Unlike the way more important Kinsey (without the “Mc”) – the most brilliant sex research institute of the 1950s – the McKinsey of this article is the rather boring 38,000 employee strong and $15bn revenue making management consultancy, McKinsey & Company. Yet, it remains the world’s most powerful management consultancy firm – known as The Gold Standard.
Often working in the shadows and corporate backrooms, McKinsey has co-engineered several scandals of our time ranging from Enron, the Global Financial Crisis, South African corruption, to the opioid crisis. Based on a novel by John Grisham, McKinsey even achieved cinematic eternity through the film The Firm, with stars Jeanne Tripplehorn, Gene Hackman, Ed Harris, and Tom Cruise .
Yet, the reality of McKinsey is often less cinematic. In 2016, a worker named Arrizola was electrocuted by a 480-volt shock in a company that was fined a meager $14,500. The fine for harassing a wild donkey is greater. His wife said, all they care about is money.
The company’s motto was, don’t buy, get by! Managers only purchased things when absolutely necessary. Rather than repairing tools, its maintenance people had to jury-rig failing equipment. Every new order had to be approved by a so-called control tower.
The management consultancy that had introduced all these changes was McKinsey. McKinsey took a certain percentage of what the company saved in a handy arrangement, in which some get rich while others die.
Things got worse. In the wake of the 2016 election, Trump promised to restore blue-collar jobs. Two corporate bosses – Longhi and Burritt – rode the Trump wave telling CNBC that they would restore ten thousand jobs.
In the end, no jobs were created, but Longhi’s golden parachute was $4.5 million while McKinsey got $13 million. McKinsey had helped to set up the company’s “STEEL code”, safety, trust, environmentally friendly activities, ethical behavior, and lawful conduct. Particularly beautiful is the wording ethical behavior when it comes to McKinsey and corporations.
McKinsey’s cost avoidance strategy also worked wonders at Disneyland, wherein the consultancy recommended cutting expenses by scaling back on park’s maintenance. At the same time, the corporation’s PR department announced that it would have world-class maintenance.
The language of Managerialism, calls this sort of jargon, “world class maintenance” or simply “world class management”. “World Class **** [insert your favorite management buzzword here] remains one of the favorite corporate weasel words for corporate apparatchiks and management consultants alike.
Around the same time, a Disney worker started to worry about the cost cutting and the potential failing of the park’s equipment saying, the reason they don’t fail is because we check them every night. Under McKinsey, this had to stop.
Just a year later – on Christmas Eve – Disneyland experienced a fatal accident. Bogdanich and Forsythe say, McKinsey was not held to account for what happened at US Steel and Disneyland. Well, some got a bonus – others died.
Undeterred, McKinsey continued. Today, many – if not most – MBA students love to get a job at McKinsey. It is an almost automatically assured pathway to prestige and power. McKinsey attracts about 200,000 applicants a year, hiring a mere 1-2%.
McKinsey offers something intoxicating: access to the power and money code – even when the intoxication turns out to be rather toxic – mostly for those outside McKinsey’s orbit, the Fortune 500 companies, and above all, for workers.
McKinsey’s rampant cost cutting – generally at the expense of workers – is spiced up by what McKinsey hands out to its own: the McKinsey Achievement Award. The award is given to those who can press the most profits out of McKinsey’s corporate clients.
This comes on top of the fact that, in their first year alone, business school-trained MBAs can make about $200,000 – as long as they parrot the managerial jargon of corporate buzz- and weasel words that they have learned at business school.
Of course, one of the most fashionable buzzwords in the corporate world is “values” – as in shareholder values. McKinsey’s values are: clients are first (read: they are McKinsey’s cash cow); McKinsey itself comes second (read, this is about McKinsey and nobody else); and after that comes money (read: McKinsey is not a charity); and fourthly, is personal interest (read: greed is good!).
At times, the all-too-obvious “money reference” is taken out – it just looks better that way. The fact that McKinsey is about money, and money only, is camouflaged by another favorite ideology: professionalism.
All this, of course, is part of McKinsey’s code of ethics. Like Enron (held up by McKinsey as the model of the modern corporation until it collapsed), Sackler’s Purdue, Smith & Wesson, Nestle, and any other decent killer corporations, McKinsey, too, has an impeccable ethics code.
How McKinsey’s ethics code works in reality is illustrated by the fact that when a company needed help several years ago, McKinsey charged that company well above $120 million – in just two years!
For that kind of cash, corporate clients do get what they want – whether legal, semi-legal, or bordering on the illegal. Whatever the case, the ideology of corporate social responsibility (CSR) will disguise what is being done.
Good CSR enabled McKinsey, for example, to advise a tobacco corporation – tobacco corporations killed about 100 million people in the 20th century – to pursue even more aggressive marketing tactics (read: sell more cigarettes and kill more people). A McKinsey employee noted later,
instead of being a force for good,
I found myself a party to the
most damaging forces affecting the world.
McKinsey has even assisted authoritarian and corrupt governments across the globe, sometimes in ways that counter American interests. At times, corporate profits and the much-acclaimed national interests collide. In those cases, the national interest ideology can even be a very handy tool to camouflage corporate profits.
Almost self-evidently, McKinsey also worked for Trump – not for his tax avoidance – but on his inhumane, and harsh immigration policy that saw children in metal cages. This is what good corporate social responsibility can do for you. It might even be the banality of evil, MBA edition.
McKinsey’s banality of evil also means that some win big time while others lose. In 1950, for example, a CEO of a normal company or corporation made roughly twenty times the money a normal production worker made. Thanks in part to McKinsey, by 2020, CEOs made 351 times as much.
Historically, McKinsey has always been “indifferent to workers” – to put it mildly. McKinsey’s work means more money for CEOs and a growing wage gap between workers and bosses.
At the same time, McKinsey helped to push deindustrialization. McKinsey pushed for outsourcing and offshoring. Inside corporations, McKinsey put in place what it called the “up-or-out practice”.
Under the McKinsey performance management system (read: workplace despotism), workers are regularly re-evaluated and those who fail to impress the bosses – according to standards put in place by McKinsey, of course – are, as McKinsey calls it, counseled to leave. This is McKinsey’s version of FIFO – fit in or f*** off!
McKinsey engineered outsourcing an internal surveillance and assessment system that led The Atlantic to argue that McKinsey Destroyed the Middle Class. Perhaps it came with the kind help of the very American love story of capitalism. In any case, McKinsey remains the chief legitimizer of mass layoffs of workers in the USA while – almost simultaneously – turning India into Offshoreistan.
In its eternal zeal for offshoring, McKinsey also supported GE, so that 35-40% of its finance operations, including accounts payable, regulatory preparation, tax compliance, and cash management could be outsourced. Simultaneously, McKinsey’s Global Institute ideologically legitimized the entire project by pretending it was supported by a scholarship.
To top all this off, and with the unquavering support of McKinsey, AT&T promised, if Trump’s $1.5 trillion tax-cut became law, it would hire seven thousand more workers. In the three years following Trump’s tax-cuts, AT&T handed over $35 million to McKinsey.
Instead of adding jobs, AT&T eliminated nearly eleven thousand jobs in the first six months after Trump’s tax cut. Perhaps those three could be featured as: the good (AT&T workers), the bad (McKinsey), and the ugly (Trump).
Of course, it always helps to play both sides. McKinsey has mastered this by advising both the corporations and government agencies at the same time. In other words, McKinsey puts meat to the bone when it comes to what political science calls state capture. It describes the intimacy between corporations and the state or better – a situation when corporate apparatchiks have their fingers in the state till.
McKinsey’s fingers were in the till when it came to the government. McKinsey creamed off $1bn in consulting contracts – often without competitive bidding. Regularly, this is camouflaged through the ideology of the free market and competition which, we are told, serves everyone. Well, not McKinsey. Playing both sides also mean advising not just government agencies but also pharmaceutical corporations (big pharma), hospitals, and private heath insurers.
Beyond all that, McKinsey – operating as a double agent – also assisted Obama during the Affordable Care Act debate. As any good corporate social responsibility company with an ethics code, McKinsey also snatched a good chunk of “business” from the FDA. In four Trump years, a cool $77 million went into its pockets while working at the same time for big pharma.
McKinsey did not lead the fight against cigarettes, vaping, and opioid abuse, as the CSR company had clients in all three sectors, working with opioid corporations, autocrats, and even kleptocrats.
While Republicans and other politicians cranked up the anti-China rhetoric, McKinsey was making money in China. The double agent even reached the South China Sea.
McKinsey helped a Chinese government-owned company building new islands in disputed waters. That this conflicted with a far more important client, the Pentagon, was of no concern to the double agent: the ethical firm McKinsey. True to its own double standards, McKinsey took in hundreds of millions of dollars from the Department of Defense.
The aforementioned “state capture” also includes the concept of the revolving door – another idea mastered by McKinsey. Bogdanich and Forsythe say,
Eric Chewning was Chief of Staff to Mark Esper, Secretary of Defense during Trump’s presidency. In 2020 he returned to McKinsey. McKinsey’s Jesse Salazar was named Deputy Assistant Secretary of Defense for Industrial Policy in the Biden administration.
The same goes for China where McKinsey hired a Harvard MBA, Liu Chunhang. He happened to be the son-in-law of China’s premier, Wen Jiabao. McKinsey claimed, it hired Liu based on his qualifications, not his connections. Of course. What else?
All of this fits rather neatly into China’s conversion of state-owned companies previously run in Soviet-style central planning. McKinsey was more than happy to give a helping hand – for a fee, of course – as restructuring (read: mass firing of workers) remains a core specialty of McKinsey. In corporate jargon, this is also called best practices – a standard management ideology sold for decades.
As one might suspect, McKinsey does not shy away when it comes to supporting China’s sheer unlimited surveillance reach. A report on what McKinsey calls “smart city” says, police patrols cannot be everywhere, for instance, but predictive analytics can deploy them in the right place at the right time.
This is a vital step towards surveillance capitalism. The New York Times called what McKinsey is doing in China, setting up the world’s most intrusive network – spiced up with surveillance cameras and security checkpoints – a virtual cage.
All in all, McKinsey not just avoids criminal prosecution for what it does, it also – rather skillfully – has avoided bad publicity. McKinsey’s key modus operandi is to work behind closed doors using so-called confidentiality agreements to shut people up who might spill the beans. This is what a company with a good ethics code does. As an ethical company, of course, McKinsey would support free speech – just not for its own employees and clients.
Yet, McKinsey is not only the master of behind-the-scene operations – while ticking all the boxes of handy ideologies like business ethics, corporate social responsibility, and corporate citizenship – it also works as a double agent, playing both sides – the state and corporations – simultaneously.
