In their new book, investigative reporters Walt Bogdanich and Michael Forsythe shatter the luminous image of McKinsey & Co. that has long attached to the consulting giant. Vault.com, a leading employment site, doesn’t exaggerate when it asserts that McKinsey “has achieved a near-universal level of renown.” With more than 30,000 employees spread across dozens of offices across the globe, McKinsey claims to serve 90 of the world’s 100 largest companies in addition to a host of prominent governments and institutions. McKinsey’s avowed mission stretches far beyond its $10 billion in annual revenue. Portraying itself as a “values-driven organization” dedicated to creating “positive, enduring change in the world,” the firm extols its environmental and social initiatives. Many of its senior partners stand at the pinnacle of the consulting profession, and just a small sampling of its famous alumni — including Facebook’s Sheryl Sandberg, Chelsea Clinton and Consumer Financial Protection Bureau Director Rohit Chopra, as well as the current chief executives of Citigroup, Alphabet and Morgan Stanley — exemplifies its exalted standing. With all these attributes, it’s no wonder that Vault rated McKinsey as “the most prestigious company of its kind.”
A far different portrait emerges in Bogdanich and Forsythe’s “When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm.” The authors expose the firm’s unsavory work with fossil fuel companies, cigarette-makers, opioid distributors, regulatory agencies and autocratic regimes. In a masterful work of investigative journalism building on their reporting for the New York Times, Bogdanich and Forsythe pierce through McKinsey’s “culture of secrecy” — a process they describe as “akin to chasing shadows” — to unearth conflicts of interest, corruption, hypocrisy and strategic blunders that read like a prosecutor’s indictment.
Besides the many venial sins uncovered by the authors, a graver set of dubious practices emerges. In Bogdanich and Forsythe’s telling, McKinsey was rife with conflicts of interest in which it advised multiple companies within a sector (it denies sharing confidential information among them) and, more disconcertingly, regulators alongside the companies they oversaw. Over the years, its cost-cutting recommendations downplayed safety concerns at U.S. Steel, Disneyland and American immigration centers, and shorted insurance policy holders of billions of dollars in claims, the authors assert.
Hypocrisy is the most odious trait highlighted in the book. As it touted its carbon reduction initiatives, for instance, McKinsey had a roster of clients that included at least 43 major carbon polluters since 2010. While helping tobacco companies fend off regulations, it advised health-care providers contending with the fallout from smoking, as well as the Food and Drug Administration, which regulated cigarette-makers. It advised the Chinese, Saudi Arabian and Russian governments even as it joined the United Nations Global Compact supporting anti-corruption efforts and human rights.
The most shocking behavior recounted in the book involved McKinsey’s role in the opioid crisis. “To settle government investigations into its role in helping Purdue [Pharma] ‘turbocharge’ opioid sales when thousands of people were dying of overdoses, the firm agreed to pay more than $600 million even as it denied any wrongdoing,” the authors write.
In the face of mounting concerns from pharmacies and federal regulators, McKinsey advised opioid-makers to target “high abuse-risk patients” and urge health-care providers to increase prescriptions. At one point, it concocted a plan to issue rebates to pharmacies for every “OxyContin overdose attributable to pills they sold.” McKinsey did all of this while advising the FDA.
Despite the litany of sketchy incidents in the book, other than the opioid imbroglio and a corruption scandal in South Africa, the “godfather of management consulting” has rarely been “held to account” for its misdeeds. The fact that neither regulators, the public, nor most of McKinsey’s employees knew about these sordid episodes until the media cast a spotlight on them is a testament to the authors’ prowess as investigative reporters.
The main thing missing from this superb book is context. Ascertaining whether these transgressions represented a small fraction of McKinsey’s undertakings or played a central role in its operations would have provided a better understanding of the scope of the wrongdoing. With only passing references to Boston Consulting Group and other competitors, it’s also difficult to gauge whether these ethical lapses made McKinsey an outlier in the industry.
In a broader sense, the problems at McKinsey are endemic to the entire class of professional advisers. Mega-size law, consulting and accounting firms have long taken on odious assignments for lucrative clients, helping them circumvent regulations, evade responsibility for toxic torts and criminal wrongdoing, and avoid paying their fair share of taxes. Yet few people are clamoring for fundamental changes to these professions. What makes it so difficult to reform the culture at these firms is that outside of those caught breaking the law or actively participating in a major scandal, few people have paid a social, professional or monetary price for their work on questionable projects. In McKinsey’s case, only a handful of people lost their jobs for the events chronicled in this book. Its members have rarely suffered reputational harm for their affiliation with the firm.
That’s the norm. In a milieu where networking and careful career maintenance are paramount, it’s easy to see why hiring managers at other firms are unlikely to hold McKinsey’s track record against its former employees. One day, after all, they may need a potential client or employer to look the other way as well.
Just as important, the ethos governing professional circles effectively shields their members from pangs of conscience. As at other advisory firms, McKinsey’s fixation on client service stripped away the political and social ramifications of its work. In contrast to a former employee who called McKinsey “an amoral institution,” a former partner elucidated the firm’s prevailing philosophy: “We don’t do policy. We do execution.”
Finally, there’s the money. Lots of it. MBAs starting at McKinsey can land pay packages totaling about $250,000, and senior partners can pull in more than $1 million annually. No matter how much pro bono work and other commendable programs McKinsey — and other leading professional service firms — may undertake, a portion of its income is tied to ethically dubious work.
How much would things change if McKinsey undertook reforms, which it vowed to do in response to its publicized scandals? If it implemented them earnestly and, in doing so, served as a lodestar for the industry, perhaps a great deal. Or perhaps not much at all. As the firm proclaimed in a rebuttal to a dejected associate’s complaint about McKinsey’s work on behalf of the fossil fuel industry: “If we don’t serve coal clients, BCG will.”
Michael Bobelian teaches journalism at Columbia University and is the author of “Battle for the Marble Palace: Abe Fortas, Earl Warren, Lyndon Johnson, Richard Nixon and the Forging of the Modern Supreme Court.”
When McKinsey Comes to Town
The Hidden Influence of the World’s Most Powerful Consulting Firm
By Walt Bogdanich and Michael Forsythe
Doubleday. 354 pp. $32.50
We are a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for us to earn fees by linking to Amazon.com and affiliated sites.