McKinsey & Co.’s leadership battle: Navigating growth, controversy, and shifting sands – Chris Hughes

In the high-stakes world of McKinsey & Co., the battle for Global Managing Partner is underway. With 45,000 employees and a flat organisational structure, the 750 senior partners face a run-off, pitting incumbent Bob Sternfels against Rodney Zemmel. Amidst growth and controversial decisions, the challenge lies in balancing compliance, profitability, and cultural shifts. As McKinsey evolves, the next leader must navigate political intricacies, changing demands from clients, and the cultural shifts of a new generation, ensuring the consultancy remains agile and effective in an increasingly complex business landscape..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..By Chris Hughes.It's a big year for elections — and that includes McKinsey & Co.'s poll to pick the Global Managing Partner for the next three years..___STEADY_PAYWALL___.As in so many elections, there's a difference between the skills needed to get the job and those required once elected..McKinsey has grown even bigger in recent years and employs some 45,000 people. Yet the world's most renowned management consultancy still has a relatively flat organizational structure, and the partner at the helm is more first-among-equals than a conventional chief executive officer..The 750 senior partners go through potentially three voting rounds seeking a winner with simple majority support. That didn't happen at the first and second stage, and now incumbent Bob Sternfels faces a run-off against Rodney Zemmel, the head of digital, the Financial Times reported Thursday. That's awkward for Sternfels. He came to the role after a three-rounder in 2021, when his predecessor Kevin Sneader failed to secure a second term. It's notable that the partners are again hesitant about the continuity candidate..Sneader and Sternfels both made decisions that proved unpopular in some quarters. Sneader's task was to lead the firm's response to its involvement in a corruption scandal in South Africa and then to the intense public, political and legal furor surrounding its work advising the pharmaceutical industry on how to "turbocharge" sales of opioids. He imposed greater controls on client vetting, while agreeing to costly legal settlements. Partners accustomed to acting with autonomy and little oversight have since faced heightened scrutiny..Sternfels has continued the investment in compliance while simultaneously cutting 1,400 back- and middle-office positions elsewhere. Headcount reductions should ultimately boost the partner profit share, but big cutbacks are never a good look. And if McKinsey had become bloated, Sternfels can't easily distance himself from criticism given he was closely involved in operational management before getting the top role..How to win? Clearly, the process can get very political and personal. You don't want to have made too many enemies on the way up — let alone be on the wrong side of a faction presiding over a slab of votes. Partners will want someone who comes across as a good ambassador externally. But the question of who will deliver the biggest profit share will loom large..Read more: 🔒 FT – Why the World's biggest political leaders are so unpopular.Now consider the challenges that McKinsey's leader has to deal with once in the job..The priority is still inculcating a culture that prevents partners doing business they shouldn't, so that compliance is the last line of defense. On top, there are other fundamental questions about McKinsey's governance and what it exists to do..The client base for management consulting has gotten wiser. It used to be easy to impress CEOs by telling them things they didn't know. Put a team of ambitious junior consultants in the client's facilities for a few weeks and they'd give their supervising partner the ammunition for a slick presentation showing the granular profitability of individual products and where easy savings could be made. Or they'd establish that returns would be much higher if only the firm's widget factories were repurposed as data centers. Mix with a few insights on industry trends, and executives doubtless felt that consultants helped them make, take and justify difficult decisions — all in 25 slides..Big corporations today have their own strategy departments, likely staffed by former partners from McKinsey or rivals Boston Consulting Group or Bain & Co. CEOs may still need external validation for radical departures or painful cuts, but boards aren't so easy to wow these days. Perhaps that explains why management consulting has expanded sideways into new (and arguably riskier) geographic markets or accepted more so-called "implementation" work, the hands-on job of, say, reconfiguring customer billing processes..Of course, there's still demand for help with knotty questions — how to respond to a pandemic or the threat of AI, and how to secure supply chains amid geopolitical tension, to name a few examples. But even on these, the big three firms face pressure from more specialized boutiques..Meanwhile, there are emerging cultural challenges. A new generation of graduates is pushing back on working 24/7 — a direct challenge to a model that harnesses keen, bright young staffers to do the long hours of legwork underpinning a partner's PowerPoint..Above all, McKinsey is getting very big for a supposedly non-hierarchical institution. Headcount is about 60% higher than it was in 2018, and the senior partner ranks have swelled by more the one-third. Today it must feel more like a conventional multinational corporation than the close-knit partnership it started out as. Pushback on the re-appointment of the incumbent leaders shows that the problems of maturity aren't easily managed by consensus. Whoever wins the current election needs to show both that McKinsey is leadable, and that they can lead it..Read also:.Boeing's redemption battle: Near-disaster sparks FAA scrutiny🔒 Geopolitical crossroads: 'Missile Gap', global tensions test America's leadership – Marc Champion🔒 FTX benefited from venture capitalists' suspension of disbelief.© 2024 Bloomberg L.P.

McKinsey & Co.’s leadership battle: Navigating growth, controversy, and shifting sands – Chris Hughes

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