When McKinsey Comes to Town:
The Hidden Influence of the World’s Most Powerful Consulting Firm
by walt bogdanich and michael forsythe
knopf doubleday, 368 pages, $32.50
Management consulting” entered my vocabulary a few months into my senior year of college. Long before most of us began applying for jobs, the class go-getters were deep in preparation for multiple rounds of interviews with one—or all—of the Big Three consulting shops: McKinsey & Co., Bain & Co., and Boston Consulting Group. It sounded like applying for college all over again, but we could see the appeal. Consulting, we heard, was an intense but extremely well-paid gig. It allowed you to retain your idealism; McKinsey in particular talks a great deal about its company “values”—its ambition to “observe high ethical standards,” “be nonhierarchical and inclusive,” and “sustain a caring meritocracy.” And best of all, it let you delay the question of what you really wanted to do with your life. After giving the first two or three years of your career to “the firm,” as employees call it, you could do anything. Industry alumni went into every field and recruited each other for plum positions.
Management consulting, as far as we knew then, meant smart people who knew how to optimize things advising high-up managers in corporations, government agencies, and even sports teams on how to make their organizations better. And that’s as much as we, the outsiders, were ever supposed to know, because the top consulting shops are highly secretive.
Investigative reporters Michael Forsythe and Walt Bogdanich shed some light on what McKinsey, the top management consulting firm, actually does. The duo’s new book, When McKinsey Comes to Town, an expansion on their reporting for the New York Times, reveals that, for all the company’s emphasis on “values,” it keeps finding itself just a degree or two removed from unethical, corrupt, or even illegal activity of almost every kind. One year it’s advising opioid manufacturers on their marketing strategy in the Rust Belt, the next it’s facilitating state capture in South Africa. In the course of their research, Forsythe and Bogdanich gained access to McKinsey’s top-secret client list, a compendium of villains ranging from Chinese state-owned enterprises to Big Tobacco to Wall Street to the 2017 Houston Astros. And that’s not counting the blatant conflicts of interest—McKinsey has, for instance, worked for drug companies and the government agencies meant to regulate those companies at the same time.
What services, exactly, did McKinsey provide for this rogues’ gallery? In some cases, Bogdanich and Forsythe can’t say. We still don’t know how the sausage gets made; we only know who buys it. When it comes to the Astros and the Chinese companies, Forsythe and Bogdanich are able only to describe how the McKinsey clients cheated at baseball or violated human rights—not to pronounce that McKinsey itself told them to do so. The internal workings remain opaque.
The exceptions come when McKinsey analysts themselves, out of devotion to their own values, are willing to leak. That happens much less often than one might expect given the firm’s assortment of high-minded meritocratic recruits. McKinsey employees seemed to go along, with hardly a peep, with advising opioid companies to market aggressively to “high abuse risk patients (e.g. males under 40),” or compiling memos on anti-regime journalists for the Saudi royal family (the journalists tend to end up harassed or imprisoned). The deafening silence from analysts working on these and other particularly nasty jobs might make one question whether any client could possibly violate the idealism McKinsey seemed to seek out in its hires. One client, however, was a bridge too far: U.S. Immigration and Customs Enforcement.
To be sure, there was ample reason to be upset: McKinsey had recommended cutting food and medical care for detained migrants. When they found out about this and other work the firm had done for ICE during the Trump administration, McKinsey employees revolted. They threatened resignation; they sent company-wide emails demanding a reckoning; they even offered to return to the company any portion of their pay attributable to the ICE contract.
Distorted as it may have been by liberal pieties, McKinsey employees’ reaction to the firm’s work with ICE gives us the clearest picture of how the world’s leading consulting firm works. Of all the chapters in When McKinsey Comes to Town, this is the one in which junior-level analysts appear most willing to tell the press everything, and the one best supplied with internal McKinsey communications. Senior McKinsey officials called several meetings to explain themselves to junior staff, including in an “all hands on deck” town hall event at the company’s D.C. office. The platitudes flowed freely. The bosses heard everyone share their experiences and concerns, told the room how “full of empathy” they were, and insisted, “We do have a shared value system.” But there was one substantive message, to which they returned again and again: “We don’t do policy. We do execution.”
That message is the true guiding light for McKinsey. The reality is that none of McKinsey’s work, no matter how ethically dubious, violates its core values. Yes, the third value listed on the company site is to “observe high ethical standards.” But value number one—on the website, in company literature, and in all McKinsey’s dealings both internal and external—is to “put client interests ahead of our firm’s.” According to one business professor who spoke with Bogdanich and Forsythe, “management consultants mainly serve to legitimize the goals of their clients.” Junior analysts might make a fuss, and even leak some multi-million-dollar PowerPoint presentations, but they aren’t holding the reins. In McKinsey’s business operations and in its internal affairs, the playbook is the same: Whatever the client wants, the client gets.
What do McKinsey clients want? In the private sector, it’s all about distributing risk downward in their organizations, and moving any resulting savings upward. Perhaps it’s Disneyland trimming the maintenance staff responsible for ride safety; U.S. Steel outsourcing blue-collar jobs; or Wall Street banks encouraging low-level clerks to make riskier, higher-leveraged loans (if it’s a bust, the manager isn’t the one getting fired). McKinsey has helped all these moves happen, while also recommending high compensation for executives—who, coincidentally, are the ones who choose to hire McKinsey. And yet it seems very few of these ideas were original to McKinsey; one union leader flatly told Forsythe and Bogdanich that “U.S. Steel made all these moves via McKinsey schemes.” By hiring a prestigious management consulting firm, clients could do what they already intended to do, and respond to criticism by insisting that they were only following expert advice. McKinsey’s ability to take the heat off its clients is what makes it so worth the paycheck. When Johnson & Johnson got into legal trouble over its opioid sales, it argued in court that recommendations found on McKinsey slides were McKinsey’s alone, “saying they were ‘McKinsey’s words,’ not J&J’s.”
McKinsey’s work with public-sector clients is a similar exercise in deflection. For officials who want to privatize a government service (or “run it like a business”) but don’t want to take the political heat for doing so, it seems that paying McKinsey tens of millions of dollars can be an acceptable solution. Medicaid has been a top target of this practice in the U.S., and at the behest of the British government, McKinsey has overseen several top-to-bottom reorganizations of the National Health Service. Elected officials call in the management consultants, already knowing the policy they want: Cut costs, and hand off work to other private-sector entities where possible.
The usual rationale for such reliance on the private sector is that the profit motive drives efficiency. Government clients hold tightly to this belief even when certain McKinsey contracts are obviously driving inefficiency: The presence of highly paid consultants alongside government bureaucrats who have already been hired to do the same job is redundant, costly, and often frustrating. The deputy mayor of Miami-Dade County, referring to the swarm of consultants that descended after the county signed a contract with McKinsey to help with its Covid response, complained: “Apparently, it takes five people with staff support to do what I’ve been doing myself.” At ICE, for all the heat McKinsey took defending its contract, federal agents didn’t even like working with the consultants. The agents quickly got tired of training one new crop of fresh-from-college dilettantes after another, even as their managers got to report fancy new metrics. Nonetheless, the Trump administration gave McKinsey “dozens of consulting contracts across the landscape of government agencies, producing millions of dollars in revenue for the firm.” One of those agreements brought “a suite of McKinsey consultants” to participate in “a shadow task force on COVID” run by Jared Kushner, entirely superfluous to the one already being run by Vice President Mike Pence.
Public-sector clients seem blinded by their faith that, no matter what the job is, someone who works for a big-name private company will do it more efficiently than an anonymous civil servant can. Better to pay a well-credentialed “business expert” (or several of them) six figures than to have an uncredentialed government worker do the same work for much less. This mirrors the apparent contempt private-sector clients have for lower-level workers in their own organizations. The consultants come in to fire people, to replace people, to shuffle around risk, but above all to embody an idea: There’s a certain type of worker we regard as extraneous no matter what he does, and another type we take to be superior no matter what he does.
Whatever else we anxious college seniors believed, we shared that ideology. We may not have known what we’d end up doing with our lives, but we believed it would be important—not because of anything we knew or any skill we had, but because we were us. The anonymous blue-collar work others did might be difficult, necessary, even lifesaving, but it wasn’t world-altering and nation-defining, as ours was going to be. Our conviction arose partly from our immaturity, but it was also explicitly encouraged by the institutions we were in, and it made us prime recruitment targets for the Big Three. You don’t need to be an expert in business to recommend that people lose their jobs or receive cut-rate public services; you just need to believe more in yourself than in those jobs or services. Elite credentials supply such belief. McKinsey, by putting every college’s high achievers through the wringer of interviews and long hours, flatters the biases and egos of up-and-coming elites, just as it flatters its clients. Those egos can be assigned to just about any project, including profiteering and job slashing, all the while believing they are doing good.
When McKinsey Comes to Town can’t tell us much directly about the ultra-secretive McKinsey. But the firm’s catalog of clients and their misdeeds is nonetheless telling. The decision to bring in McKinsey consultants is an ideological one. It may not be possible to know what transpires between McKinsey and the major corporations and government bodies that make up its clientele, but the very fact that the meetings happen reveals how those clients see the world, how they treat the people who work for them, and what values they believe America’s best and brightest should serve.
Philip Jeffery is a deputy opinion editor of Newsweek.
Image by RawPixel via Creative Commons. Image cropped.
