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McKinsey’s brand has taken a beating these last few years with the company going from scandal to scandal. The NY Times has been doing a whole string of stories

by JCM9 4y ago

McKinsey’s brand has taken a beating these last few years with the company going from scandal to scandal. The NY Times has been doing a whole string of stories on the firm’s questionable business practices and ethics. Funny though how it sounds like, per their own admission, McKinsey badly mismanaged running their own internal operation and woke up to realize they need mass layoffs. Sort of causes one to question how much one should listen to these so called “experts” on how to manage a business. Mass layoffs generally don’t follow strong management execution. I’ve been a customer of management consultants on a few occasions. There were times when some of the input helped but mostly that was essentially just hired hands to do rote organizational work like interviewing 100 people and summarizing what they said in a nice PPT deck delivered to my desk. The “experts” were woefully out of touch with reality. They were more following hype cycles than providing any sort of real valuable strategic advice. Most had never actually run a business or done the thing they were offering up advice on, and it showed.

turdprincess 4y ago
But wouldn't they basically have no choice but to scale up their own workforce if their client's business is booming? It wouldn't be a good look to say "hey actually we can't take your project on because we believe a recession is coming". Consulting could be even more "boom and bust" than normal companies since consulting budgets might be the first thing to get cut when times get tough.
- JohnFen 4y ago
  > It wouldn't be a good look to say "hey actually we can't take your project on because we believe a recession is coming". Why not? I'd trust a consultant who demonstrably trusted their own judgement like that even more, and even if they were wrong on that particular call. I may have to find a different consultant because that one couldn't take me on, but I'd be more likely to consider checking on them later to see if circumstances have changed enough to bring me in. (Just to be clear, I'm talking about business consultants generally. Certainly not McKinsey specifically)
- oneoff786 4y ago
  I work at McKinsey. Many times business is better during hard times contrary to what you may think. ymmv
scarmig 4y ago
Management consulting isn't about providing advice to management. It's about building pretty PowerPoint decks to justify decisions already made. That said, expanding to take advantage of temporary market opportunities and then contracting when those opportunities isn't bad advice, per se. Probably generates more profits over a more static, restrained path.
hn_throwaway_99 4y ago
> Mass layoffs generally don’t follow strong management execution. I realize that's a common sentiment on HN, but it's not really among executive leadership in US businesses. Sure, nobody wants to do layoffs, but then you're essentially left with 2 choices: 1. Potentially underhire despite growing business opportunity. 2. Potentially overhire to take advantage of business opportunities that may not eventually come to fruition. What people who hire management consultants care about is that they have the decisiveness to take action when needed, and having significant layoffs is not really a ding one way or the other.
- epicureanideal 4y ago
  Why not hire contractors or contract-to-hire for those bursty work needs? Or spin up a separate company and buy services from them?
  - hn_throwaway_99 4y ago
    > Why not hire contractors or contract-to-hire for those bursty work needs? To start, it's not legal. If the people you are hiring are doing the same work as full time employees, with the same work structure, you're not supposed to hire them as contractors. > Or spin up a separate company and buy services from them? I mean, companies certainly do outsource to third parties for "bursty" needs, but if you think this is going to be an important core part of your business going forward, why would you go through the organizational complexity to spin up a new entity? How would you explain this to recruits? "Congrats, you've been hired by the slightly shittier version of us, and when layoffs come you'll be the first to get cut." I mean, companies do actually kinda do that, but it's very much a hierarchical system - anyone with the ability to get hired by "main company" is not going to take a position with "shitty clone".
    - Scubabear68 4y ago
      > If the people you are hiring are doing the same work as full time employees, with the same work structure, you're not supposed to hire them as contractors. This is not true at all. Many firms do “staff augmentation” for exactly what the parent described, bursty work for clients on a time and materials basis.
DrBenCarson 4y ago
How is the fact that the economy is not always a linearly increasing line an indicator of poor management? Also the economy is relatively strong at the moment, so one could argue this is in fact a forward-looking reduction.
quantum_state 4y ago
“ Most had never actually run a business or done the thing they were offering up advice on, and it showed.” exactly!
spamizbad 4y ago
If you were competent at running businesses why would you be an associate at McKinsey when you could be a COO or VP or something?
- ilrwbwrkhv 4y ago
  Because you get all of the benefits with none of the blame.
- oneoff786 4y ago
  An associate is typically a fresh MBA grad or someone with a few years of tenure out of school. Awkward imbalance of levels aside, I enjoy the consulting lifestyle personally. It’s interesting to work with many different clients and have enough political clout to get things done on a fast timeline.
  - rvba 4y ago
    Consultants get things done? Apart from a deck of slides?
    - nice_terrible 4y ago
      Don't forget the invoices.
    - afavour 4y ago
      They do. The client paid a load of money to hear what the consultant said, there’s a lot of incentive to act on it otherwise you’re the exec that hired a load of consultants only to ignore them.
    - WastingMyTime89 4y ago
      Having been on the receiving end of two McKinsey decks, in my admittedly limited experience, no, they don't. But the package somewhat looks good.
    - oneoff786 4y ago
      Please tell me more about my job.
midoridensha 4y ago
>Most had never actually run a business or done the thing they were offering up advice on, and it showed. "Those who can, do. Those who can't, teach."
- hgsgm 4y ago
  "Those who don't even know how, manage."
- antasvara 4y ago
  I've always found that saying disrespectful because it treats teaching like everyone's second choice. Many that "can" choose to teach. Currently licensed and practicing surgeons are the primary way that medical residents learn how to become effective surgeons. I would never trust somebody incapable of surgery with the education of a surgeon.
  - theGnuMe 4y ago
    It takes real skill to teach.
    - anonymouskimmer 4y ago
      "It takes real skill to teach well." Agreed.
  - A4ET8a8uTh0 4y ago
    It is and sadly similar sentiment exists in the old country. I am not entirely certain why that is the case. Granted, they are always outliers and heavens know I had my share of bad teachers ( partly because it is a hard thing to do well and partly probably because, with some interesting exceptions it is not that well paid compared to non-teaching variants ). If one is to look at income alone ( again with the exception of ,say, some Chicago teachers ) and effort involved, the choice and sentiment makes sense.
- jdkee 4y ago
  "And those that can't teach, consult."
achow 4y ago
This recently published book should be of interest: The Big Con by Mariana Mazzucato and Rosie Collington review – how consultancy firms cash in https://www.theguardian.com/books/2023/feb/16/the-big-con-by-mariana-mazzucato-and-rosie-collington-review-how-consultancy-firms-cash-in https://www.theguardian.com/books/2023/feb/16/the-big-con-by...
williamcotton 4y ago
Have you worked with Bain or BCG? Are they any more competent?
- Spooky23 4y ago
  They are all competent. It’s just that they work for their principal in the company and are always selling. If you think something these guys are doing is awful or dumb, follow the money. The guy signing the checks is calling the shots. McKinsey’s lack of ethics and self-preservation is notable. But they weren’t hoodwinking innocents into preying on the weak. Perdue and the medical providers writing those oxycodone scripts to make money. The other stuff is a byproduct of modern corporate management. Most companies don’t have departments that do administrative or organizational analysis. They run lean and hire the capability.
  - EFreethought 4y ago
    Being "competent" is not sufficient. Are they doing anything useful besides telling clueless CEOs what they want to hear? Is there any difference between a stupid person and a smart person doing something pointless?
  - hitekker 4y ago
    > The other stuff is a byproduct of modern corporate management. Most companies don’t have departments that do administrative or organizational analysis. They run lean and hire the capability. Another quality comment from Spooky23. Your points cannot be understated. I would add my own biased and limited insight; companies should not* investigate the history, decision-making, conflicts and other explosive topics that makes a company tick. The kind of topics managers gossip about but are loathe to put into writing as key insights, either out of fear or out of a lack of detachment. If the company needs that "central intelligence" function enough to hire internally, the company is probably dying, i.e. the management has failed and can no longer produce intelligence. But when management fails every now and then, executives will bring on a neutral third party to perform this kind of sensitive research, which could lead to heads rolling. Or that third party could just be a hatchetmen who does the killing themselves.
nus07 4y ago
When you have to layoff people or have hard conversations or navigate politics qualities that are required are - being good looking , being popular and liked , being pleasant in conversations and demeanor. Management consultants usually come from wealthy or upper middle class families , go to elite schools and are usually good looking and have a very pleasant demeanor. So that’s why they are hired to do what leadership in a big organization cannot for fear of revolt or bad blood.
HillRat 4y ago
McK also pivoted into trying to execute over the past few years, picking up some design and digital capabilities to compete for Big Five-style work. I ... haven't been impressed with their work, to put it mildly, and I'm curious how much of that capability they're jettisoning as part of this restructuring. Gotta love the fact that they're just completely transparent that they're going this to preserve the partner comp pool, though. Even for the MBBs that's a hell of a "fuck you" to the folks doing the hard work.
balderdash 4y ago
> Mass layoffs generally don’t follow strong management execution. Professional service firms largely sell their time. Yet demand for their services is anything but (just ask people that work in restructuring). Hiring and layoffs in these businesses is simply capacity management.
vkou 4y ago
> Mass layoffs generally don’t follow strong management execution In 2023, the only thing mass layoffs follow is the Fed raising interest rates. Many of the businesses doing them are quite healthy.
TMWNN 4y ago
>Funny though how it sounds like, per their own admission, McKinsey badly mismanaged running their own internal operation and woke up to realize they need mass layoffs. Classic example of this is Bain almost going bust during the 1990s. Mitt Romney, who by then had left to start Bain Capital, had to come back to right the ship.

by JCM9 4y ago

turdprincess 4y ago

But wouldn't they basically have no choice but to scale up their own workforce if their client's business is booming? It wouldn't be a good look to say "hey actually we can't take your project on because we believe a recession is coming". Consulting could be even more "boom and bust" than normal companies since consulting budgets might be the first thing to get cut when times get tough.

JohnFen 4y ago
> It wouldn't be a good look to say "hey actually we can't take your project on because we believe a recession is coming". Why not? I'd trust a consultant who demonstrably trusted their own judgement like that even more, and even if they were wrong on that particular call. I may have to find a different consultant because that one couldn't take me on, but I'd be more likely to consider checking on them later to see if circumstances have changed enough to bring me in. (Just to be clear, I'm talking about business consultants generally. Certainly not McKinsey specifically)
oneoff786 4y ago
I work at McKinsey. Many times business is better during hard times contrary to what you may think. ymmv

scarmig 4y ago

Management consulting isn't about providing advice to management. It's about building pretty PowerPoint decks to justify decisions already made. That said, expanding to take advantage of temporary market opportunities and then contracting when those opportunities isn't bad advice, per se. Probably generates more profits over a more static, restrained path.

hn_throwaway_99 4y ago

> Mass layoffs generally don’t follow strong management execution. I realize that's a common sentiment on HN, but it's not really among executive leadership in US businesses. Sure, nobody wants to do layoffs, but then you're essentially left with 2 choices: 1. Potentially underhire despite growing business opportunity. 2. Potentially overhire to take advantage of business opportunities that may not eventually come to fruition. What people who hire management consultants care about is that they have the decisiveness to take action when needed, and having significant layoffs is not really a ding one way or the other.

epicureanideal 4y ago
Why not hire contractors or contract-to-hire for those bursty work needs? Or spin up a separate company and buy services from them?
- hn_throwaway_99 4y ago
  > Why not hire contractors or contract-to-hire for those bursty work needs? To start, it's not legal. If the people you are hiring are doing the same work as full time employees, with the same work structure, you're not supposed to hire them as contractors. > Or spin up a separate company and buy services from them? I mean, companies certainly do outsource to third parties for "bursty" needs, but if you think this is going to be an important core part of your business going forward, why would you go through the organizational complexity to spin up a new entity? How would you explain this to recruits? "Congrats, you've been hired by the slightly shittier version of us, and when layoffs come you'll be the first to get cut." I mean, companies do actually kinda do that, but it's very much a hierarchical system - anyone with the ability to get hired by "main company" is not going to take a position with "shitty clone".
  - Scubabear68 4y ago
    > If the people you are hiring are doing the same work as full time employees, with the same work structure, you're not supposed to hire them as contractors. This is not true at all. Many firms do “staff augmentation” for exactly what the parent described, bursty work for clients on a time and materials basis.

DrBenCarson 4y ago

How is the fact that the economy is not always a linearly increasing line an indicator of poor management? Also the economy is relatively strong at the moment, so one could argue this is in fact a forward-looking reduction.

quantum_state 4y ago

“ Most had never actually run a business or done the thing they were offering up advice on, and it showed.” exactly!

spamizbad 4y ago

If you were competent at running businesses why would you be an associate at McKinsey when you could be a COO or VP or something?

ilrwbwrkhv 4y ago
Because you get all of the benefits with none of the blame.
oneoff786 4y ago
An associate is typically a fresh MBA grad or someone with a few years of tenure out of school. Awkward imbalance of levels aside, I enjoy the consulting lifestyle personally. It’s interesting to work with many different clients and have enough political clout to get things done on a fast timeline.
- rvba 4y ago
  Consultants get things done? Apart from a deck of slides?
  - nice_terrible 4y ago
    Don't forget the invoices.
  - afavour 4y ago
    They do. The client paid a load of money to hear what the consultant said, there’s a lot of incentive to act on it otherwise you’re the exec that hired a load of consultants only to ignore them.
  - WastingMyTime89 4y ago
    Having been on the receiving end of two McKinsey decks, in my admittedly limited experience, no, they don't. But the package somewhat looks good.
  - oneoff786 4y ago
    Please tell me more about my job.

midoridensha 4y ago

>Most had never actually run a business or done the thing they were offering up advice on, and it showed. "Those who can, do. Those who can't, teach."

hgsgm 4y ago
"Those who don't even know how, manage."
antasvara 4y ago
I've always found that saying disrespectful because it treats teaching like everyone's second choice. Many that "can" choose to teach. Currently licensed and practicing surgeons are the primary way that medical residents learn how to become effective surgeons. I would never trust somebody incapable of surgery with the education of a surgeon.
- theGnuMe 4y ago
  It takes real skill to teach.
  - anonymouskimmer 4y ago
    "It takes real skill to teach well." Agreed.
- A4ET8a8uTh0 4y ago
  It is and sadly similar sentiment exists in the old country. I am not entirely certain why that is the case. Granted, they are always outliers and heavens know I had my share of bad teachers ( partly because it is a hard thing to do well and partly probably because, with some interesting exceptions it is not that well paid compared to non-teaching variants ). If one is to look at income alone ( again with the exception of ,say, some Chicago teachers ) and effort involved, the choice and sentiment makes sense.
jdkee 4y ago
"And those that can't teach, consult."

achow 4y ago

This recently published book should be of interest: The Big Con by Mariana Mazzucato and Rosie Collington review – how consultancy firms cash in https://www.theguardian.com/books/2023/feb/16/the-big-con-by-mariana-mazzucato-and-rosie-collington-review-how-consultancy-firms-cash-in https://www.theguardian.com/books/2023/feb/16/the-big-con-by...

williamcotton 4y ago

Have you worked with Bain or BCG? Are they any more competent?

Spooky23 4y ago
They are all competent. It’s just that they work for their principal in the company and are always selling. If you think something these guys are doing is awful or dumb, follow the money. The guy signing the checks is calling the shots. McKinsey’s lack of ethics and self-preservation is notable. But they weren’t hoodwinking innocents into preying on the weak. Perdue and the medical providers writing those oxycodone scripts to make money. The other stuff is a byproduct of modern corporate management. Most companies don’t have departments that do administrative or organizational analysis. They run lean and hire the capability.
- EFreethought 4y ago
  Being "competent" is not sufficient. Are they doing anything useful besides telling clueless CEOs what they want to hear? Is there any difference between a stupid person and a smart person doing something pointless?
- hitekker 4y ago
  > The other stuff is a byproduct of modern corporate management. Most companies don’t have departments that do administrative or organizational analysis. They run lean and hire the capability. Another quality comment from Spooky23. Your points cannot be understated. I would add my own biased and limited insight; companies should not* investigate the history, decision-making, conflicts and other explosive topics that makes a company tick. The kind of topics managers gossip about but are loathe to put into writing as key insights, either out of fear or out of a lack of detachment. If the company needs that "central intelligence" function enough to hire internally, the company is probably dying, i.e. the management has failed and can no longer produce intelligence. But when management fails every now and then, executives will bring on a neutral third party to perform this kind of sensitive research, which could lead to heads rolling. Or that third party could just be a hatchetmen who does the killing themselves.

nus07 4y ago

When you have to layoff people or have hard conversations or navigate politics qualities that are required are - being good looking , being popular and liked , being pleasant in conversations and demeanor. Management consultants usually come from wealthy or upper middle class families , go to elite schools and are usually good looking and have a very pleasant demeanor. So that’s why they are hired to do what leadership in a big organization cannot for fear of revolt or bad blood.

HillRat 4y ago

McK also pivoted into trying to execute over the past few years, picking up some design and digital capabilities to compete for Big Five-style work. I ... haven't been impressed with their work, to put it mildly, and I'm curious how much of that capability they're jettisoning as part of this restructuring. Gotta love the fact that they're just completely transparent that they're going this to preserve the partner comp pool, though. Even for the MBBs that's a hell of a "fuck you" to the folks doing the hard work.

balderdash 4y ago

> Mass layoffs generally don’t follow strong management execution. Professional service firms largely sell their time. Yet demand for their services is anything but (just ask people that work in restructuring). Hiring and layoffs in these businesses is simply capacity management.

vkou 4y ago

> Mass layoffs generally don’t follow strong management execution In 2023, the only thing mass layoffs follow is the Fed raising interest rates. Many of the businesses doing them are quite healthy.

TMWNN 4y ago

>Funny though how it sounds like, per their own admission, McKinsey badly mismanaged running their own internal operation and woke up to realize they need mass layoffs. Classic example of this is Bain almost going bust during the 1990s. Mitt Romney, who by then had left to start Bain Capital, had to come back to right the ship.