James O. McKinsey

James Oscar McKinsey
James Oscar McKinsey
Born	Template:Birth date; Gamma, Missouri, U.S.
Died	November 30, 1937 (aged 48)
Occupation(s)	Accountant, management consultant, professor
Known for	Founder of McKinsey & Company

James Oscar McKinsey (June 4, 1889 – November 30, 1937) was an American accountant, management consultant, professor specializing in accounting at the University of Chicago, and the founder of McKinsey & Company.

Biography

Born in 1889 in Gamma, Missouri, McKinsey was the son of James Madison McKinsey and Mary Elizabeth (Logan) McKinsey. He pursued teacher training at Warrensburg Teachers College (currently known as the University of Central Missouri), where he earned a Bachelor of Pedagogy degree in 1912.

Following this, he studied law at the University of Arkansas, receiving a Bachelor of Laws in 1913. In 1914, he served as an instructor in bookkeeping at St. Louis University. McKinsey continued his education at the University of Chicago, obtaining a Bachelor of Philosophy in 1916 and a Master of Arts in commerce by 1917. After being drafted into the United States Army in 1917, he advanced from private to lieutenant within the Ordnance Department and was discharged in 1919. During his military tenure, he identified inefficiencies affecting logistics operations.

Between 1917 and 1920, McKinsey held positions as an instructor and assistant professor of accounting at the University of Chicago and achieved certification as a public accountant in Illinois in 1919. He married Alice Louise Anderson in 1920, with whom he had two children. From 1920 to 1921, he lectured on accounting at Columbia University.

Further career

McKinsey authored several textbooks on accounting and taxation before publishing his seminal work Budgetary Control in 1922, which is recognized as the pioneering comprehensive guide on budgeting. At a time when budgeting was largely confined to government use, he championed its adoption by businesses as a means to evaluate performance through adherence to predetermined budgets.

In 1924, he released Managerial Accounting and Business Administration. In Managerial Accounting, McKinsey emphasized utilizing accounting information to enhance operational efficiency via financial benchmarks. Business Administration served as the foundation for his 1931 General Survey Outline—a concise 30-page framework designed to evaluate a company’s financial status, organizational structure, and market competitiveness. These publications were distinguished by their methodical scientific analysis. That same year, McKinsey became president of the American Association of University Instructors in Accounting and contributed to founding its scholarly journal, The Accounting Review.

In 1925, McKinsey established James O. McKinsey & Company based in Chicago and acted as senior partner until 1935. Although promoted to full professorship at the University of Chicago in 1926, his teaching duties diminished due to growing business obligations. In 1935, Marshall Field & Company engaged McKinsey to resolve $12 million in losses accumulated since 1930 alongside an $18 million loan repayment challenge. After thorough consulting across retail outlets, manufacturing plants, and wholesale divisions, he advised concentrating exclusively on retail operations by divesting factories and discontinuing wholesaling activities. Subsequently, Marshall Field’s board appointed him chairman and CEO in October 1935. Concurrently, McKinsey served on boards for Kroger, the Armour Institute of Technology, among other institutions.

He designated Andrew Thomas Kearney as managing partner for the Chicago office and was elected chairman of the American Management Association in 1936.

As noted in the History of Accounting: An International Encyclopedia, McKinsey successfully transformed Marshall Field’s financial losses into profitability but likely at the expense of his health; he passed away from pneumonia on November 30, 1937.

Selected publications

Hodge, Albert Claire and James Oscar McKinsey, Principles of Accounting, University of Chicago Press, 1920. [1]
McKinsey, J.O., Bookkeeping and Accounting, Volume 1, South-Western, 1920. [2]
McKinsey, J.O., Bookkeeping and Accounting, Volume 2, South-Western, 1920. [3]
McKinsey, James O., Budgetary Control, The Ronald Press, 1922. [4]
McKinsey, James Oscar, Managerial Accounting, University of Chicago Press, 1924.
McKinsey, James O., Business Administration, South-Western Publishing Co., 1924.

References

Works cited

Kahle, John J., American Accountants and Their Contributions to Accounting Thought, 1900–1930, Routledge, 2014 (originally published 1993)
McDonald, Duff, The Firm: The Story of McKinsey and Its Secret Influence on American Business, Simon & Schuster, 2013

Notes