-chip companies A blue chip is stock in a ''stock corporation'' (contrasted with non-stock one) with a national reputation for quality, reliability, and the ability to operate profitably in good and bad times. Origin As befits the sometimes high-risk nature of ...
and military organizations in the post–
World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...
era. McKinsey became a private corporation with shares owned exclusively by McKinsey employees in 1956. After Bower stepped down in 1967, the firm's revenues declined. New competitors like the
Boston Consulting Group Boston Consulting Group, Inc. (BCG) is an American global management consulting firm founded in 1963 and headquartered in Boston, Massachusetts. It is one of the Big Three (or MBB, the world’s three largest management consulting firms by rev ...
and
Bain & Company Bain & Company is an American management consulting company headquartered in Boston, Massachusetts. The firm provides advice to public, private, and non-profit organizations. One of the Big Three management consultancies, Bain & Company was fou ...
created increased competition for McKinsey by marketing specific branded products, such as the Growth-Share Matrix, and by selling their industry expertise. In 1971, McKinsey created the Commission on Firm Aims and Goals, which found that McKinsey had become too focused on geographic expansion and lacked adequate industry knowledge. The commission advised that McKinsey slow its growth and develop industry specialties. In 1975, John L. Neuman, a McKinsey consultant at the time, published "Make Overhead Cuts That Last" in ''
Harvard Business Review ''Harvard Business Review'' (''HBR'') is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. ''HBR'' is published six times a year and is headquartered in Brighton, Ma ...
'', in which he introduced new rules for scientific management such as "overhead valuation analysis" (OVA). (extra ) OVA guided McKinsey's "path to downsizing", responding to the "mid-century corporation's excessive reliance on middle management". Neuman wrote that the "process, though swift, is not painless. Since overhead expenses are typically 70% to 85% people-related and most savings come from work-force reductions, cutting overhead does demand some wrenching decisions." In 1976,
Ron Daniel Ron is a shortening of the name Ronald. Ron or RON may also refer to: Arts and media * Big Ron (''EastEnders''), a TV character * Ron (''King of Fighters''), a video game character *Ron Douglas, the protagonist in '' Lucky Stiff'' played by Joe ...
was elected managing director, serving until 1988. Daniel and Fred Gluck helped shift the firm away from its generalist approach by developing 15 specialized working groups within McKinsey called Centers of Competence and by developing practice areas called Strategy, Operations and Organization. Daniel also began McKinsey's knowledge management efforts in 1987. This led to the creation of an IT system that tracked McKinsey engagements, a process to centralize knowledge from each practice area and a resource directory of internal experts." By the end of his tenure in 1988 the firm was growing again and had opened new offices in
Rome , established_title = Founded , established_date = 753 BC , founder = King Romulus (legendary) , image_map = Map of comune of Rome (metropolitan city of Capital Rome, region Lazio, Italy).svg , map_caption ...
,
Helsinki Helsinki ( or ; ; sv, Helsingfors, ) is the Capital city, capital, primate city, primate, and List of cities and towns in Finland, most populous city of Finland. Located on the shore of the Gulf of Finland, it is the seat of the region of U ...
,
São Paulo São Paulo (, ; Portuguese for 'Saint Paul') is the most populous city in Brazil, and is the capital of the state of São Paulo, the most populous and wealthiest Brazilian state, located in the country's Southeast Region. Listed by the GaWC a ...
and
Minneapolis Minneapolis () is the largest city in Minnesota, United States, and the county seat of Hennepin County. The city is abundant in water, with thirteen lakes, wetlands, the Mississippi River, creeks and waterfalls. Minneapolis has its origins ...
. Fred Gluck served as McKinsey's managing director from 1988 to 1994. The firm's revenues doubled during his tenure. He organized McKinsey into 72 "islands of activity" that were organized under seven sectors and seven functional areas. By 1997, McKinsey had grown eightfold over its size in 1977. In 1989 the firm tried to acquire talent in IT services through a $10 million purchase of the Information Consulting Group (ICG), but a culture clash caused 151 out of the 254 ICG staff members to leave by 1993. In 1994,
Rajat Gupta Rajat Kumar Gupta (; born ) is an Indian-American businessman and convicted felon who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted for insider ...
became the first non-American-born partner to be elected as the firm's managing director. By the end of his tenure, McKinsey had grown from 2,900 to 7,700 staff and 58 to 84 locations. He opened new international offices in cities such as
Moscow Moscow ( , US chiefly ; rus, links=no, Москва, r=Moskva, p=mɐskˈva, a=Москва.ogg) is the capital and largest city of Russia. The city stands on the Moskva River in Central Russia, with a population estimated at 13.0 million ...
,
Beijing } Beijing ( ; ; ), alternatively romanized as Peking ( ), is the capital of the People's Republic of China. It is the center of power and development of the country. Beijing is the world's most populous national capital city, with over 21 ...
and
Bangkok Bangkok, officially known in Thai language, Thai as Krung Thep Maha Nakhon and colloquially as Krung Thep, is the capital and most populous city of Thailand. The city occupies in the Chao Phraya River delta in central Thailand and has an estima ...
. Continuing the structure developed by prior directors, Gupta also created 16 industry groups charged with understanding specific markets and instituted a three-term limit for the managing director. McKinsey created practice areas for manufacturing and business technology in the late 1990s. McKinsey set up "accelerators" in the 1990s, where the firm accepted
stock In finance, stock (also capital stock) consists of all the shares by which ownership of a corporation or company is divided.Longman Business English Dictionary: "stock - ''especially AmE'' one of the shares into which ownership of a company ...
-based reimbursement to help internet
startups A startup or start-up is a company or project undertaken by an entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses that never intend t ...
; the company performed more than 1,000 e-commerce projects from 1998 to 2000 alone. An October 1, 2000 article in the ''New York Times'' described the compulsory mini-courses that McKinsey—and its two largest rivals Boston Consulting and Bain—offered their "hyper-educated" young new recruits. Once completed, these newly certified management consultants would begin their work of "advising the executives of multibillion-dollar companies" on "projects" not related to their academic backgrounds"—" wyers would help packaged-foods companies develop new products, and physicists would tell Internet start-ups how to stand out from the crowd." The burst of the
dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Compo ...
led to a reduction in utilization rates of McKinsey's consultants from 64 to 52 percent. Though McKinsey avoided dismissing any personnel following the decline, the decline in revenues and losses from equity-based payments as stock lost value, together with a recession in 2001, meant the company had to reduce its prices, cut expenses and reduce hiring. In 2001, McKinsey launched several practices that focused on the public and social sector. It took on many public sector or non profit clients on a
pro bono ( en, 'for the public good'), usually shortened to , is a Latin phrase for professional work undertaken voluntarily and without payment. In the United States, the term typically refers to provision of legal services by legal professionals for pe ...
basis. By 2002 McKinsey had invested a $35.8 million budget on
knowledge management Knowledge management (KM) is the collection of methods relating to creating, sharing, using and managing the knowledge and information of an organization. It refers to a multidisciplinary approach to achieve organisational objectives by making ...
, up from $8.3 million in 1999. Its revenues were 50, 20, and 30 percent from strategy, operations, and technology consulting, respectively. In 2003, Ian Davis, the head of the
London London is the capital and largest city of England and the United Kingdom, with a population of just under 9 million. It stands on the River Thames in south-east England at the head of a estuary down to the North Sea, and has been a majo ...
office, was elected to the position of managing director. Davis promised a return to the company's core values after a period in which the firm had expanded rapidly, which some McKinsey consultants felt was a departure from the company's heritage. Also in 2003, the firm established a headquarters for the Asia-Pacific region in
Shanghai Shanghai (; , , Standard Mandarin pronunciation: ) is one of the four direct-administered municipalities of the People's Republic of China (PRC). The city is located on the southern estuary of the Yangtze River, with the Huangpu River flow ...
. By 2004, more than 60 percent of McKinsey's revenues were generated outside the U.S. The company started a Social Sector Office (SSO) in 2008, which is divided into three practices: Global Public Health, Economic Development and Opportunity Creation (EDHOC) and Philanthropy. McKinsey does much of its pro-bono work through the SSO, whereas a Business Technology Office (BTO), founded in 1997, provides consulting on technology strategy. By 2009, the firm consisted of 400 directors (senior partners), up from 151 in 1993.
Dominic Barton Dominic Barton (born 1962), known as Bao Damin ( zh, 鲍达民) in China, is a Ugandan-born Canadian business executive, author, and diplomat. He is the current chairman of the private investment firm LeapFrog Investments as well as the chancellor ...
was elected as managing director, a role he was re-elected for in 2012 and 2015.


Recent history

Rajat Gupta along with another McKinsey executive,
Anil Kumar Anil Kumar (born 1958) is an Indian-American former senior partner and director at management consulting firm McKinsey & Company, where he co-founded McKinsey's offices in Silicon Valley and India and created its Internet practice (representin ...
, were among those convicted in a government investigation into
insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...
for sharing inside information with
Galleon Group The Galleon Group was one of the largest hedge fund management firms in the world, managing over $7 billion, before closing in October 2009. The firm was the center of a 2009 insider trading scandal which subsequently led to its fall. The firm w ...
hedge fund owner
Raj Rajaratnam Rajakumaran Rajaratnam (born June 15, 1957) is a Sri Lankan-American former hedge fund manager and founder of the Galleon Group, a New York-based hedge fund management firm. On October 16, 2009, he was arrested by the FBI for insider trading ...
. Though McKinsey was not accused of any wrongdoing, the convictions were embarrassing for the firm, since it prides itself on integrity and client confidentiality. McKinsey no longer maintains a relationship with either senior partner. Senior partner Anil Kumar, described as Gupta's protégé, left the firm after the allegations in 2009 and pleaded guilty in January 2010. While he and other partners had been pitching McKinsey's consulting services to the Galleon Group, Kumar and Rajaratnam reached a private consulting agreement, violating McKinsey's policies on confidentiality. Gupta was convicted in June 2012 of four counts of
conspiracy A conspiracy, also known as a plot, is a secret plan or agreement between persons (called conspirers or conspirators) for an unlawful or harmful purpose, such as murder or treason, especially with political motivation, while keeping their agree ...
and
securities fraud Securities fraud, also known as stock fraud and investment fraud, is a deceptive practice in the stock or commodities markets that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in lo ...
, and acquitted on two counts. In October 2011, he was arrested by the
FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and its principal Federal law enforcement in the United States, federal law enforcement age ...
on charges of sharing insider information from these confidential board meetings with Rajaratnam. At least twice, Gupta used a McKinsey phone to call Rajaratnam and retained other perks—an office, assistant, and $6 million retirement salary that year—as a senior partner emeritus. After the scandal McKinsey instituted new policies and procedures to discourage future indiscretions from consultants, including investigating other partners' ties to Gupta. In February 2018,
Kevin Sneader Kevin Sneader (born c. 1966) is a Canadian-born British management consultant. He was McKinsey & Company's global managing partner from July 2018 to July 2021. He failed to secure a second term in that position in early 2021, becoming the first g ...
was elected as managing director. He is serving a three-year term that began on July 1, 2018. McKinsey has consulted for multiple cities, states and government organizations during the 2019 coronavirus pandemic. During the first four months of the pandemic, McKinsey obtained in excess of $100 million in consulting work, including no-bid contracts with the
United States Department of Veterans Affairs The United States Department of Veterans Affairs (VA) is a Cabinet-level executive branch department of the federal government charged with providing life-long healthcare services to eligible military veterans at the 170 VA medical centers a ...
and
Air Force An air force – in the broadest sense – is the national military branch that primarily conducts aerial warfare. More specifically, it is the branch of a nation's armed services that is responsible for aerial warfare as distinct from an a ...
. The reopening guidelines for Florida's Miami-Dade County, produced with McKinsey's input, were criticized by local media and officials for complexity and lack of clarity. McKinsey discontinued its investment banking advisory unit in 2021, citing "personnel matters" as the reason. In December 2021, Puneet Dikshit, a McKinsey partner, pled guilty to insider trading. Dikshit advised
Goldman Sachs Goldman Sachs () is an American multinational investment bank and financial services company. Founded in 1869, Goldman Sachs is headquartered at 200 West Street in Lower Manhattan, with regional headquarters in London, Warsaw, Bangalore, H ...
about its acquisition of GreenSky, a fintech company, and used that confidential information to trade call options. On June 1, 2022, McKinsey announced that it had acquired Caserta, a data engineering firm.


Organization and services


Structure

McKinsey & Company was originally organized as a
partnership A partnership is an arrangement where parties, known as business partners, agree to cooperate to advance their mutual interests. The partners in a partnership may be individuals, businesses, interest-based organizations, schools, governments o ...
before being legally restructured as a private corporation with shares owned by its partners in 1956. It mimics the structure of a partnership and employees are called "partners". The company has a flat hierarchy and each member is assigned a mentor. Since the 1960s, McKinsey's managing director has been elected by a vote of senior directors to serve up to three, three-year terms or until reaching the mandatory retirement age of 60. The firm is also managed by a series of committees that each has its own area of responsibility. By 2013, McKinsey was described as having a decentralized structure, whereby different offices operate similarly, but independently. The company's budgeting is centralized, but individual consultants are given a large degree of autonomy. As a truly global firm McKinsey does not have a traditional "headquarters," but it is usually the home office of the current Managing Partner.


List of global managing partners

#
James O. McKinsey James Oscar McKinsey (June 4, 1889 – November 30, 1937) was an American accountant, management consultant, professor of accounting at the University of Chicago, and founder of McKinsey & Company.Flesher, Dale L. and Tonya K. Flesher.McKinsey, ...
(1926–1935), Chicago office # Guy Crockett (1939–1950) #
Marvin Bower Marvin Bower (August 1, 1903 – January 22, 2003) was an American business theorist and management consultant associated with McKinsey & Company. Under Bower's leadership, McKinsey grew from a small engineering and accounting firm to a leader ...
(1950–1967), New York office # Gil Clee (1967–1968) # Chester Walton (1968–1976) #
Alonzo L. McDonald Alonzo L. McDonald (August 5, 1928 - November 21, 2019) was an American businessman and philanthropist. Biography Early life He was born in Atlanta, Georgia.Ron Daniel Ron is a shortening of the name Ronald. Ron or RON may also refer to: Arts and media * Big Ron (''EastEnders''), a TV character * Ron (''King of Fighters''), a video game character *Ron Douglas, the protagonist in '' Lucky Stiff'' played by Joe ...
(1976–1988) #
Frederick Gluck Frederick W. Gluck (born 1935) was a longtime top senior partner and director at management consultancy McKinsey & Company, serving as managing director (chief executive) from 1988 to 1994. At McKinsey he introduced the concept of fifteen “cen ...
(1988–1994), New York office #
Rajat Gupta Rajat Kumar Gupta (; born ) is an Indian-American businessman and convicted felon who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted for insider ...
(1994–2003), New York office # Ian Davis (2003–2009), London office #
Dominic Barton Dominic Barton (born 1962), known as Bao Damin ( zh, 鲍达民) in China, is a Ugandan-born Canadian business executive, author, and diplomat. He is the current chairman of the private investment firm LeapFrog Investments as well as the chancellor ...
(2009–2018), London office #
Kevin Sneader Kevin Sneader (born c. 1966) is a Canadian-born British management consultant. He was McKinsey & Company's global managing partner from July 2018 to July 2021. He failed to secure a second term in that position in early 2021, becoming the first g ...
(2018–2021), Hong Kong office #
Bob Sternfels Robert Sternfels is an American businessman who has been the managing partner of McKinsey & Company since July 2021. Early life and education After growing up in Lodi, California, Sternfels studied history and economics at Stanford University, w ...
(2021– ), San Francisco office


Consulting services

McKinsey & Company provides strategy and
management consulting Management consulting is the practice of providing consulting services to organizations to improve their performance or in any way to assist in achieving organizational objectives. Organizations may draw upon the services of management consultant ...
services, such as providing advice on an acquisition, developing a plan to restructure a sales force, creating a new business strategy or providing advice on downsizing, according to the 2013 book, ''The Firm''. The 1999 book, ''The McKinsey Way'' said that McKinsey consultants designed and implemented studies to evaluate management decisions using data and interviews to test hypotheses. which were then presented to senior management, typically in a
PowerPoint Microsoft PowerPoint is a presentation program, created by Robert Gaskins and Dennis Austin at a software company named Forethought, Inc. It was released on April 20, 1987, initially for Macintosh computers only. Microsoft acquired PowerPoi ...
presentation and a booklet. McKinsey & Company has traditionally charged approximately 25 percent more than competing firms. A typical McKinsey engagement can last between two and twelve months and involves three to six McKinsey consultants. An engagement is usually managed by a generalist that covers the region the client's headquarters are located in and specialists that have either an industry or functional expertise. Unlike some competing consulting firms, McKinsey does not hold a policy against working for multiple competing companies (although individual consultants are barred from doing so).


Recruiting

McKinsey & Company was the first management consultancy to hire recent graduates instead of experienced business managers, when it started doing so in 1953. According to a 1997 article in ''The Observer'', McKinsey recruited recent graduates and "imbue them with a religious conviction" in the firm, then cull dthrough them with its " up-or-out" policy. The "up or out" policy, which was established in 1951, meant that consultants that were not being promoted within the firm were asked to leave. By 1997, about one-fifth of McKinsey's consultants departed under the up or out policy each year. McKinsey's practice of hiring recent graduates and the "up-or-out" philosophy, were originally based on Marvin Bower's experiences at the law firm
Jones Day Jones Day is an American multinational law firm. As of 2021, it was the eighth largest law firm in the U.S. and the 13th highest grossing law firm in the world. Originally headquartered in Cleveland, Ohio, Jones Day ranks first in both M&A le ...
in the 1930s, as well as the " Cravath system" used at the law firm Cravath, Swaine and Moore. In recent years, it has consistently been recognized by Vault as the most prestigious consulting firm employer in the world. In 2018, 800,000 candidates applied for 8,000 jobs. While many recruits have MBAs, by 2009, less than half of the firm's recruits were business majors; by 1999, recruits had advanced degrees in science, medicine, engineering or law.


Culture

A November 1, 1993, profile story in ''Fortune'' magazine said that McKinsey & Company was "the most well-known, most secretive, most high-priced, most prestigious, most consistently successful, most envied, most trusted, most disliked management consulting firm on earth". In the article, McKinsey was cited as claiming that its consultants were not motivated by money, and that partners talked to each other with "a sense of personal affection and admiration". The article described a culture clash that occurred in the early 1990s, leading to the departure of 151 out of the 254 ICG staff members. In their 1997 book ''Dangerous Company: Management Consultants and the Businesses They Save and Ruin'', authors James O'Shea and Charles Madigan said that McKinsey's culture had often been compared to
religion Religion is usually defined as a social- cultural system of designated behaviors and practices, morals, beliefs, worldviews, texts, sanctified places, prophecies, ethics, or organizations, that generally relates humanity to supernatural, ...
, because of the influence, loyalty and zeal of its members. The firm has a policy against discussing specific client situations. A September 1997 '' The News Observer'' story said that McKinsey's internal culture was "collegiate and ruthlessly competitive" and has been described as arrogant. Ethan Rasiel's 1999 book entitled ''The McKinsey Way'', described a culture at McKinsey's whereby members were not supposed to "sell" their services. ''The Sunday Times'' wrote that McKinsey was a pioneer in the industry—the "first firm to hire MBA graduates from the top business schools to staff its projects, rather than relying on older industry personnel." They were still trying to keep a "very low profile public image" in 2005. That year, an article in ''
The Guardian ''The Guardian'' is a British daily newspaper. It was founded in 1821 as ''The Manchester Guardian'', and changed its name in 1959. Along with its sister papers ''The Observer'' and ''The Guardian Weekly'', ''The Guardian'' is part of the Gu ...
'' said that McKinsey "hours are long, expectations high and failure not acceptable". According to an October 2009
Reuters Reuters ( ) is a news agency owned by Thomson Reuters Corporation. It employs around 2,500 journalists and 600 photojournalists in about 200 locations worldwide. Reuters is one of the largest news agencies in the world. The agency was estab ...
article, the firm had a "button-down culture" focused on "playing by the rules". In his 2013 book, ''The Firm: The Story of McKinsey and Its Secret Influence on American Business'', Duff McDonald described how McKinsey's consultants were expected to become a part of the community and recruit clients from church, charitable foundations, board positions and other community involvements. McDonald wrote that McKinsey calls itself "The Firm" and its employees "members". ''
BusinessWeek ''Bloomberg Businessweek'', previously known as ''BusinessWeek'', is an American weekly business magazine published fifty times a year. Since 2009, the magazine is owned by New York City-based Bloomberg L.P. The magazine debuted in New York City ...
'' summarized ''The Firm''s description of McKinsey as a "fading empire, where hubris and changing times have diminished the firm's statures." In his February 2020 in-depth article in ''
The Atlantic ''The Atlantic'' is an American magazine and multi-platform publisher. It features articles in the fields of politics, foreign affairs, business and the economy, culture and the arts, technology, and science. It was founded in 1857 in Boston, ...
'', Daniel Markovits argues that McKinsey promotes "intellect and elite credentials" and "Meritocrats" over "directly relevant experience".


Conflicts of interest between McKinsey and MIO partners

In February 2019, ''The New York Times'' ran a series of articles about McKinsey and the in-house hedge fund it operates – McKinsey Investment Office, or MIO Partners. The articles claimed that there was "potential for undisclosed conflicts of interest between the fund's investments and the advice the firm sells to clients", since the hedge fund could benefit from the inside knowledge obtained through management consulting services. The firm responded that "MIO and McKinsey employ separate staffs. MIO staff have no nonpublic knowledge of McKinsey clients. For the vast majority of assets under management, decisions about specific investments are made by third-party managers". The firm has agreed to repay fees it earned in three bankruptcy cases, approximately $15 million worth. MIO Partners was fined $18 million by SEC in 2021.


Influence

Many of McKinsey's alumni become CEOs of major corporations or hold important government positions. In doing so, they influence the other organization with McKinsey's values and culture. McKinsey's alumni have been appointed as CEOs or high-level executives. In his 2010 publication, '' The Lords of Strategy: The Secret Intellectual History of the New Corporate World'', business journalist
Walter Kiechel Walter Kiechel III (born July 21, 1946 in Tecumseh, Nebraska) is an author and business journalist. He has served as Managing Editor of ''Fortune'' magazine and as the Editorial Director of Harvard Business School Publishing, producer of the ''Harv ...
traced the roots of a profound change in corporate management to "four mavericks" in the 1960s—Fred Gluck at McKinsey & Company, Boston Consulting Group's Bruce Henderson, Bill Bain at Bain & Company, and Harvard Business School professor, Michael Porter. Kiechel recounted how they "revolutionized the way we think about business, changed the very soul of the corporation, and transformed the way we work," according to the Harvard Business Press synopsis. McKinsey has been either directly involved in, or closely associated with, a number of notable scandals, involving Enron in 2001, Galleon in 2009,
Valeant Bausch Health Companies Inc. (formerly Valeant Pharmaceuticals International, Inc.) is a Canadian multinational specialty pharmaceutical company based in Laval, Quebec, Canada. It develops, manufactures and markets pharmaceutical products and ...
in 2015, Saudi Arabia in 2018, China in 2018, ICE in 2019, an internal conflict of interest in 2019 and Purdue Pharma in 2019, among others. By 2019, major news outlets, including ''
The New York Times ''The New York Times'' (''the Times'', ''NYT'', or the Gray Lady) is a daily newspaper based in New York City with a worldwide readership reported in 2020 to comprise a declining 840,000 paid print subscribers, and a growing 6 million paid ...
'' and ''
ProPublica ProPublica (), legally Pro Publica, Inc., is a nonprofit organization based in New York City. In 2010, it became the first online news source to win a Pulitzer Prize, for a piece written by one of its journalists''The Guardian'', April 13, 2010P ...
,'' had raised concerns about McKinsey's business practices.


Research and publishing

McKinsey & Company consultants regularly publish books, research and articles about business and management. The firm spends $50–$100 million a year on research. McKinsey was one of the first organizations to fund management research, when it founded the Foundation for Management Research in 1955. The firm began publishing a business magazine, '' The McKinsey Quarterly'', in 1964. It funds the McKinsey Global Institute, which studies global economic trends and was founded in 1990. It also launched the McKinsey Institute for Black Economic Mobility in 2020 to fund research focused on advancing inclusive growth & racial equity globally. Many consultants are contributors to the
Harvard Business Review ''Harvard Business Review'' (''HBR'') is a general management magazine published by Harvard Business Publishing, a wholly owned subsidiary of Harvard University. ''HBR'' is published six times a year and is headquartered in Brighton, Ma ...
. McKinsey consultants published only two books from 1960 to 1980, then more than 50 from 1980 to 1996. McKinsey's publications and research give the firm a "quasi-academic" image. A McKinsey book, ''
In Search of Excellence ''In Search of Excellence'' is a book written by Tom Peters and Robert H. Waterman Jr. First published in 1982, it sold three million copies in its first four years, and was the most widely held monograph in the United States from 1989 to 2006. T ...
'', was published in 1982. It featured eight characteristics of successful businesses based on an analysis of 43 top performing companies. It marked the beginning of McKinsey's shift from accounting to "softer" aspects of management, like skills and culture. According to David Guest from King's College, ''In Search of Excellence'' became popular among business managers because it was easy to read, well-marketed and some of its core messages were valid. However, it was disliked by academics because of flaws in its methodology. Additionally, a 1984 analysis by ''BusinessWeek'' found that many of those companies identified as "excellent" in the book no longer met the criteria only two years later. A 1997 article and a book it published in 2001 on "The War for Talent" prompted academics and the business community to start focusing more on talent management. The authors found that the best-performing companies were "obsessed" with acquiring and managing the best talent. They advocated that companies rank employees by their performance and promote "stars", while targeting under-performers for improvement or layoffs. After the book was published,
Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
, a company which followed many of its principles, was involved in a scandal that led to its bankruptcy. In May 2001, a Stanford professor wrote a paper critical of the "War on Talent" arguing that it prioritized individuals at the expense of the larger organization. McKinsey consultants published ''Creative Destruction'' in 2001. The book suggested that CEOs need to be willing to change or rebuild a company, rather than protect what they have created. It found that out of the first
S&P 500 The Standard and Poor's 500, or simply the S&P 500, is a stock market index tracking the stock performance of 500 large companies listed on stock exchanges in the United States. It is one of the most commonly followed equity indices. As of D ...
list from 1957, only 74 were still in business by 1998. ''The New York Times'' said it "makes a cogent argument that in times of rampant, uncertain change ... established companies are handcuffed by success." In 2009, McKinsey consultants published ''The Alchemy of Growth'', which established three "horizons" for growth: core enhancements, new growth platforms and options. In February 2011, McKinsey surveyed 1,300 US private-sector employers on their expected response to the
Affordable Care Act The Affordable Care Act (ACA), formally known as the Patient Protection and Affordable Care Act and colloquially known as Obamacare, is a landmark U.S. federal statute enacted by the 111th United States Congress and signed into law by Presid ...
(ACA). Thirty percent of respondents said they anticipated they would probably or definitely stop offering employer sponsored health coverage after the ACA went into effect in 2014. These results, published in June 2011 in the ''McKinsey Quarterly'', became "a useful tool for critics of the ACA and a deep annoyance for defenders of the law" according to an article in ''Time'' magazine. Supporters of healthcare reform argued the survey far surpassed estimates by the
Congressional Budget Office The Congressional Budget Office (CBO) is a federal agency within the legislative branch of the United States government that provides budget and economic information to Congress. Inspired by California's Legislative Analyst's Office that manages ...
and insisted that McKinsey disclose the survey's methodology. Two weeks after publishing the survey results, McKinsey released the contents of the survey including the questionnaire and 206-pages of survey data. In its accompanying statement, McKinsey said it was intended to capture the attitude of employers at a certain point in time, not make a prediction. Since 1990, McKinsey has been publishing '' Valuation: Measuring and Managing the Value of Companies'', a textbook on valuation. In 2022, McKinsey senior partners Carolyn Dewar, Scott Keller, and Vikram Malhotra authored the book ''CEO Excellence'', which was published by Scribner.


Environmental consulting

Marginal abatement cost curves attempt to compare the financial costs of different options for reducing pollution in a region and are used in emissions trading, policy discussions and incentive programs. McKinsey & Company released its first marginal abatement cost (MAC) curve for greenhouse gas emissions in February 2007, which was updated to version two in January 2009. McKinsey & Company's MAC curve has become the most widely used and is the basis for McKinsey's consulting on climate change and sustainability. McKinsey's curve predicts negative cost abatement strategies, which has been controversial among economists. The International Association for Energy Economics said in ''The Energy Journal'' that McKinsey's cost-curve was popular among policymakers, because it suggests they can take "bold action towards improving energy efficiency without imposing costs on society." In a 2010 report, the Rainforest Foundation UK said McKinsey's cost curve methodology was misleading for policy decisions regarding the Reduced Emissions from Deforestation and Forest Degradation (REDD) program. The report argued that McKinsey's calculations exclude certain implementation and governance costs, which makes it favor industrial uses of forests while discouraging subsistence projects. Greenpeace said the curve has allowed Indonesia and Guyana to win financial incentives from the
United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be ...
by creating inflated estimates of current deforestation so they could demonstrate reductions in comparison. McKinsey said they had made it clear in the cost-curve publications that cost curves do not translate "mechanically" into policy implications and that policymakers should consider "many other factors" before introducing new laws.


Significant consulting projects

McKinsey & Company's founder, James O. McKinsey, introduced the concept of budget planning as a management framework in his fifth book ''Budgetary Control'' in 1922. The firm's first client was the treasurer of
Armour & Company Armour & Company was an American company and was one of the five leading firms in the meat packing industry. It was founded in Chicago, in 1867, by the Armour brothers led by Philip Danforth Armour. By 1880, the company had become Chicago's most ...
, who, along with other early McKinsey clients, had read ''Budgetary Control''. In 1931 McKinsey created a methodology for analyzing a company called the General Survey Outline (GSO), which was established based on ideas introduced in the 1924 book ''Business Administration''. It was also known as the Banker's Survey, because McKinsey's clients who used it in the 1930s were predominantly banks. After the
Wagner Act The National Labor Relations Act of 1935, also known as the Wagner Act, is a foundational statute of United States labor law that guarantees the right of private sector employees to organize into trade unions, engage in collective bargaining, and ...
gave certain rights to employees to organize into unions in 1935, McKinsey started consulting corporations on employee relations. Later in the 1950s, the work of a McKinsey consultant on compensation was influential in "skyrocketing executive pay". It also helped many companies such as Heinz, IBM and Hoover expand into Europe. In the 1940s, McKinsey helped many corporations convert into wartime production for World War II. It also helped organize NASA into an organization that relies heavily on contractors in 1958. McKinsey created a report in 1953 for
Dwight D. Eisenhower Dwight David "Ike" Eisenhower (born David Dwight Eisenhower; ; October 14, 1890 – March 28, 1969) was an American military officer and statesman who served as the 34th president of the United States from 1953 to 1961. During World War II, ...
that was used to guide government appointments. In 1973, McKinsey & Company led a project for a consortium of grocery chains represented by the U.S. Supermarket Ad Hoc Committee on a Uniform Grocery Product Code to create the barcode. According to the book ''"Business Research Methods"'', the barcode became commonplace after a study by McKinsey persuaded
Kroger The Kroger Company, or simply Kroger, is an American retail company that operates (either directly or through its subsidiaries) supermarkets and multi-department stores throughout the United States. Founded by Bernard Kroger in 1883 in Cinci ...
to adopt it. In the 1970s and 1980s, McKinsey helped European companies change their organizational structure to
M-form Multi-divisional form (also known as M-form or MDF) refers to an organizational structure by which the firm is separated into several semi autonomous units which are guided and controlled by (financial) targets from the center. Overview Multi-divi ...
(Multidivisional Form), which organizes the company into semi-autonomous divisions that function around a product, industry or customer, rather than a function or expertise. In the 1980s, AT&T reduced investments in cell towers due to McKinsey's prediction that there would only be 900,000 cell phone subscribers by 2000. According to ''The Firm'' this was "laughably off the mark" from the 109 million cellular subscribers by 2000. At the time cell phones were bulky and expensive. The firm helped the Dutch government facilitate a turnaround for
Hoogovens Koninklijke Hoogovens known as Koninklijke Nederlandse Hoogovens en Staalfabrieken (KNHS) until 1996 or informally Hoogovens. was a Dutch steel producer founded in 1918. Since 2010, the plant is named Tata Steel IJmuiden. The IJmuiden steelwor ...
, the world's largest steel company as of 2013, through a $1 billion bankruptcy bailout. It also implemented a turnaround for the city of
Glasgow Glasgow ( ; sco, Glesca or ; gd, Glaschu ) is the most populous city in Scotland and the fourth-most populous city in the United Kingdom, as well as being the 27th largest city by population in Europe. In 2020, it had an estimated popul ...
, which had problems with unemployment and crime. McKinsey created the corporate structure for
NationsBank NationsBank was one of the largest banking corporations in the United States, based in Charlotte, North Carolina. The company named NationsBank was formed through the merger of several other banks in 1991, and prior to that had been through mul ...
, when it was still a small company known as
North Carolina National Bank North Carolina National Bank (NCNB) was a bank based in Charlotte, North Carolina, prior to 1960 called American Commercial Bank. It was one of the top banking institutions. From 1974 to 1983, the bank was run by Chairman and Chief Executive Office ...
. McKinsey was hired by
General Motors The General Motors Company (GM) is an American Multinational corporation, multinational Automotive industry, automotive manufacturing company headquartered in Detroit, Michigan, United States. It is the largest automaker in the United States and ...
to do a large-scale re-organization to help it compete with Japanese auto-makers. The book ''The Firm'' said it was an "unmitigated disaster" because McKinsey focused on corporate structure, whereas GM needed to compete with Japanese automakers through manufacturing process improvement. A McKinsey consultant said GM did not follow their advice. A 2002 article in ''BusinessWeek'' said that a series of bankruptcies of McKinsey clients, such as
Swissair Swissair AG/ S.A. (German: Schweizerische Luftverkehr-AG; French: S.A. Suisse pour la Navigation Aérienne) was the national airline of Switzerland between its founding in 1931 and bankruptcy in 2002. It was formed from a merger between Bal ...
,
Kmart Kmart Corporation ( , doing business as Kmart and stylized as kmart) is an American retail company that owns a chain of big box department stores. The company is headquartered in Hoffman Estates, Illinois, United States. The company was inc ...
, and
Global Crossing Global Crossing was a telecommunications company that provided computer networking services and operated a tier 1 carrier. It maintained a large backbone network and offered peering, virtual private networks, leased lines, audio and video con ...
, in the 1990s raised questions as to whether McKinsey was responsible or had a lapse in judgement. McKinsey recommended that Swissair avoid high operating costs in its home country by developing partnerships with airlines based in other regions. In order to attract partners, Swissair acquired more than $1 billion in shares of other airlines, many of which were failing. This led to huge losses and even bankruptcy for Swissair. As part of a lawsuit against
Allstate The Allstate Corporation is an American insurance company, headquartered in Northfield Township, Illinois, near Northbrook since 1967. Founded in 1931 as part of Sears, Roebuck and Co., it was spun off in 1993 but still partially owned by S ...
, 13,000 McKinsey documents were released, showing that McKinsey recommended that Allstate reduce payouts to insurance claimants by offering low settlements, delaying processing to wear out claimants through attrition, and fighting customers that protest in court. Allstate's profits doubled over ten years after adopting McKinsey's strategy, but it also led to lawsuits alleging they were cheating claimants out of legitimate insurance claims.


Controversies

The firm has been associated with a number of notable scandals including the collapse of
Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
in 2001, 2007–2008 financial crisis, and facilitating state capture in South Africa. It has also drawn controversy for involvement with
Purdue Pharma Purdue Pharma L.P., formerly the Purdue Frederick Company, is an American privately held pharmaceutical company founded by John Purdue Gray. It was owned principally by members of the Sackler family as descendants of Mortimer and Raymond Sackl ...
,
U.S. Immigration and Customs Enforcement The U.S. Immigration and Customs Enforcement (ICE) is a federal law enforcement agency under the U.S. Department of Homeland Security. ICE's stated mission is to protect the United States from the cross-border crime and illegal immigration tha ...
and
authoritarian regimes Authoritarianism is a political system characterized by the rejection of political plurality, the use of strong central power to preserve the political '' status quo'', and reductions in the rule of law, separation of powers, and democratic ...
.


Enron

Enron Enron Corporation was an American energy, commodities, and services company based in Houston, Texas. It was founded by Kenneth Lay in 1985 as a merger between Lay's Houston Natural Gas and InterNorth, both relatively small regional companies. ...
was the creation of
Jeff Skilling Jeffrey Keith Skilling (born November 25, 1953) is an American businessman who is best known as the CEO of Enron Corporation during the Enron scandal. In 2006, he was convicted of federal felony charges relating to Enron's collapse and eventuall ...
, a McKinsey consultant of 21 years, who was jailed after Enron reportedly used McKinsey on 20 different projects, and McKinsey consultants had "used Enron as their sandbox." Prior to the Enron scandal, McKinsey helped it shift from an oil and gas production company into an electric commodities trader, which led to significant growth in profits and revenues. According to ''The Independent'', there was "no suggestion that McKinsey was complicit in the subsequent scandal, utcritics say the arrogance of Enron's leaders is emblematic of the McKinsey culture." The government did not investigate McKinsey, who said they did not provide advice on Enron's accounting. The ''Wall Street Journal'' questioned McKinsey's "liability" and its "close relationship with Enron", and a 2002 ''BusinessWeek'' article suggested that they had ignored warning signs. In his July 2002 in-depth ''BusinessWeek'' article on the aftermath of the Enron scandal, John Bryne wrote that McKinsey had been a "key architect of the strategic thinking that made Enron a Wall Street darling. In books, articles, and essays, its partners regularly stamped their imprimatur on many of Enron's strategies and practices, helping to position the energy giant as a corporate innovator worthy of emulation. The firm may not be the subject of any investigations, but its close involvement with Enron raises the question of whether McKinsey, like some other professional firms, ignored warning flags in order to keep an important account." ''BusinessWeek'' described how McKinsey's culture had changed, as the "number of partners grew from 427 to 891" making it a "less personal place". According to the article, "some current and former McKinsey consultants" said that McKinsey had lost their "ingrained values" that used to guide the firm. Citing the example of the
dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Compo ...
, McKinsey had begun to have "less prestigious companies" as clients and had allowed "its focus on building agenda-shaping relationships with top management at leading companies to slip." As well, "there was a noticeable tilt toward bringing in revenue at the expense of developing knowledge." McKinsey denied this. McKinsey denied giving Enron advice on financing issues or having suspicions that Enron was using improper accounting methods.


2008 financial crisis

McKinsey is said to have played a significant role in the 2008 financial crisis by promoting the securitization of mortgage assets and encouraged the banks to fund their balance sheets with debt, driving up risk, which "poisoned the global financial system and precipitated the 2008 credit meltdown". Furthermore, McKinsey advised
Allstate The Allstate Corporation is an American insurance company, headquartered in Northfield Township, Illinois, near Northbrook since 1967. Founded in 1931 as part of Sears, Roebuck and Co., it was spun off in 1993 but still partially owned by S ...
Insurance to purposely give low offers to claimants. The ''Huffington Post'' revealed that the strategy was to make claims "so expensive and so time-consuming that lawyers would start refusing to help clients." Next to this, 2016 McKinsey partner Navdeep Arora was convicted for illegally depleting
State Farm State Farm Insurance is a large group of mutual insurance companies throughout the United States with corporate headquarters in Bloomington, Illinois. Overview State Farm is the largest property and casualty insurance provider, and the la ...
of over $500,000 over a period of 8 years, in collaboration with a State Farm employee.


Valeant

Valeant Bausch Health Companies Inc. (formerly Valeant Pharmaceuticals International, Inc.) is a Canadian multinational specialty pharmaceutical company based in Laval, Quebec, Canada. It develops, manufactures and markets pharmaceutical products and ...
, a Canadian pharmaceutical company investigated by the SEC in 2015, has been accused of improper accounting, and that it used predatory price hikes to boost growth. The ''Financial Times'' states that "Valeant's downfall is not exactly McKinsey's fault but its fingerprints are everywhere." Three out of six senior executives were recent ex-McKinsey employees, as well as the chair of the 'talent and compensation' committee. MIO Partners was a private investor of Valeant and McKinsey consulted Valeant on drug prices and acquisitions.


Role in opioid epidemic

McKinsey advised opioid makers on how to "turbocharge" sales of
OxyContin Oxycodone, sold under various brand names such as Roxicodone and OxyContin (which is the extended release form), is a strong, semi-synthetic opioid used medically for treatment of moderate to severe pain. It is highly addictive and a commonly ...
, proposed strategies to counter the emotional messages from mothers with teenagers who overdosed on OxyContin, and helped opioid makers circumvent regulation. The firm also advised
Purdue Pharma Purdue Pharma L.P., formerly the Purdue Frederick Company, is an American privately held pharmaceutical company founded by John Purdue Gray. It was owned principally by members of the Sackler family as descendants of Mortimer and Raymond Sackl ...
to offer pharmacies rebates based on the number of overdoses and addictions they caused. In 2019, McKinsey projected that over 2,400 CVS customers would have an overdose or become reliant on opioids. McKinsey estimated that a rebate of $14,810 per "event" would mean that Purdue would have to pay CVS $36.8 million that year. In February 2021, McKinsey reached agreements with attorneys general in 49 states, five U.S. territories, and the District of Columbia. Across the settlements, the firm agreed to pay nearly $600 million to settle investigations into its role in promoting sales of OxyContin. McKinsey has since apologized for its advice to opioid makers. Records show that McKinsey worked for Purdue Pharma and other opioid makers in a 15 year period, from 2004 to 2019. During 2018 and 2019, McKinsey collected at least $400 million consulting pharmaceutical companies. McKinsey advised Mallinckrodt, the largest manufacturer of generic opioids, as well as Endo for which McKinsey consulted on marketing Opana. McKinsey's consultation grew Endo into a leading generics manufacturer. McKinsey recommended targeted and influenced doctors who treat back pain in elderly and long-term care patients. In April 2022, the ''New York Times'' reported that McKinsey had frequently allowed partners and other consultants to work for both government clients, such as the
FDA The United States Food and Drug Administration (FDA or US FDA) is a federal agency of the Department of Health and Human Services. The FDA is responsible for protecting and promoting public health through the control and supervision of food ...
and pharmaceutical clients, such as Purdue. These actions violated McKinsey's own internal ethical guidelines.


Rikers Island jail complex

New York City paid McKinsey $27.5 million between 2014 and 2017 to reduce prison assaults in
Rikers Island Rikers Island is a island in the East River between Queens and the Bronx that contains New York City's main jail complex. Named after Abraham Rycken, who took possession of the island in 1664, the island was originally under in size, but has ...
; but the violence grew and the city abandoned many of the firm's recommendations. The consultancy's alleged failings included not soliciting the views of inmates or clinic staff; using an encrypted messaging app that deletes messages, allegedly to avoid transparency; initiatives involving the expanded use of Tasers, shotguns and K9 patrol dogs; replacing troublesome inmates with more accommodating ones in the test area, which skewed the data in favor of the project; the use of ineffective data-analytics software; and spreadsheet errors that inflated the baseline rate of violence, against which the project was measured. McKinsey advised New York City's Rikers Island jail complex and tested an anti-violence strategy named "Restart" which occurred in Rikers housing units. The results of the strategy reported that violent crimes dropped more than 70% inside the Rikers housing units. Later, it was found that McKinsey consultants and jail officials rigged the program by grouping compliant inmates into the housing units.


Fine for insider trading by investment affiliate

In 2019, McKinsey paid the Justice Department $15 million to settle allegations relating to failure to disclose potential conflict in three bankruptcy cases that the firm advised. In 2021, MIO Partners, an affiliate of McKinsey & Co. that invests almost $31 billion of money on behalf of its employees, was fined US$18 million by the US regulator, SEC. The SEC said some of the same people making investment decisions for MIO Partners were McKinsey & Co. employees who had visibility into confidential information for companies for which McKinsey was consulting. The SEC claimed that MIO Partners had advaced knowledge of upcoming mergers, bankruptcy, and financial results announcements for companies that the firm was consulting.


Accusations of conflicts of interest in US bankruptcies

In January 2022, the Second U.S. Circuit Court of Appeals in Manhattan revived a lawsuit against McKinsey & Co. filed by retired turnaround specialist Jay Alix, accusing the consulting firm of concealing potential conflicts when seeking permission from bankruptcy courts to perform lucrative work on corporate restructurings.


GreenSky Insider Trading

An ex-partner at McKinsey was sentenced to 24 months in prison for insider trading. The ex-partner helped advise Goldman Sachs Group on the recent purchase of fintech company GreenSky Inc. The ex-partner bought 2,500 GreenSky call options before the $2.24 billion merger and sold the call options shortly after the merger was announced on September 15, 2021. The ex-partner was ordered to hand over approximately $450,000 of illegal profit.


Controversial clients and association with authoritarian regimes


Role in U.S. Immigration and Customs Enforcement (ICE)

McKinsey stopped working for U.S. Immigration and Customs Enforcement (ICE) after it was disclosed that the firm had done more than $20 million in consulting work for the agency. McKinsey
managing partner A partner in a law firm, accounting firm, consulting firm, or financial firm is a highly ranked position, traditionally indicating co-ownership of a partnership in which the partners were entitled to a share of the profits as "equity partners". Th ...
Kevin Sneader said the contract, not widely known within the company until ''The New York Times'' reported it, had "rightly raised" concerns. In 2019, ''The New York Times'' and ProPublica reported on newly uncovered documents which showed that McKinsey, as part of its work with ICE, proposed cuts in spending on food and medical care for migrants. McKinsey also advocated for an acceleration of the deportation process, causing concerns among ICE staff that the due process rights of the migrants would be violated. Previously, McKinsey managing partner, Kevin Sneader, had claimed that McKinsey had done no work for ICE in terms of developing and implementing immigration policy; the uncovered documents showed that to be false.


Role in Saudi clampdown on dissidents

In October 2018, in the wake of the
assassination of Jamal Khashoggi On 2 October 2018, Jamal Khashoggi, a Saudi dissident journalist was assassinated by agents of the Saudi government at the Saudi consulate in Istanbul, Turkey. Khashoggi was ambushed and strangled by a 15-member squad of Saudi assassins. His body ...
, a Saudi dissident and journalist, ''The New York Times'' reported that McKinsey had identified the most prominent Saudi dissidents on Twitter and that the Saudi government subsequently repressed the dissidents and their families. One of the dissidents, Khalid al-Alkami, was arrested. Another dissident identified by McKinsey; Omar Abdulaziz in Canada, had two brothers imprisoned by the Saudi authorities, and his cell phone hacked. McKinsey issued a statement, saying "We are horrified by the possibility, however remote, that
he report He or HE may refer to: Language * He (pronoun), an English pronoun * He (kana), the romanization of the Japanese kana へ * He (letter), the fifth letter of many Semitic alphabets * He (Cyrillic), a letter of the Cyrillic script called ''He'' in ...
could have been misused. We have seen no evidence to suggest that it was misused, but we are urgently investigating how and with whom the document was shared." In December 2018, ''The New York Times'' reported that " the kingdom is a such a vital client for the firm—the source of nearly 600 projects from 2011 to 2016 alone—that McKinsey chose to participate in a major Saudi investment conference in October 2018 even after the killing and dismemberment of a ''Washington Post'' columnist by Saudi agents." On February 12, 2019, the European Parliament Greens/EFA group presented a motion for a resolution on the situation on women's rights defenders in Saudi Arabia denouncing the involvement of foreign public relations companies in representing Saudi Arabia and handling its public image, particularly McKinsey & Company.


Support of authoritarian regimes

McKinsey's business and policy support for
authoritarian regime Authoritarianism is a political system characterized by the rejection of political plurality, the use of strong central power to preserve the political '' status quo'', and reductions in the rule of law, separation of powers, and democratic ...
s came under scrutiny in December 2018, in the wake of a lavish company retreat in China held adjacent to Chinese government internment camps where thousands of
Uyghurs The Uyghurs; ; ; ; zh, s=, t=, p=Wéiwú'ěr, IPA: ( ), alternatively spelled Uighurs, Uygurs or Uigurs, are a Turkic ethnic group originating from and culturally affiliated with the general region of Central and East Asia. The Uyghur ...
were being detained without cause. In December 2021,
NBC News NBC News is the news division of the American broadcast television network NBC. The division operates under NBCUniversal Television and Streaming, a division of NBCUniversal, which is, in turn, a subsidiary of Comcast. The news division's var ...
reported McKinsey's connection to a manufacturing facility owned by
DJI SZ DJI Technology Co., Ltd. or Shenzhen DJI Sciences and Technologies Ltd. ( zh, c=深圳大疆创新科技有限公司, p=Shēnzhèn Dà Jiāng Chuàngxīn Kējì Yǒuxiàn Gōngsī) in full, more popularly known as its trade name DJI, which s ...
, a drone maker sanctioned by the
United States Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...
for alleged complicity in aiding the
Uyghur genocide The Chinese government has committed a series of ongoing human rights abuses against Uyghurs and other ethnic and religious minorities in Xinjiang that is often characterized as genocide. Since 2014, the Chinese government, under the ...
. In the preceding few years, McKinsey's clients included
Saudi Arabia Saudi Arabia, officially the Kingdom of Saudi Arabia (KSA), is a country in Western Asia. It covers the bulk of the Arabian Peninsula, and has a land area of about , making it the fifth-largest country in Asia, the second-largest in the A ...
's absolute monarchy, Turkey's autocratic leader
Recep Tayyip Erdogan Recep may refer to: People Surname * Aziz Recep (born 1992), German-Greek footballer * Sibel Recep (born 1987), Swedish pop singer Given name * Recep Adanır (born 1929), Turkish footballer * Recep Akdağ (born 1960), Turkish physician and poli ...
, ousted former president of Ukraine
Viktor Yanukovych Viktor Fedorovych Yanukovych ( uk, Віктор Федорович Янукович, ; ; born 9 July 1950) is a former politician who served as the fourth president of Ukraine from 2010 until he was removed from office in the Revolution of Di ...
, and several Chinese and Russian companies under sanctions.


South African corruption scandal

The
Gupta family The Gupta family is a wealthy Indian-born family with business interests in South Africa, whose most notable members are brothers Ajay, Atul, and Rajesh "Tony" Gupta—as well as Atul's nephews Varun, and US-based Ashish and Amol. The family ow ...
(no relation to
Rajat Gupta Rajat Kumar Gupta (; born ) is an Indian-American businessman and convicted felon who, as CEO, was the first foreign-born managing director of management consultancy firm McKinsey & Company from 1994 to 2003. In 2012, he was convicted for insider ...
) had strategically placed corrupted individuals in various South African government, utilities and infrastructure sectors. It is alleged that McKinsey was complicit in this corruption by using the Guptas to obtain consulting contracts from certain state-owned enterprises, including
Eskom Eskom Hld SOC Ltd or Eskom is a South African electricity public utility. It was established in 1923 as the Electricity Supply Commission (ESCOM) and was also known by its Afrikaans name Elektrisiteitsvoorsieningskommissie (EVKOM). Eskom repre ...
and
Transnet Transnet SOC Ltd is a large South African rail, port and pipeline company, headquartered in the Carlton Centre in Johannesburg. It was formed as a limited company on 1 April 1990. A majority of the company's stock is owned by the Departmen ...
. Working with Trillian Capital Partners (a consultancy which was owned by a Gupta associate), they provided services to the value of R1 billion ($75 million) annually. Trillian was paid a commission for facilitating the business for McKinsey. McKinsey hired law firm
Norton Rose Fulbright Norton Rose Fulbright is a British-American multinational law firm. It is the second largest law firm in the United States and one of the ten largest in the world, by both lawyers and revenue. In 2017–18, Norton Rose Fulbright had total reven ...
to carry out an internal investigation over the allegations. McKinsey's then Managing Partner, Dominic Barton, issued a statement following an internal investigation, in which the firm "admitted that it found violations of its professional standards but denied any acts of bribery, corruption, and payments to Trillian." Corruption Watch, a South African non-governmental organization, filed a complaint about the controversial contract to the
US Department of Justice The United States Department of Justice (DOJ), also known as the Justice Department, is a federal executive department of the United States government tasked with the enforcement of federal law and administration of justice in the United State ...
, alleging that there was a criminal conspiracy between McKinsey, Trillian and
Eskom Eskom Hld SOC Ltd or Eskom is a South African electricity public utility. It was established in 1923 as the Electricity Supply Commission (ESCOM) and was also known by its Afrikaans name Elektrisiteitsvoorsieningskommissie (EVKOM). Eskom repre ...
in contravention of US and South African law. It was revealed in January 2018 that criminal complaints were filed against McKinsey & Company by the South African
Companies and Intellectual Property Commission The Companies and Intellectual Property Commission (CIPC) is an agency of the Department of Trade and Industry in South Africa South Africa, officially the Republic of South Africa (RSA), is the southernmost country in Africa. It is boun ...
. South African prosecutors confirmed that they would enforce the seizing of assets from McKinsey. South Africa's National Prosecuting Authority concluded in early 2018 that the payments to McKinsey and its local business partner, Trillian, were illegal, involving crimes such as fraud, theft, corruption and money laundering. McKinsey had subsequently been in discussion with Eskom and the National Prosecuting Authority's Asset Forfeiture Unit to agree on a transparent, legally appropriate process for returning the R1-billion (US$74m) it had been paid – it was confirmed on 6 July 2018 that this had been concluded. Eskom confirmed it received R99.5 million in interest from McKinsey on July 23, 2018. The interest payment covers the two years since McKinsey was paid almost R1-billion in 2016. Information relating to allegedly corrupt practices by McKinsey at
Transnet Transnet SOC Ltd is a large South African rail, port and pipeline company, headquartered in the Carlton Centre in Johannesburg. It was formed as a limited company on 1 April 1990. A majority of the company's stock is owned by the Departmen ...
in 2011 and 2012 came to light in late July 2018. The weekly ''
Mail & Guardian The ''Mail & Guardian'' is a South African weekly newspaper and website, published by M&G Media in Johannesburg, South Africa. It focuses on political analysis, investigative reporting, Southern African news, local arts, music and popular cult ...
'' newspaper reported that a "...new forensic treasury report shows how controversial former Transnet and Eskom chief financial officer Anoj Singh enjoyed overseas trips at the expense of international consulting firm McKinsey, which scored multi-billion rand contracts at the state owned entities." The "...report reiterates treasury's recommendations that Singh's conduct with regards to McKinsey should be referred to the elite crime-fighting unit, the Hawks, for investigations under the Prevention and Combating of Corrupt Activities Act (Precca). Under Precca, Singh would be investigated for allegations of corruption as payment for the overseas trips alone would constitute a form of gratification, which is illegal." The Sunday '' City Press'' reported that the forensic report in turn reported that "multinational advisory firm McKinsey paid for Singh to go on lavish international trips to Dubai, Russia, Germany and the UK, after which their contract with Transnet was massively extended." McKinsey issued a statement that the allegations were incorrect. McKinsey stated that "based on an extensive review encompassing interviews, email records and expense documents, our understanding is that McKinsey did not pay for Mr. Singh's airfare and hotel lodgings in connection with the CFO Forum and the meetings that took place around the CFO Forum in London and elsewhere in 2012 and 2013." On 11 October 2019, the United States Treasury department announced that it had imposed wide-ranging financial sanctions on three Gupta brothers, Ajay, Atul and Rajesh (aka Tony) and their business associate Salim Essa under the United States
Magnitsky Act The Magnitsky Act, formally known as the Russia and Moldova Jackson–Vanik Repeal and Sergei Magnitsky Rule of Law Accountability Act of 2012, is a bipartisan bill passed by the U.S. Congress and signed into law by President Barack Obama in D ...
. ''
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
'' reported in November 2019, that McKinsey's scandals, such as the 2016 South Africa scandal and the allegations of conflict of interest tied to its $12.7bn investment affiliate, McKinsey Investment Office (MIO), are relatively recent in terms of its long history. The article said that McKinsey's legal challenges facing McKinsey's new global managing partner, Kevin Sneader, may be related to the company's fast-paced growth with an increase of 2,200 partners compared to 2009. During that same time period, the number of employees increased to 30,000 worldwide from 17,000. In 2020 McKinsey representatives giving testimony to the
Zondo Commission of Inquiry into State Capture The Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud in the Public Sector including Organs of State, better known as the Zondo Commission or State Capture Commission, is a public inquiry established in Janua ...
placed blame for the firm's involvement in the corruption scandal on former McKinsey partner, Vikas Sagar. During 2021 McKinsey & Co. agreed to repay R 870 million (US$63 million) in fees to South African state logistics company Transnet SOC Ltd., seeking to distance itself from contracts linked to corruption allegations. In April 2022 the Zondo Commission recommended that key Eskom executives be criminally investigated for improperly awarding consulting contracts to McKinsey & Company. South Africa's National Prosecuting Authority announced on Friday, 30 September 2022 that it had criminally charged both McKinsey South Africa and former McKinsey partner, Vikas Sagar, with fraud, corruption and theft related to a contract to advise Transnet on buying new locomotives.


OxyContin promotion and involvement in opioid epidemic

In February 2021, McKinsey paid $600 million to settle investigations into its role in promoting sales of OxyContin and fueling the greater
opioid epidemic The opioid epidemic, also referred to as the opioid crisis, is the rapid increase in the overuse, misuse/abuse, and overdose deaths attributed either in part or in whole to the class of drugs opiates/opioids since the 1990s. It includes the sign ...
.


See also

*
Big Three (management consultancies) The Big Three or MBB refers to the name colloquially given to the three large strategy consulting firms. They are considered to be the most prestigious firms in the management consulting industry. In terms of employees, McKinsey & Company is th ...
– MBB


Explanatory notes


References


Further reading

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External links

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McKinsey Quarterly
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