MCKINSEY & COMPANY

McKinsey & Company, Inc. is an American global management consulting rm

!ea"#uartere" in t!e $.S. %!e rm ser&es as an a"&iser to businesses,
go&ernments, an" institutions. It 'as (oun"e" in )*+, in C!icago by -ames
McKinsey as -ames O. McKinsey & Company an" is no' !ea"#uartere" in Ne'
Yor. City.
Many c!ie( e/ecuti&e o0cers o( large companies !a&e 'or.e" at t!e rm.
%!ere 'ere o&er )11 McKinsey o0ces in ,1 countries as o( September +1)2.
324
5istory
Early !istory
McKinsey & Company 'as (oun"e" in )*+, in C!icago un"er t!e name -ames
O. McKinsey & Company by -ames McKinsey,364 a pro(essor o( accounting at
t!e $ni&ersity o( C!icago.3743,482 %!e rm calle" itsel( a team o(
9management engineers9 an" starte" out gi&ing consulting on using
accounting principles to ma.e management "ecisions.3:43;43*482 Mr.
McKinsey<s rst !ires 'ere partners %om Kearney in )*+*3)14 an" Mar&in
=o'er in )*22.3))48)22 %!e rm<s secon" o0ce 'as opene" in Ne' Yor. City
in )*2+.3:4
In )*27 Mr. McKinsey le(t t!e rm temporarily to ser&e as t!e C!airman an"
CEO o( client Mars!all >iel"<s as t!ey implemente" t!e restructuring plan
create" by -ames O. McKinsey & Company.3))48)22 McKinsey 'as merge"
'it! accounting rm Sco&ell, ?ellington & Company t!at same year, creating
McKinsey, ?ellington & Co.3)+48: A ?ellington pro@ect t!at accounte" (or 77
percent o( McKinsey, ?ellington & Company<s billings 'as about to e/pire3)+4
an" %om Kearney an" Mar&in =o'er !a" "isagreements about !o' to run t!e
rm.3)24 A""itionally, in )*2: -ames O. McKinsey passe" a'ay a(ter catc!ing
pneumonia.3*43)64 %!is le" to t!e "i&ision o( McKinsey, ?ellington &
Company in )*2*.3)64 %!e accounting practice returne" to Sco&ell,
?ellington & Company, '!ile t!e management engineering practice 'as split
into McKinsey & Company an" McKinsey, Kearney & Company.3)+4 Auy
Croc.ett became t!e Managing Partner o( t!e ne' McKinsey & Company,
'!ile Mar&in =o'er is cre"ite" 'it! (oun"ing t!e rm<s principles an"
strategy as !is "eputy.3)+4 %!e Ne' Yor. o0ce purc!ase" e/clusi&e rig!ts to
t!e McKinsey name in )*6,.3)748+7
Establis!ment
McKinsey & Company gre' #uic.ly in t!e )*61s an" 71s, especially in
Europe.3;43)24 It !a" ;; staB in )*7)3),4 an" more t!an +11 by t!e )*,1s,
3)74 inclu"ing 2: in Con"on by )*,,.3),4 It establis!e" an o0ce in Australia
in t!e early )*,1s.3):4 =y t!e en" o( t!e "eca"e, more t!an oneDt!ir" o( t!e
rm<s re&enues 'ere (rom si/ European o0ces.3)74 Auy Aroc.ett steppe"
"o'n as managing "irector in )*71, an" Mar&in =o'er 'as electe" in !is
place.3)+4 McKinsey<s protDs!aring, e/ecuti&e an" planning committees
'ere (orme" in )*7).3)+4 %!e organiEation<s client base e/pan"e" especially
among go&ernments, "e(ense contractors, bluec!ip companies an" military
organiEations in t!e postD?orl" ?ar II era.3);4 A(ter se&en years o(
"eliberation, McKinsey became a pri&ate corporation 'it! s!ares e/clusi&e to
McKinsey employees in )*7,. A plan (or international e/pansion 'as
"e&elope" an" an o0ce in Con"on 'as establis!e" in )*7*.3)+4
A(ter =o'er steppe" "o'n in )*,:, t!e rm<s re&enues "ecline". Ne'
competitors li.e t!e =oston Consulting Aroup an" =ain & Company stiBene"
competition (or McKinsey by mar.eting specic bran"e" pro"ucts, suc! as
t!e Aro't!DS!are Matri/, an" by selling t!eir in"ustry e/pertise.3;43):43)*4 In
)*:) McKinsey create" t!e Commission on >irm Aims an" Aoals, '!ic! (oun"
t!at McKinsey !a" become too (ocuse" on geograp!ic e/pansion an" lac.e"
a"e#uate in"ustry .no'le"ge. %!e commission a"&ise" t!at McKinsey slo'
its gro't! an" "e&elop in"ustry specialties.3;43)248)6 In )*:,, Fon Ganiel
'as electe" managing "irector, ser&ing until )*;;.3+14 Ganiel an" >re" Aluc.
!elpe" s!i(t t!e rm a'ay (rom its generalist approac! by "e&eloping )7
specialiEe" 'or.ing groups 'it!in McKinsey calle" Centers o( Competence
an" by "e&eloping practice areas calle" Strategy, Operations an"
OrganiEation. Ganiel also began McKinsey<s .no'le"ge management eBorts
in )*;:. =y t!e en" o( !is tenure in )*;; t!e rm 'as gro'ing again an" !a"
opene" ne' o0ces in Fome, 5elsin.i, SHo Paulo an" Minneapolis.3;43)24
>re" Aluc. ser&e" as McKinseyIs managing "irector (rom )*;; to )**6.3+)4
%!e rm<s re&enues "ouble" "uring !is tenure.3)*4 5e organiEe" McKinsey
into :+ sectors, centers, 'or.ing groups, an" pro@ects.3)24 O&er t'o "eca"es
McKinsey & Company gre' eig!t(ol".3++4 In )*;* t!e rm attempte" to ma.e
a talent ac#uisition in I% ser&ices t!roug! a J)1 million purc!ase o( t!e
In(ormation Consulting Aroup KICAL,3+24 but a culture clas! cause" )7) out o(
t!e +76 ICA staB members to lea&e by )**2.3+)4
Fecent !istory
%!e burst o( t!e "otDcom bubble le" to a re"uction in utiliEation rates o(
McKinsey<s consultants (rom ,6 to 7+ percentM alt!oug!, McKinsey a&oi"e"
"ismissing any personnel (ollo'ing t!e "ecline.3+64 In )**6, Fa@at Aupta
became t!e rst nonDAmericanDborn partner to be electe" as t!e rmIs
managing "irector.3+74 =y t!e en" o( !is tenure, McKinsey !a" gro'n (rom
+,*11 to :,111 consultants.3+643+,4 In t!e )**1s, McKinsey set up
Naccelerators,O '!ere t!e rm accepte" stoc.Dbase" reimbursement to !elp
internet startups.3+643+:4 In +11), McKinsey launc!e" se&eral practices t!at
(ocuse" on t!e public an" social sector. It too. on many public sector or non
prot clients on a pro bono basis.3);4 =y +11+ McKinsey !a" in&este" a J27.;
million bu"get on .no'le"ge management, up (rom J;.2 million in )***.
3);48)
In +112 Ian Ga&is, t!e !ea" o( t!e Con"on, $.K. o0ce, 'as electe" to t!e
position o( managing "irector.3+;4 Ga&is promise" a return to t!e companyIs
core &alues, a(ter a perio" in '!ic! t!e rm !a" e/pan"e" rapi"ly, a
"e&elopment t!at, accor"ing to some people relate" to McKinsey, 'as a
"eparture (rom t!e company<s !eritage.3+*4 Also in +112, t!e rm
establis!e" a !ea"#uarters (or t!e AsiaDPacic region in S!ang!ai, C!ina. =y
+116, more t!an ,1 percent o( McKinsey<s re&enues 'ere generate" outsi"e
t!e $.S.3);4
OrganiEation
Structure
McKinsey & Company 'as originally organiEe" as a partners!ip3214 be(ore
being legally restructure" as a pri&ate corporation 'it! s!ares o'ne" by its
Partners in )*7,.3)+432)4 It mimics t!e structure o( a partners!ip an"
employees are calle" 9partners9.321432+4 %!e company !as a Pat !ierarc!y
an" eac! member is assigne" a mentor.3224 Since t!e )*,1s, McKinsey<s
Managing Girector !as been electe" by a &ote o( senior "irectors to ser&e up
to t!ree, t!reeDyear terms3264 or until t!ey reac! t!e man"atory retirement
age o( ,1.3)*4 %!e rm is also manage" by a series o( committees t!at eac!
!a&e t!eir o'n area o( responsibility.3274
McKinsey !as a "eDcentraliEe" structure, '!ereby "iBerent o0ces operate
similarly, but in"epen"ently. Eac! o0ce is e/pecte" to put t!e o&erall
organiEation<s best interest be(ore t!e o0ce<s, '!ic! McKinsey re(ers to as
t!e 9one rm9 principle. Consultants an" engagements are o(ten s!are"
across o0ces.3:43264 Fe&enues (rom all o0ces are poole" an" an in"i&i"ual
o0ce<s re&enue "oes not "irectly eBect it nancially.32,4 %!e company<s
bu"geting is centraliEe", but in"i&i"ual consultants are gi&en a large "egree
o( autonomy.32:4
McKinsey consultants are eit!er in"ustry e/perts, (unctional e/perts, or a
generalist t!at co&ers a geograp!ic region.32;4 %!e rm !as +2 In"ustry
Practices (ocuse" on in"i&i"ual in"ustries, * >unctional Practices t!at 'or. in
areas li.e nance, mar.eting or ris., an" 7 Capabilities an" Solutions areas
relate" to tec!nology consulting.326432*4 It starte" a Social Sector O0ce
KSSOL in +11;. %!e SSO is "i&i"e" into t!ree practices8 Alobal Public 5ealt!,
Economic Ge&elopment an" Opportunity Creation KEG5OCL an" P!ilant!ropy.
McKinsey also "oes muc! o( its proDbono 'or. t!roug! t!e SSO. A =usiness
%ec!nology O0ce K=%OL, (oun"e" in )**:, pro&i"es consulting on tec!nology
strategy.3264
Culture
>ormer McKinsey & Company partner Mar&in =o'er create" t!e rm<s
strategy o( only 'or.ing 'it! t!eir clients< CEOs, '!ic! 'as later e/pan"e" to
CEOs o( subsi"iaries an" "i&isions, an" o( c!oosing to only 'or. 'it! clients
t!e rm (elt 'oul" ta.e action on its a"&ice.3:432,4 %!is 'as rein(orce" in
)*67, '!en McKinsey & Company publis!e" its Ne' Engagement an"
E/ecuti&e Felations Aui"e, '!ic! emp!asiEe" t!e nee" to persua"e clients to
ta.e action base" on McKinsey<s recommen"ations.3)+4 =o'er also
establis!e" t!e rm<s language.3274 It calls itsel( N%!e >irmO an" its
employees NmembersO.3:43)*4 McKinsey claims its consultants are not
moti&ate" by money.3)*4
McKinsey & Company tries to .eep a N&ery lo' prole public image.O3614 %!e
rm !as a policy against "iscussing specic client situations.32,436)4 It says it
"oes not a"&ertise, t!oug! it "i" a"&ertise allege"ly (or recruitment purposes
in %IME MagaEine in )*,,.3:4 Members are not suppose" to NsellO t!eir
ser&ices, a tra"ition base" in t!e early )*11s, '!en it 'as consi"ere"
beneat! t!e "ignity o( a la'yer or accountant to a"&ertise.322436+4
McKinsey<s consultants are also e/pecte" to become a part o( t!e community
an" recruit clients t!roug! c!urc!, c!aritable (oun"ations, boar" positions
an" ot!er community in&ol&ements.3:4
InPuence
Many o( McKinsey<s alumni become CEOs o( ma@or corporations or !ol"
important go&ernment positions.3614 In "oing so, t!ey sprea" McKinsey<s
&alues an" culture to ot!er organiEations an" o(ten become McKinsey clients.
32,436143624 McKinsey<s alumni !a&e been appointe" as CEOs or !ig!Dle&el
e/ecuti&es at American E/press, I=M, ?esting!ouse Electric32)43624 Sears,
A%&%, PepsiCo32,4 an" Enron.3664 Some McKinsey alumni !a&e !el" positions
'it! %ony =lair<s o0ce.3674 Citicorp an" Merrill Cync! !a&e also !ire" many
McKinsey alumni.32)4 As o( +11;, McKinsey alumni !el" CEO positions 'it!
), corporations t!at !a&e more t!an J+ billion in re&enue. %!e rm 'as
ran.e" by $SA %o"ay as t!e most li.ely company to 'or. (or an" become a
(uture CEO o( a ma@or corporation, 'it! o""s o( ) out o( ,*1.36,4 McKinsey<s
consulting 'or. !as also been inPuential in establis!ing many o( t!e norms o(
!o' go&ernments an" corporations are run.3:432,4
Feception
A )**2 prole story in >ortune MagaEine sai" McKinsey & Company 'as Nt!e
most 'ellD.no'n, most secreti&e, most !ig!Dprice", most prestigious, most
consistently success(ul, most en&ie", most truste", most "isli.e"
management consulting rm on eart!.O3)*4 Accor"ing to =usiness?ee. t!e
>irm is 9ri"icule", re&ile", or re&ere" "epen"ing on one<s perspecti&e.936:4
McKinsey<s culture !as o(ten been compare" to religion, because o( t!e
inPuence, loyalty an" Eeal o( its members.32,43624 >ortune MagaEine sai"
partners tal. to eac! ot!er 'it! 9a sense o( personal aBection an"
a"miration.93)*4 %!e ?all Street -ournal sai" McKinsey is seen as Nelite, loyal
an" secreti&e.O32;4 Accor"ing to Feuters it !as a NbuttonD"o'n cultureO
(ocuse" on Nplaying by t!e rulesO.36;4 Accor"ing to =usiness?ee., Nsome
obser&ersO say t!at McKinsey !as starte" to lose touc! 'it! its (oun"ing
principles an" become less personal as its siEe !as increase".36*4
%!e Auar"ian sai" at McKinsey N!ours are long, e/pectations !ig! an" (ailure
not acceptable.O3674 >ortune an" $SA %o"ay !a&e bot! note" t!at t!e
ma@ority o( McKinsey<s consultants are '!ite men.3)*432)4 An article in %!e
Ne's Obser&er sai" McKinsey<s internal culture 'as Ncollegiate an" rut!lessly
competiti&eO an" is sometimes "escribe" as arrogant.3274
Consulting ser&ices
McKinsey pro&i"es management consulting ser&ices, suc! as pro&i"ing a"&ice
on an ac#uisition, "e&eloping a plan to restructure a sales (orce, creating a
ne' business strategy or pro&i"ing a"&ice on "o'nsiEing.3:4322432;4 Its
consultants "esign an" implement stu"ies to e&aluate management "ecisions
using "ata an" inter&ie's to test !ypot!eses.322432,4 Conclusions o( t!e
stu"y are presente" to senior management, typically in a Po'erPoint
presentation an" a boo.let.322432,4 McKinsey is one o( N%!e =ig %!reeO
management consulting ser&ices along 'it! =ain & Company an" %!e =oston
Consulting Aroup.3714 Accor"ing to McKinsey, it ser&es more t!an ;1 percent
o( t!e 'orl"<s largest organiEations an" more t!an ;1 percent o( >ortune
MagaEine<s Most A"mire" Companies Cist.37)4
McKinsey is consi"ere" one o( t!e most prestigious an" most e/pensi&e
management consulting rms.3)*432)437+4 In NGangerous CompanyO
@ournalists -ames O<S!ea an" C!arles Ma"igan sai" McKinsey is t!e most
inPuential, most reputable management consulting rm in t!e in"ustry an"
t!at it carrie" t!e most 'eig!t 'it! corporate boar"s.32,4 %!e Ne's Obser&er
sai" McKinsey is t!e Ncreme "e la cremeO an" t!e NFolls FoyceO o(
management consulting.3)*43274 5o'e&er, it !as tra"itionally c!arge"
appro/imately +7 percent more t!an competing rms3264 'it! an a&erage
pro@ect o( one million "ollars.32;4 Prices 'ere re"uce" in t!e economic slump
(ollo'ing t!e GotDcom bubble.32+4 Accor"ing to t!e ?all Street -ournal,
McKinsey clients estimate t!at t!e rm<s a"&ice turns out to be poor in
retrospect about )1 to +1 percent o( t!e time.32;4
A typical McKinsey engagement can last bet'een t'o an" t'el&e mont!s an"
in&ol&es t!ree to si/ McKinsey consultants.3264 An engagement is usually
manage" by a generalist t!at co&ers t!e region t!e client<s !ea"#uarters are
locate" in an" specialists t!at !a&e eit!er an in"ustry or (unctional e/pertise.
3)*4 $nli.e some competing consulting rms, McKinsey "oes not !ol" a policy
against a consultant 'or.ing (or t'o competing companies. %!is !as
sometimes lea" to accusations o( s!aring con"ential in(ormation32;4 or reD
pac.aging a competitor<s practices as best practices.3:4
Fecruiting an" compensation
McKinsey & Company 'as t!e rst management consultancy to !ire (res!
gra"uates instea" o( e/perience" business managers,3614 '!en it starte"
"oing so in )*72.3724 Many o( its recruits are =a.er Sc!olars, F!o"es
sc!olars, Mars!all Sc!olars or ?!ite 5ouse >ello's.3)*43764 Cess t!an !al( o(
t!e rm<s recruits are (rom business ma@ors,32648: '!ile ot!ers !a&e
a"&ance" "egrees in science, me"icine, engineering or la'.322437643774
Some colleges !a&e a team o( McKinsey consultants assigne" to culti&ating
relations!ips 'it! upcoming gra"uates.32248)7;
Accor"ing to %!e Obser&er, McKinsey recruits (res! gra"uates an" 9imbues
t!em 'it! a religious con&iction9 in t!e rm, t!en culls t!roug! t!em 'it! its
9upDorDout9 policy.3274 %!e 9up or out9 policy, '!ic! 'as establis!e" in )*7),
means t!at consultants t!at are not being promote" 'it!in t!e rm are as.e"
to lea&e.3),48+1;37,4 About oneD(t! o( McKinsey<s consultants "epart un"er
t!e up or out policy eac! year.327432:4 McKinsey<s practice o( !iring (res!
gra"uates an" t!e 9upDorDout9 p!ilosop!y, 'ere originally base" on Mar&in
=o'er<s e/periences at t!e la' rm -ones Gay in t!e )*21s, as 'ell as t!e
9Cra&at! system9 use" at t!e la' rm Cra&at!, S'aine an" Moore.3),48+1,
Accor"ing to >inancial %imes @ournalist GuB McGonal", as o( September +1)2,
t!e rm recei&es ++7,111 employment applications annually an" about one
percentQor +,+11Qo( t!e applicants are !ire".324 %!ere is an ongoing "ebate
'it!in t!e rm on !o' (ast it s!oul" gro'.37:4
Accor"ing to a report by ?et>eet, McKinsey 9oBers some o( t!e best
e/perience, opportunity an" pro(essional "e&elopment in t!e in"ustry9 an" it
is prestigious to !a&e McKinsey on a resume. 5o'e&er, t!e 'or. en&ironment
is "eman"ing, in&ol&es e/tensi&e tra&el an" long !ours.32)43264 Consulting
MagaEine<s +11: list o( 9=est Consulting >irms to ?or. >or9 ran.e" McKinsey
as number 2.3264 Ne' un"ergra"uate McKinsey recruits are pai" J;1,111 a
year.3774
As a pri&ate rm, McKinsey is not re#uire" to "isclose compensation gures.
$nli.e t!e nancial ser&ices sector, consultants are not pai" proportional to
t!e business t!ey bring inM top senior partners an" t!e managing "irector
!a&e similar compensation. %!is 'as estimate" to be J+R6 million in )**6
"ollars KJ2R7 million in +11* "ollarsL.37;4 5o'e&er, t!ere are in"ications
t!ese numbers !a&e increase" S61T in t!e subse#uent +1 years.37*4 >or
e/ample, accor"ing to public ta/ recor"s, t!e senior partner lea"ing
McKinsey<s Nor'egian o0ce in +1)) earne" ,: million NOK KJ)).7 million
$SGL.3,14 A )**2 >ortune prole says, 9%!e >irm places itsel( abo&e
"iscussing money as a moti&ation, yet senior partners o(ten earn as muc!, or
more, t!an t!e CEOs t!ey a"&ise.93,)4
Kno'le"ge management system
McKinsey !as use" a .no'le"ge management system to support el"
consultants. It 'as create" an" c!aire" by (ormer senior partner Anil Kumar
as an early e/ample o( .no'le"ge process outsourcing.3,+4 =y +11*, t!e rm
consiste" o( 611 "irectors Ksenior partnersL, up (rom )7) in )**2,3)*43,24 an"
Gominic =arton 'as electe" as Managing Girector, a role !e 'as reDelecte"
(or in +1)+.3,24 %!e system inclu"es generalist researc!ers, in"ustryDe/perts,
librarians an" (unctionDspecic e/perts an" inclu"es access to @ournals an"
"atabases. McKinsey maintains an organisation calle" t!e McKinsey
Kno'le"ge Centre KMcKCL to pro&i"e rapi" access to specialiEe" e/pertise
an" business in(ormation.3,64
Fesearc! & Publis!ing
McKinsey & Company consultants regularly publis! boo.s, researc! an"
articles about business an" management.322487)3,74877 %!e rm spen"s
J71RJ)11 million a year on researc!.3,74876 McKinsey 'as one o( t!e rst
organiEations to (un" management researc!, '!en it (oun"e" t!e >oun"ation
(or Management Fesearc! in )*77.3*4 %!e rm began publis!ing a business
magaEine,%!e McKinsey Uuarterly, in )*,6.3,,4 It (un"s t!e McKinsey Alobal
Institute, '!ic! stu"ies global economic tren"s an" 'as (oun"e" in )**1.3);4
3624 Many consultants are contributors to t!e 5ar&ar" =usiness Fe&ie'.3624
McKinsey consultants publis!e" only t'o boo.s (rom )*,1D)*;1, t!en more
t!an 71 (rom )*;1 to )**,.3,74877 McKinsey<s publications an" researc! gi&e
t!e rm a 9#uasiDaca"emic9 image.3,74
A McKinsey boo., NIn Searc! o( E/cellenceO, 'as publis!e" in )*;+.3,:4 It
(eature" eig!t c!aracteristics o( success(ul businesses base" on an analysis
o( 62 top per(orming companies.3,748;:D;*3,:4826; It became one o( t!e
most inPuential an" !ig!ly rea" management boo.s3,:4826; an" mar.e" t!e
beginning o( McKinsey<s s!i(t (rom accounting to 9so(ter9 aspects o(
management, li.e s.ills an" culture.3,:4827* In Searc! o( E/cellence<s
"istribution prompte" ot!ers, inclu"ing McKinsey consultants, to 'rite more
management boo.s.3,74 Accor"ing to Ga&i" Auest (rom King<s College In
Searc! o( E/cellence became popular among business managers because it
'as easy to rea", 'ellDmar.ete" an" some o( its core messages 'ere &ali".
5o'e&er, it 'as "isli.e" by aca"emics because o( Pa's in its met!o"ology.
A""itionally, a )*;6 analysis by =usiness?ee. (oun" t!at many o( t!ose
companies i"entie" as 9e/cellent9 in t!e boo. no longer met t!e criteria only
t'o years later.3,:4
A )**: article an" a boo. publis!e" in +11) on N%!e ?ar (or %alentO3,;4
prompte" aca"emics an" t!e business community to start (ocusing more on
talent management.3,*48),2 %!e aut!ors (oun" t!at t!e bestDper(orming
companies 'ere 9obsesse"9 'it! ac#uiring an" managing t!e best talent.3:14
%!ey a"&ocate" t!at companies ran. employees by t!eir per(ormance an"
promote NstarsO, '!ile targeting un"erDper(ormers (or impro&ement or
layoBs.3643:14 A(ter t!e boo. 'as publis!e", t!e Enron scan"al le" to t!e
ban.ruptcy o( a company t!at (ollo'e" many o( t!e principles in t!e boo..
3:14 In May +11), a Stan(or" pro(essor 'rote a paper critical o( t!e 9?ar on
%alent9 arguing t!at it prioritiEe" in"i&i"uals at t!e e/pense o( t!e larger
organiEation.3,;4
McKinsey consultants publis!e" Creati&e Gestruction in +11).3:48+6: %!e
boo. suggeste" t!at CEOs nee" to be 'illing to c!ange or rebuil" a company,
rat!er t!an protect '!at t!ey<&e create".3:)4 It (oun" t!at out o( t!e rst S&P
711 list (rom )*7:, only :6 'ere still in business by )**;.3:)43:+4 %!e Ne'
Yor. %imes sai" it Nma.es a cogent argument t!at in times o( rampant,
uncertain c!ange... establis!e" companies are !an"cuBe" by success.O3:24
In +11*, McKinsey consultants publis!e" N%!e Alc!emy o( Aro't!O, '!ic!
establis!e" t!ree N!oriEonsO (or gro't!8 core en!ancements, ne' gro't!
plat(orms an" options. Its t!ree !oriEons became a"opte" 'i"ely, because it
ga&e e/ecuti&es a practical an" simple &ocabulary (or t!in.ing about gro't!.
3:64
In >ebruary +1)), McKinsey sur&eye" ),211 $S pri&ateDsector employers on
t!eir e/pecte" response to t!e ABor"able Care Act KACAL.3:743:,4 21 percent
o( respon"ents sai" t!ey anticipate" t!ey 'oul" probably or "enitely stop
oBering employer sponsore" !ealt! co&erage a(ter t!e ACA 'ent into eBect
in +1)6.3::43:;4 %!ese results, publis!e" in -une +1)) in t!e McKinsey eD
Uuarterly,3:74 became 9a use(ul tool (or critics o( t!e ACA an" a "eep
annoyance (or "e(en"ers o( t!e la'9 accor"ing to an article in %IME MagaEine.
3:*4 Supporters o( !ealt!care re(orm argue" t!e sur&ey (ar surpasse"
estimates by t!e Congressional =u"get O0ce an" insiste" t!at McKinsey
"isclose t!e sur&ey<s met!o"ology.3;143;)43;+43;24 %'o 'ee.s a(ter
publis!ing t!e sur&ey results,3:*4 McKinsey release" t!e contents o( t!e
sur&ey inclu"ing t!e #uestionnaire an" +1,Dpages o( sur&ey "ata.3;64 In its
accompanying statement,3;74 McKinsey sai" t!e sur&ey s!oul" not be
compare" 'it! ot!er estimates t!at use "iBerent met!o"ologies3;143;,4 an"
t!at it 'as inten"e" to capture t!e attitu"e o( employers at a certain point in
time rat!er t!an ma.e a pre"iction.3;:43;;4 A subse#uent article in %IME
MagaEine calle" McKinseyIs "isclaimer t!at t!e sur&ey 'as not pre"icti&e
9rat!er absur",9 but sai" t!e sur&ey met!o"ology 'as soun".3:*4 Some
supporters o( t!e ABor"able Care Act criticiEe" t!e sur&ey<s met!o"ology,
arguing it use" slante" #uestions, c!erryDpic.e" in(ormation an" !a"
unin(orme" recipients.3;143;*4
Alumni
Main article8 Cist o( McKinsey & Company people
In a +11; CapitalIU stu"y, McKinsey 'as (oun" to !a&e pro"uce" more CEOs
o( large companies on a CEOsDperDemployee basis t!an any ot!er company in
t!e stu"y.3*14 More t!an :1 past an" present CEOs at >ortune 711 companies
are (ormer McKinsey employees.
A'ar"s an" in"ustry ran.ings
=et'een +11+ an" +1)6, McKinsey !as been ran.e" in t!e number one
position o( t!e 9%!e =est Consulting >irms8 Prestige9 list o( t!e Vault.com
career intelligence 'ebsite an" 'as cite" as t!e 9most prestigious consulting
rm o( all9 in a +1)) Ne' Yor. %imes article.3*)43*+43*243*64
Issues
Criticism o( management a"&ice
%!e recommen"ation in )*;1 to A%&% Corporation t!at cellular p!ones 'oul"
be a nic!e mar.et.3*74
>ailures o( McKinseyQaccor"ing to A"am Sternberg! 'riting in =loomberg
=usiness'ee.3*,4Qinclu"e its massi&e reorganiEation o( Aeneral Motors in
t!e early )*;1s3*:4 9t!at<s 'i"ely @u"ge" as "isastrous,9 its close relations!ip
'it! Enron,32:4 an" its &igorous support (or t!e %ime ?arner merger 'it!
AOC.3*,4
Anot!er notably trouble" company associate" 'it! McKinsey is S'issair,
'!ic! entere" ban.ruptcy t'el&e years a(ter McKinsey recommen"e" t!e
5unter Strategy.3*;4
En&ironmental consi"erations
Marginal abatement cost cur&es attempt to compare t!e nancial costs o(
"iBerent options (or re"ucing pollution in a region an" are use" in emissions
tra"ing, policy "iscussions an" incenti&e programs.3**4 McKinsey & Company
release" its rst marginal abatement cost KMACL cur&e (or green!ouse gas
emissions in >ebruary +11:, '!ic! 'as up"ate" 'it! &ersion t'o in -anuary
+11*.3)1143)1)4 McKinsey<s cur&e became t!e most 'i"ely use"3)1+4 an"
t!e basis (or McKinseyIs consulting on climate c!ange an" sustainability.3)124
McKinsey<s cur&e pre"icts negati&e cost abatement strategies, '!ic! !as
been contro&ersial among economists.3)164 %!e International Association (or
Energy Economics sai" in %!e Energy -ournal t!at McKinsey<s costDcur&e 'as
popular among policyma.ers, because it suggests t!ey can ta.e Nbol" action
to'ar"s impro&ing energy e0ciency 'it!out imposing costs on society.O3)174
%!e =roo.ings Institution sai" t!e negati&eDcost pro@ections 'ere NpeculiarO,
3)1,4 '!ile Paul Krugman, a pro(essor (rom Princeton, sai" t!at t!ere 'as
alrea"y a bo"y o( aca"emic literature establis!ing t!at t!ere are misse"
opportunities (or re"ucing costs '!ile also re"ucing pollution.3)1:4
In a +1)1 report, t!e Fain(orest >oun"ation $K sai" McKinsey<s cost cur&e
met!o"ology 'as mislea"ing (or policy "ecisions regar"ing t!e Fe"uce"
Emissions (rom Ge(orestation an" >orest Gegra"ation KFEGGL program. %!e
report argue" t!at McKinsey<s calculations e/clu"e certain implementation
an" go&ernance costs, '!ic! ma.es it (a&or in"ustrial uses o( (orests '!ile
"iscouraging subsistence pro@ects.3)1;4 In April +1)), Areenpeace $K
commissione" a report by t!e $CC Energy Institute t!at urge" (or caution in
using McKinsey<s cur&e. It criticiEe" McKinsey (or not "isclosing t!e
assumptions be!in" t!e costDcur&e<s calculations.3)1+4 Areenpeace also sai"
t!e cur&e !as allo'e" In"onesia an" Auyana to 'in nancial incenti&es (rom
t!e $nite" Nations by creating inPate" estimates o( current "e(orestation so
t!ey coul" "emonstrate re"uctions in comparison.3:743)1*43))14 McKinsey
sai" t!ey !a" ma"e it clear in t!e costDcur&e publications t!at cost cur&es "o
not translate Nmec!anicallyO into policy implications an" t!at policyma.ers
s!oul" consi"er Nmany ot!er (actorsO be(ore intro"ucing ne' la's.3:743)1*4
%!e $CC report also note" McKinsey !a" publis!e" t!e cur&e 'it! Nsuitable
ca&eatsO an" "isclose" some o( t!e s!ortcomings o( using MAC cur&es itsel(.
3)1+4
Enron
Enron 'as !ea"e" by McKinsey alumni an" 'as one o( t!e rm<s biggest
clients be(ore Enron<s collapse.3)))4 In particular, McKinsey<s 9"eepDseate"
belie( t!at !a&ing better talent at all le&els is !o' you outper(orm your
competitors9, a 5F program implemente" at Enron 'it! McKinsey<s
.no'le"ge, resulte", in t!e opinion o( one aut!or, in a 'or.place culture o(
prima "onnas t!at 9too. more cre"it (or success t!an 'as legitimate, t!at "i"
not ac.no'le"ge responsibility (or its (ailures, t!at s!re'"ly sol" t!e rest o(
us on its genius, an" t!at substitute" sel(Dnomination (or "iscipline"
management.93))+4 -eB S.illing, sentence" to +6 years in (e"eral prison as
t!e CEO o( Enron, 'as (ormerly a partner at McKinsey an" 9loyal alum.9
Insurance
Se&eral ci&il suits !a&e been le" against !ome insurance an" &e!icle
insurance companies a(ter t!e insurers 'ere a"&ise" by McKinsey, an"
allege"ly pai" t!e insure" parties signicantly less t!an t!e actual &alue o(
t!e "amage.3))24 McKinsey 'as cite" in a >ebruary +11: CNN article 'it!
"e&eloping contro&ersial car insurance practices use" by State >arm an"
Allstate in t!e mi"D)**1s to a&oi" paying claims in&ol&ing so(t tissue in@ury.
3))64