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A new best-selling book from journalists at The New York Times, “McKinsey Comes To Town,” documents decades of scandalous behavior by the consultancy, raising questions to some about the legitimacy of the consulting industry and whether regulation is required.
The charges outlined in the book include how the firm worked with insurers to slash claim payouts to poor households, its involvement in South Africa’s post-apartheid corruption scandal and its work supporting authoritarian regimes in China and Saudi Arabia.
In its highest-profile scandal, McKinsey in November 2021 agreed to pay nearly $600 million to settle investigations into its role helping “turbocharge” opioid sales that the authors noted followed support of tobacco and vaping firms. Walmart, Kroger, CVS and Walgreens have all been sued over not flagging suspicious opioid orders to authorities.
With controversies also faced by Bain and Boston Consulting Group, an article from The Economist, “Do McKinsey and other consultants do anything useful?,” explored whether ethical lapses, questionable conduct and often-hidden conflicts are hurting the consulting industry’s reputation and whether their advice is worth the risks for any organization, including consumer brands and retailers.
On a follow-up podcast, Thomas Lee Devlin, the author and a former Bain consultant, believes consultants still provide value in offering a “second opinion” in tackling major resets and their “specialist knowledge.”
He believes, however, that the consulting industry’s outsized growth — catapulted in recent years by digital transformation, ESG goals and consultancies taking on more active roles in projects beyond advice — has been accomplished without enough oversight and risk assessment.
Mr. Devlin believes “thorny questions,” such as consultants advising both “regulators and the regulated” and working with governments and state-owned enterprises, may require regulation. A “clear and transparent code of conduct at least is required” to ensure consultancies aren’t profiting by harming customers.
Mr. Devlin said, “It's fair to say that years of rapid growth have created conditions for disreputable behavior to thrive. A firm with a few 100 partners can get by on the basis of personal ties and a sense of mutual duty, but a firm with a few 1,000 partners requires something different.”
- McKinsey Is a Consulting Powerhouse. But Is It a Force for Good? – The New York Times
- The scandals and hypocrisy behind McKinsey’s sterling reputation – The Washington Post
- Advising both Chinese state companies and the Pentagon, McKinsey & Co. comes under scrutiny – NBC News
- How McKinsey cashed in by consulting for both companies and their regulators – NPR
- When McKinsey Comes To Town — inside the global consulting giant – Financial Times
- Statement on the future of the EY organization – Ernst & Young
- Money Talks: Managing The Consultants – Spotify
- Do McKinsey and other consultants do anything useful? – The Economist