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Many Fortune 500 CEOs have previously worked at McKinsey.
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These include Google’s Sundar Pichai and ex-Meta COO Sheryl Sandberg.
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The firm has become known as a CEO factory, but has sparked controversy in the past, too.
McKinsey is back in the headlines.
The Wall Street Journal reported on Wednesday that the Department of Justice is conducting a criminal investigation into the management consultancy, related to how it had previously advised opioid firms on sales strategies.
The “Big Three” firm has previously raised eyebrows over some of the work it’s carried out, including advising Enron and helping Saudi Arabia’s government diversify its economy.
But another, perhaps equally notable thing to know about the management consultancy is its history as an incubator for top leadership talent.
Fortune reported last year that 17 Fortune 500 CEOs were McKinsey alumni at the time, including Alphabet boss and man of the moment Sundar Pichai.
Liberty Media chairman John Malone, former Meta Platforms COO Sheryl Sandberg, ex-Morgan Stanley CEO James Gorman, and Louis Vuitton executive Delphine Arnault are among others who’ve worked there. Transportation Secretary Pete Buttigieg and Sen. Tom Cotton (R-Arkansas) also had stints at the firm.
Last year, leadership professor Graham Ward told The Financial News that McKinsey had earned its status as a CEO factory by instilling good analytical skills in employees and spending heavily on its learning and development programs.
“McKinsey partners have three things going for them — they are deeply analytical, have broad industry coverage by getting parachuted into customer service teams in a variety of situations and a massive internal investment in their learning and development,” said Ward, who was also a former head of European equities at Goldman Sachs and now works at France’s INSEAD business school.
In the post-pandemic era, employees might not be developing their skills in the same way.
Last year, The Wall Street Journal reported that there isn’t enough work for new recruits at top consulting firms anymore, leaving some employees earning $175,000 to sit around and do nothing.
Meanwhile, one former McKinsey associate recently told Business Insider that the firm had clearly overhired in recent years, with rising interest rates causing client demand to dry up.
McKinsey did not immediately respond to a BI request for comment.
Read the original article on Business Insider
North Highland recognized across six industries by clients and peers
ATLANTA, April 03, 2024–(BUSINESS WIRE)–North Highland, the leading change and transformation consultancy, ranked in the Financial Times 2024 UK Leading Management Consultants List. This marks the fourth consecutive year the firm received this honorable mention, which is based on peer and client relationships and satisfaction.
A total of 788 rankings were determined by three Statista surveys completed by clients and peers of 178 consultancies across 16 industries and 14 types of specialist work.
North Highland ranked bronze in six categories, including:
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Consumer Goods & Retail
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Financial Institutions & Services
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Healthcare
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Life Sciences
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Public & Social Sector
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Travel, Transportation & Logistics
“Being named a Leading Management Consultancy across six industries is a testament to the hard work and expertise of our UK team,” said Anthony Shaw, managing director and EMEA business leader. “This recognition further demonstrates our ability to deliver high-quality, tangible business value for our clients while continuing to build lasting relationships among our peers.”
Click here to see the full results of the 2024 UK Leading Management Consultants report by Financial Times.
About North Highland
North Highland makes change happen, helping businesses transform by putting people at the heart of every decision. Partnering closely to design and deliver change, we turn challenges into opportunities. Our award-winning change and transformation services – powered by data and digital expertise – build lasting capability at the intersection of workforce and operations.
Founded in 1992, North Highland is regularly named one of the best places to work. We are a proud member of Cordence Worldwide, a global network of truly connected consultancy firms with the ability to think and deliver together. This means North Highland has more than 3,500 experts in 50+ offices around the globe on hand to partner with you.
For more information, visit www.northhighland.com or connect with us on LinkedIn, Twitter/X, Instagram and Facebook.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240403127865/en/
Contacts
Courtney James
Director, PR
(+1) 404-850-2806
courtneylee.james@northhighland.com
In The Big Con, Mariana Mazzucato and Rosie Collington claim that our overreliance on the consulting industry has negative consequences for society, inhibiting knowledge transfer and corporate and political accountability. The authors expose how consultancies’ goal of “creating value” may not align with addressing major issues such as climate change, arguing convincingly for greater transparency and a revitalised public sector, writes Ivan Radanović.
This blogpost originally appeared on LSE Review of Books. If you would like to contribute to the series, please contact the managing editor at lsereviewofbooks@lse.ac.uk.
In their book The Big Con, Mariana Mazzucato and Rosie Collington warn that relying on consultancies harms the public interest. Asking what happens to the brain of an organisation when it is not learning by doing because someone else is doing the doing, they conclude that societies must return public purpose in centre of attention.
The authors’ thesis is that overreliance on consultancies harms public interest, disables governments, and threatens democracy.
In 2021, the consulting industry was valued at over 900 billion dollars. Its ninefold rise since 1999 is the result of rising reliance of states on consulting agencies. The authors’ thesis is that overreliance on consultancies harms public interest, disables governments, and threatens democracy. They investigate this trend and how to reverse it.
The “Big Con” is the term Mazzucato and Collington use to mark the biggest auditing, accounting, and consulting agencies such as Ernst & Young (EY), KPMG, PwC, Deloitte, McKinsey, Boston Consulting Group (BCG), Accenture and others. The consulting market emerged during early industrialisation, when engineers, periodically recruited by major industrial firms, formalised their work. In the 1920s many consultants, among them James McKinsey, cooperated with American businesses. The popularity of management consultancy rose in 1970 when BCG introduced the matrix for mapping the profitability of business portfolio. After two years, this tool was used (and paid for) by more than 100 enterprises. American firms, on the wings of the Marshall plan and later IT management projects, have spread throughout Europe.
Golden years
The election of the right-wing populists Margaret Thatcher in the UK (1979) and Ronald Reagan in the US (1981) occurred after a decade of economic turmoil, led by the end of the Bretton Woods system and two major oil crises. The opinion that the responsibility for the turmoil lay in how states were run mushroomed. The neoliberal credo was that the only value creators in society are markets, and with Thatcher and Reagan, favour was refocused from the worker to the citizen-taxpayer.
The neoliberal credo was that the only value creators in society are markets, and with Thatcher and Reagan, favour was refocused from the worker to the citizen-taxpayer.
Contrary to the belief that the essence of neoliberalism is to slash public spending, Mazzucato and Collington suggest “it is more precise to describe it as public spending redirection towards the stronger role of the market” (49). In Thatcher’s era (1979-1990) government expenditure rose in real terms by 7.7 percent (43). In Reagan’s (1981-1989) federal spending rose by almost nine percent annually (43). From the US to Australia, thousands of neoliberal reforms such as privatisation, deregulation or outsourcing states had to be implemented, and advised. The authors show us that the annual public spending for consulting in the UK from 1979 to 1990 rose fortyfold – from 7.1 million to 290 million dollars. The 1980s saw the advent of a new management doctrine. In place of earlier stable forms of organisational life emerged the model of flexible “learning organisations” which view instability as an opportunity. The main goal becomes maximising value for shareholders. In the 1990s, that led to the popularisation of storytelling in politics and business. It is no longer a product or brand that is sold, but the story about value, challenges and business success through positive change, peddled by elite consultants or management gurus.
Creating the impression of value
Today, consultants are seen as experts who transfer know-how and utilise advanced management techniques to improve clients’ businesses. The enormous rise of consulting in the last four decades is explained by the “value” they create for states and companies. However, according to the authors, consultants do not always meet expectations and they seldom transfer knowledge. Created “value” is often unclear and depends on the perception of the client. Consultants hustle to create the impression of value.
Created “value” is often unclear and depends on the perception of the client. Consultants hustle to create the impression of value.
There are many examples where engaging consultancies has backfired for states. In developing countries such as Nigeria, Mexico and Angola, hiring consultancies was a condition of their IMF loan agreements (50). The authors focus on wealthy countries, arguing that even if contracting consultants experienced in the implementation of complex macroeconomic programmes could be justified in developing countries, it is less justifiable in developed countries, which should ostensibly have high competency in these areas.
Unmet deadlines, spiralling costs
Consultancies often fail to deliver on their promises. In 2010, Sweden started the construction project for a new university hospital in Stockholm which would be the most advanced in Europe. Its operations were to be grounded in “value-based healthcare”, a concept designed by management guru Michael Porter. Costs were initially valued at 1.4 billion euro, with the project set to be completed in 2015. City authorities opted for a public-private partnership which contracted consultants from PwC and EY who claimed they would ”maximise the value and keep the costs under control” (145). Representatives from the construction company Skanska stated that this model would “transfer the risk from the state and taxpayers to the private sector” (145). However, the costs immediately surpassed the projections because vital equipment had not been included in the budget The project, beset by problems, was passed to BCG, who had nine consultants working on its implementation while earning a monthly salary of almost 70,000 euros over six years. Another consultancy, Nordic Interim AB was then contracted for an additional 12 million euro, and when the hospital was eventually finished in 2018, costs a billion euros higher than the original estimate.
Absence of accountability
It is not all about money. Consultancies contribute to many undemocratic practices, maintaining what Acemoglu and Robinson named as extractive institutions. Often, they act as a mechanism for public wealth extraction, whereby states recruit consultants when they want to “hedge” the political risk of unpopular economic measures. The states maintain legitimacy, and consultants get their share of political influence. Authors emphasise the example of Puerto Rico, which faced bankruptcy in 2016. Then-President Obama initiated the creation of an Oversight Board to supervise the bankruptcy process. Keeping reputational risk low, Washington ensured that the majority of members of the Board were of Puerto Rican heritage. The Board did not hire a large staff, to avoid looking like it was setting up a parallel government. Instead, it brought in consultants. Instead of the state, McKinsey engaged in the privatisation of public enterprises, healthcare reforms “based on value”, slashing public spending and restructuring debt. Moreover, McKinsey owned $20 million of Puerto Rico’s bonds: consultants were set to profit from the very same debt they were helping to restructure.
Regaining control
Even though consultancies did not cause the maladies of neoliberal capitalism, they have profited from them. Without transparency and democratic permission, they erode the capabilities of states and enterprises. Because knowledge is not cultivated within state workforces and institutions, a dependency on the “expertise” of consultancies spirals.
[Consultancies] erode the capabilities of states and enterprises. Because knowledge is not cultivated within state workforces and institutions, a dependency on the “expertise” of consultancies spirals.
The last section of the book is about “climate consulting”. Omnipresent and long-term, climate change is ideal ground for consultants. Competition is fierce; consultancies’ “websites are replete with beautifully designed free reports on sustainability issues for every sector, from oil and gas to healthcare” (190). They promise solutions, pitching themselves as an avant-garde of change.
The key takeaway, according to Mazzucato and Collington, is that we must challenge the predominance of consultancies. With their ultimate goal of “creating value”, they advise both the fossil polluters and the governments mandated to reduce emissions. Moreover, states are catalysts of technological change for public good, while the private sector only invests in fundamental research when it becomes enticingly profitable.
Putting aside the authors’ techno-optimistic view – which holds that climate change mitigation is mostly a technical issue regarding innovations for green transition, which is being debunked – their final suggestions are valid. A new narrative and vision for the role of the state, recovering public capacities, embedding knowledge transfer into consulting contracts’ evaluation and mandating transparency are, undoubtedly, desirable. The book’s importance lies in how it reveals the political implications of the consulting industry. Whether we choose “green growth” or abandon the growth imperative, one thing is certain: democratically elected governments are key actors. Only they can mobilise the resources required for achieving “moonshot” missions, the most urgent of which is climate change.
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