McKinsey & Company

McKinsey & Company
Company type	Private
Industry	Management consulting
Founded	January 1, 1926; 100 years ago in Chicago, United States
Founder	James O. McKinsey
Headquarters	New York City, United States
Area served	Worldwide
Products	Professional advisory services, strategy consulting, management consulting
Number of employees	Not specified (over 7,700 in late 1990s)

McKinsey & Company—commonly referred to as McKinsey or McK—is a prominent American multinational firm specializing in strategy and management consulting. It delivers professional advisory services to corporations, governments, and various organizations. Established in 1926 by James O. McKinsey, it stands as the oldest and largest among the "MBB" firms, with a primary concentration on clients’ financial and operational challenges.

During the 1940s and 1950s, under the leadership of Marvin Bower, McKinsey extended its operations into Europe. In the 1960s, Fred Gluck of McKinsey collaborated with leaders from Boston Consulting Group, Bain & Company, and Harvard Business School to develop initiatives that reshaped corporate culture. A notable 1975 work by McKinsey’s John L. Neuman introduced the concept of "overhead value analysis," which played a role in the downsizing trend that significantly reduced middle management positions.

Recognized for its rigorous recruitment standards, McKinsey is considered one of the most selective employers worldwide. The firm predominantly hires from elite business schools and was among the pioneers in recruiting candidates holding advanced degrees such as PhDs who exhibit strong analytical capabilities alongside business insight. McKinsey also publishes the business periodical McKinsey Quarterly.

The company has been subject to considerable controversy, including several criminal probes into its business conduct. Critiques focus on its involvement in promoting OxyContin amid the Opioid epidemic in the United States, its association with Enron, and partnerships with authoritarian governments including those of Saudi Arabia and Russia. The US Department of Justice is actively investigating McKinsey’s role in the opioid crisis, including a grand jury inquiry into allegations of obstruction of justice. Furthermore, McKinsey maintains collaborations with leading fossil fuel companies aiming to boost fossil fuel consumption.

Early history

Founded in 1926 in Chicago by James O. McKinsey, an accounting professor at the University of Chicago, McKinsey & Company originated from McKinsey’s observations of inefficiencies among military suppliers during his tenure with the United States Army Ordnance Department. Initially branded as an "accounting and management firm," it focused on applying accounting principles as tools for management improvement. Early key personnel included AT Kearney, who joined in 1929, and Marvin Bower, hired in 1933.

Beginning in 1937, Bower—drawing on his legal expertise—was instrumental in defining McKinsey’s foundational values and corporate ethos. He implemented the "up or out" policy mandating that consultants not promoted must depart from the firm. Bower enshrined principles prioritizing client interests above firm profits, maintaining confidentiality, insisting on honesty even when it challenged clients, and concentrating solely on work that McKinsey could execute exceptionally well. He also emphasized engaging directly with CEOs and clients dedicated to enacting recommendations. Bower is credited with crafting McKinsey’s unique professional culture and terminology.

In 1932, McKinsey opened a second office in New York City. In 1935, James O. McKinsey temporarily left to assume chairman and CEO roles at client company Marshall Field's. That same year, McKinsey merged with accounting firm Scovell, Wellington & Company to create McKinsey, Wellington & Co., headquartered in New York; meanwhile, the accounting segment separated as Wellington & Company in Chicago. Internal tensions emerged between Kearney—who favored a Chicago-centered model staffed by experienced accountants—and Bower—who advocated for national expansion and recruitment from business schools.

Following James O. McKinsey’s death from pneumonia in 1937, the firm split in 1939: the accounting division reverted to Scovell, Wellington & Company, while management consulting divided into McKinsey & Company and McKinsey, Kearney & Company. Bower joined forces with Guy Crockett from Scovell Wellington to invest in the newly restructured McKinsey & Company and became managing partner. He is acknowledged for laying down the firm’s lasting strategic direction and values. In 1946, the New York office secured exclusive rights to use the McKinsey name from Chicago, which then became AT Kearney.

Years of Expansion

During the 1940s and 1950s, McKinsey & Company experienced significant growth, particularly across Europe. By 1951, the firm employed 88 individuals, a number that increased to over 200 by the 1960s, with 37 consultants based in London by 1966. At that time, McKinsey maintained six offices in key American cities—including San Francisco, Cleveland, Los Angeles, and Washington D.C.—as well as six international locations primarily in Europe (London, Paris, Amsterdam) and Melbourne. Approximately one-third of the firm's revenue was generated from its European branches. In 1959, Guy Crockett stepped down as managing director, with Marvin Bower succeeding him. The year 1951 also saw the introduction of profit-sharing and executive committees. Following World War II, McKinsey broadened its clientele to encompass government agencies, defense contractors, leading corporations, and military institutions. In 1956, the firm transitioned into a private corporation fully owned by its employees.

After Bower’s departure in 1967, McKinsey's revenues experienced a downturn due to intensifying competition from emerging consultancies such as Boston Consulting Group and Bain & Company, which differentiated themselves with proprietary tools like the Growth–Share Matrix and a focus on sector-specific expertise. In response, McKinsey’s 1971 Commission on Firm Aims and Goals recommended decelerating geographic expansion to concentrate on developing specialized industry knowledge.

In 1975, consultant John L. Neuman published "overhead valuation analysis" (OVA) in Harvard Business Review, which influenced McKinsey’s strategy to streamline operations by reducing excessive middle-management layers.

Ron Daniel led the firm as managing director from 1976 until 1988, steering McKinsey away from a broad generalist approach toward establishing 15 specialized Centers of Competence and practice domains such as Strategy, Operations, and Organization. He also launched initiatives in knowledge management through an IT platform designed to monitor client engagements and consolidate expertise internally. By 1988, McKinsey was expanding again with new offices opened in cities including Rome, Helsinki, São Paulo, and Minneapolis.

Under Fred Gluck’s leadership from 1988 to 1994, the company’s revenues doubled. He restructured the organization into 72 distinct "islands of activity," grouped under seven industry sectors and seven functional areas. By 1997, McKinsey had expanded eightfold compared to its size in 1977. The acquisition of Information Consulting Group (ICG) for $10 million in 1989 aimed to enhance IT consulting capabilities but faced cultural integration challenges that led to significant staff attrition by 1993.

Rajat Gupta became the first managing director born outside the United States in 1994. During his leadership tenure, employee numbers surged from 2,900 to 7,700 while office locations increased from 58 to 84 globally, including new sites in Moscow, Beijing, and Bangkok. Gupta established 16 industry-focused groups to deepen market expertise and implemented a three-term limit for managing directors. In the late 1990s, practice areas dedicated to manufacturing and business technology were introduced.

Throughout the 1990s, McKinsey launched "accelerators," accepting equity stakes as payment to support internet startups; between 1998 and 2000 the firm completed over a thousand e-commerce projects. A New York Times feature highlighted McKinsey’s intensive training programs designed to prepare consultants for advising multibillion-dollar enterprises across multiple industries.

Following the dot-com crash, consultant utilization rates dropped from 64% to 52%. Despite revenue declines and losses linked to equity-based payments during the recession of 2001, McKinsey avoided layoffs but implemented price reductions and hiring slowdowns. The firm expanded its public sector and social impact consulting practices beginning in 2001, frequently offering pro bono services. Investment in knowledge management increased substantially from $8.3 million in 1999 to $35.8 million by 2002. Revenue streams at that time were roughly divided into half from strategy consulting, with operations accounting for about one-fifth and technology consulting making up nearly one-third.

Ian Davis was appointed managing director in 2003 and committed to reaffirming core values after rapid growth had raised concerns about diluting the company’s foundational culture. That same year saw the establishment of McKinsey’s Asia-Pacific headquarters in Shanghai; by 2004 more than sixty percent of revenues originated outside the United States. Founded in 2008, the Social Sector Office (SSO) coordinates pro bono engagements across areas such as Global Public Health, Economic Development and Opportunity Creation (EDHOC), and Philanthropy practices. The Business Technology Office (BTO), launched earlier in 1997, concentrates on technology strategy consulting services. By 2009, McKinsey had expanded its leadership ranks to include approximately four hundred directors (senior partners), up from one hundred fifty-one in 1993. Dominic Barton was elected managing director that year and subsequently re-elected in both 2012 and 2015.

Recent developments

Rajat Gupta and McKinsey executive Anil Kumar were found guilty in a government probe concerning insider trading, having disclosed confidential details to hedge fund manager Raj Rajaratnam. Although McKinsey itself was not directly implicated, these convictions significantly tarnished the firm's reputation for maintaining integrity and safeguarding client confidentiality. In the aftermath, McKinsey terminated its relationships with both senior partners involved.

Anil Kumar, who was a mentee of Gupta, departed from McKinsey in 2009 and admitted guilt in 2010. During efforts to provide consulting services to the Galleon Group, Kumar breached McKinsey’s confidentiality rules by engaging in a private consulting arrangement with Rajaratnam. Gupta was convicted in 2012 on charges of conspiracy and securities fraud for passing insider information obtained from board meetings to Rajaratnam. Despite his conviction, Gupta continued to receive senior partner emeritus benefits, including an office, administrative support, and a retirement package totaling $6 million that year.

In reaction to these events, McKinsey strengthened its policies to prevent similar violations and conducted a thorough review of employee associations with Gupta. In February 2018, Kevin Sneader was appointed managing director for a three-year term commencing July 1, 2018.

Throughout the 2019 COVID-19 pandemic, McKinsey secured more than $100 million in government consulting contracts, including no-bid agreements with the United States Department of Veterans Affairs and the United States Air Force. Nevertheless, its involvement in formulating reopening protocols for Miami-Dade County in Florida drew criticism over their complexity and lack of transparency.

In 2021, McKinsey shut down its investment banking advisory division citing "personnel matters." That same year, the Australian branch expanded by acquiring Hypothesis, a digital product development company, along with Venturetec, an innovation consultancy. On June 1, 2022, McKinsey completed the acquisition of Caserta, a firm specializing in data engineering. In March 2023, the company announced an uncommon workforce reduction involving 1,400 employees as part of organizational restructuring.

Structure

Initially established as a partnership, McKinsey & Company transitioned into a private corporation owned by partners in 1956. Despite this change, it maintains a partnership-like framework where senior staff hold the title of "partners." The firm operates with a flat organizational hierarchy and assigns mentors to each member. Since the 1960s, the managing director has been selected by senior directors for terms up to three periods of three years each or until reaching mandatory retirement at age 60. Additionally, management includes committees responsible for overseeing specific functional areas.

By 2013, McKinsey had adopted a decentralized operational approach where individual offices operate similarly but maintain independence. While budgeting processes are centralized, consultants benefit from considerable autonomy. As a global entity without a conventional headquarters, the managing partner chooses their base office location.

Consulting services

McKinsey & Company provides a range of strategy and management consulting offerings, which include guidance on acquisitions, restructuring sales teams, formulating business strategies, and advising on workforce reductions. As detailed in The McKinsey Way (1999), consultants develop and carry out analyses to assess managerial choices by gathering data and conducting interviews to validate assumptions, typically delivering their conclusions through PowerPoint presentations and printed reports.

The firm customarily sets its fees approximately 25% above those of its competitors. Typical engagements, often referred to as "studies," span from two to twelve months and involve teams of three to six consultants. These teams are overseen by a regional generalist leader and supported by experts specializing in specific industries or functions. Unlike some consulting firms, McKinsey allows consultants to serve multiple competing clients, although individual consultants are prohibited from doing so.

Recruiting

In 1953, McKinsey became one of the first firms to prioritize hiring recent graduates rather than solely experienced managers. Its strict "up-or-out" system, initiated in 1951, mandates that consultants who fail to secure promotion within a designated timeframe must leave the company; by 1997, this policy resulted in approximately 20% annual attrition among consultants. This approach was inspired by Marvin Bower’s background at prominent law firms such as Jones Day and Cravath.

The company is regularly acknowledged as the top consulting employer worldwide. In 2018 alone, it attracted 800,000 applicants for roughly 8,000 available positions. Although a significant portion of new hires hold MBAs, by 2009 fewer than half had business degrees; many came from advanced academic backgrounds in fields such as science, medicine, engineering, or law.

Culture

A 1993 Fortune article characterized McKinsey & Company as "the most renowned, most secretive, highest-priced, most prestigious, most consistently successful, most envied, most trusted, and most disliked management consulting firm globally." The firm asserted that its consultants were driven by factors beyond financial gain and that partners communicated with genuine respect and admiration. However, a cultural conflict in the early 1990s led to the exit of 151 out of 254 members of the ICG division.

Writers James O'Shea and Charles Madigan likened McKinsey’s culture to a form of religion due to the deep loyalty and fervor among its personnel. The company enforces a strict policy prohibiting discussion of specific client projects. In 1997, The News Observer depicted McKinsey’s workplace environment as "collegial yet fiercely competitive" and occasionally marked by arrogance. Ethan Rasiel’s 1999 publication highlighted that consultants were discouraged from aggressively marketing their services.

The Sunday Times recognized McKinsey as an industry trailblazer for being the first firm to recruit MBA graduates from leading business schools instead of relying primarily on seasoned industry veterans. By 2005, the firm maintained a discreet public profile. According to The Guardian, McKinsey’s work culture involved demanding hours, elevated expectations, and little tolerance for failure. A Reuters article from 2009 described its culture as formal and heavily rule-oriented.

In his 2013 book, Duff McDonald revealed that consultants are expected to embed themselves within communities and attract clients through involvement in churches, charitable organizations, and board memberships. Internally, McKinsey refers to itself as "The Firm," while employees are called "members." Nonetheless, BusinessWeek portrayed it as a "declining empire," affected by overconfidence and evolving circumstances. In 2020, Daniel Markovits argued in The Atlantic that McKinsey prioritizes intellectual prowess and prestigious credentials over practical experience relevant to client needs, fostering a merit-based culture.

Influence

A significant number of McKinsey's former consultants ascend to CEO positions or assume influential government roles, thereby disseminating the firm's principles and culture across various sectors. These individuals have been appointed as senior leaders within prominent corporations. Walter Kiechel, in his 2010 work The Lords of Strategy: The Secret Intellectual History of the New Corporate World, attributed a transformation in corporate management and strategic thinking to McKinsey’s Fred Gluck, alongside executives from Boston Consulting Group, Bain & Company, and Harvard Business School.

McKinsey has been associated with several high-profile controversies involving key clients and governmental bodies, including cases such as Enron (2001), Galleon (2009), Valeant (2015), Saudi Arabia (2018), China (2018), ICE (2019), conflicts of interest within the firm (2019), and Purdue Pharma (2019). By 2019, major media outlets like The New York Times and ProPublica had expressed concerns regarding McKinsey’s operational conduct.

Research and publishing

Consultants at McKinsey & Company consistently produce books, studies, and articles focused on business management. The firm allocates between $50 million and $100 million annually toward research initiatives. As an early supporter of management research, McKinsey established the Foundation for Management Research in 1955. The company launched The McKinsey Quarterly in 1964 and sponsors the McKinsey Global Institute, created in 1990 to analyze worldwide economic patterns. In 2020, McKinsey introduced the McKinsey Institute for Black Economic Mobility to promote inclusive economic growth and racial equity on a global scale. Numerous consultants contribute regularly to the Harvard Business Review. While only two books were published by McKinsey between 1960 and 1980, this number surged to over 50 from 1980 through 1996, enhancing the firm’s reputation as a "quasi-academic" authority.

One influential work, In Search of Excellence (1982), examined 43 leading companies to identify eight traits common to successful enterprises, marking a pivot toward softer management dimensions such as organizational culture and skills. Although widely embraced by practitioners for its practical insights, the book faced criticism from academics regarding its research methods. A 1984 BusinessWeek review revealed that many companies profiled no longer satisfied the success criteria shortly after publication.

McKinsey’s 1997 article and subsequent 2001 book titled "The War for Talent" shaped talent management strategies by emphasizing that top-performing organizations focus on recruiting and developing exceptional talent. This framework promoted ranking employees based on performance, elevating high achievers, and addressing poor performers—concepts later scrutinized in light of the Enron scandal. Detractors contended that this approach risked undermining overall organizational well-being.

The 2001 book Creative Destruction encouraged CEOs to welcome transformation instead of clinging to legacy assets, highlighting that only 74 of the original 1957 S&P 500 companies remained by 1998. The New York Times underscored its argument that success can impede adaptability amidst rapid industry changes. In 2009, The Alchemy of Growth introduced a framework consisting of three growth horizons: enhancing core business, developing new platforms, and exploring future options.

In February 2011, McKinsey conducted a survey involving 1,300 private-sector employers in the United States regarding their anticipated responses to the Affordable Care Act (ACA). Thirty percent indicated plans to discontinue employer-sponsored health benefits following ACA’s rollout in 2014. Published in McKinsey Quarterly, these results generated debate—being cited by ACA opponents while reform advocates challenged the study’s methodology. Two weeks later, McKinsey released comprehensive survey data clarifying that it reflected employer sentiments at a particular moment rather than predictive outcomes.

Since its inception in 1990, McKinsey has issued Valuation: Measuring and Managing the Value of Companies, regarded as a premier textbook on corporate valuation. In 2022, senior partners Carolyn Dewar, Scott Keller, and Vikram Malhotra authored CEO Excellence, published by Scribner, further solidifying McKinsey’s influence in executive leadership thought leadership.

Environmental consulting

Marginal abatement cost (MAC) curves, which evaluate the economic expenses associated with various pollution reduction measures, are extensively utilized in emissions trading, policymaking, and incentive design. McKinsey & Company first introduced its greenhouse gas emissions MAC curve in 2007, with a subsequent revision in 2009. This particular curve has gained widespread recognition and underpins McKinsey’s advisory services in climate change and sustainability. Notably, it identifies some abatement options with negative costs, a feature that has sparked debate among economists. The International Association for Energy Economics has highlighted its appeal to policymakers by showcasing opportunities to enhance energy efficiency without imposing societal costs.

However, critics such as the Rainforest Foundation UK contend that McKinsey’s approach omits critical implementation and governance expenses, thereby favoring industrial forestry projects over subsistence initiatives. Greenpeace accused the curve of enabling countries like Indonesia and Guyana to obtain UN financial incentives by artificially inflating deforestation baselines. In response, McKinsey clarified that their cost curves are not intended as direct policy directives and recommend considering a comprehensive set of factors prior to legislation.

In April 2022, McKinsey’s "Global Energy Perspective" projected that fossil fuel consumption would peak between 2023 and 2025, with fossil fuels accounting for approximately 43% of energy use by 2050 and emissions reaching their highest point before 2030. The September 2024 update adjusted this outlook, forecasting fossil fuel consumption to stabilize between 2025 and 2035, remaining a substantial energy source—comprising 40% to 60% by mid-century—amid geopolitical tensions, increasing electricity demand driven partly by artificial intelligence, and challenges in technological transition. The report emphasized that the low cost of renewables might reduce profitability for traditional energy producers, necessitating regulatory frameworks to encourage adoption.

Moreover, McKinsey’s "Global Materials Perspective" underscored that the shift toward clean energy will require extensive mining of diverse materials. Although coal extraction is expected to decline, emissions from mining and metal industries are projected to decrease only slightly—from 15% down to 13%—by 2035.

Significant consulting projects

James O. McKinsey, the firm’s founder, pioneered budget planning as a managerial tool in his 1922 publication Budgetary Control. The company’s inaugural client was Armour & Company’s treasurer, who had encountered this work. In 1931, McKinsey created the General Survey Outline (GSO), a framework for corporate analysis initially favored by banking institutions. Following the enactment of the Wagner Act in 1935, the firm began advising on labor relations and later shaped executive compensation trends during the 1950s. Additionally, McKinsey provided strategic support to firms such as Heinz, IBM, and Hoover during their European expansion efforts.

Throughout the 1940s, McKinsey played a role in helping businesses transition to wartime production amid World War II and assisted in structuring NASA’s contractor-based organization in 1958. A report delivered in 1953 influenced presidential appointments under Dwight D. Eisenhower’s administration. In 1973, McKinsey contributed to the development of the barcode system through a project that persuaded Kroger to implement it widely.

During the 1970s and 1980s, McKinsey aided European companies in adopting the multidivisional (M-form) organizational model, which segments firms into semi-independent units based on product lines or markets. However, its forecast for AT&T’s cellular subscriber growth during the 1980s significantly underestimated actual demand. In 1999, Sinochem engaged McKinsey to enhance management practices and internal controls—the first foreign consultancy contract awarded by a central Chinese state-owned enterprise.

The firm orchestrated a $1 billion bankruptcy rescue for Dutch steelmaker Hoogovens and contributed to initiatives addressing unemployment and crime reduction in Glasgow. It also structured NationsBank (which later became Bank of America) when it operated as North Carolina National Bank. McKinsey’s comprehensive restructuring plan for General Motors aimed at boosting competitiveness against Japanese automakers faced criticism for lacking effectiveness, with reports indicating GM did not fully implement the recommendations.

A BusinessWeek article from 2002 scrutinized McKinsey’s involvement following multiple client bankruptcies during the 1990s, including Swissair and Kmart. Swissair’s collapse followed advice from McKinsey to cut operating expenses by forming partnerships funded through acquiring shares of struggling airlines.

Internal documents disclosed during litigation involving Allstate revealed that McKinsey recommended strategies focused on lowering insurance claim payouts by settling claims at minimal amounts and delaying claim processing to improve profitability. While this approach doubled Allstate’s profits over a decade, it also triggered lawsuits alleging unfair claimant treatment.

Engagement with Fossil Fuel Corporations

McKinsey has partnered with leading fossil fuel companies such as Saudi Aramco, Shell, and BP. The firm recognizes that "fossil fuels will remain part of the global energy portfolio to satisfy demand." Internal projections from 2021 indicated that emissions from their clients could contribute to a temperature rise between 3 to 5 degrees Celsius, with over half of the world’s most polluting entities represented in their client base. Critics have labeled McKinsey’s sustainability initiatives as efforts primarily aimed at improving corporate image. The consultancy is also involved in the Oil Demand Sustainability Programme (ODSP), a Saudi-led initiative designed to boost fossil fuel consumption across Africa and Asia.

Involvement with US Immigration and Customs Enforcement (ICE)

McKinsey ended its consulting relationship with US Immigration and Customs Enforcement (ICE) after reports disclosed the company had received more than $20 million for advisory services. Managing partner Kevin Sneader acknowledged the concerns that arose following the contract’s exposure. Investigations revealed that McKinsey recommended reductions in funding for migrant food and medical care, alongside advocating for expedited deportation processes, raising serious questions about due process. Earlier statements by McKinsey denying participation in shaping immigration policies were contradicted by documents that later surfaced.

Participation in Saudi Repression of Dissidents

In October 2018, after the assassination of Jamal Khashoggi, The New York Times revealed that McKinsey had identified prominent Saudi dissidents on Twitter, which was followed by government crackdowns on these activists and their families. Among those affected were Khalid al-Alkami, who was detained, and Omar Abdulaziz in Canada, whose brothers were imprisoned and whose phone was hacked. McKinsey expressed it was "deeply disturbed by the remote possibility that [the report] could have been exploited" and launched an inquiry into how the information was disseminated. Despite the controversy, McKinsey took part in a major Saudi investment forum in December 2018, underscoring the kingdom’s significance as a client with nearly 600 projects completed between 2011 and 2016. In February 2019, the Greens/EFA group in the European Parliament criticized foreign consultancies, including McKinsey, for aiding Saudi Arabia’s image management.

Disclosure Issues Regarding Saudi Influence

In February 2024, McKinsey came under judicial examination over potential breaches of federal disclosure laws. Alongside three other consulting firms, it faced allegations of failing to disclose work performed for Saudi Arabia’s Public Investment Fund and not registering as representatives of the Saudi government. Company officials cautioned that employees could face imprisonment if they complied with subpoenas due to Saudi restrictions on sharing information with US authorities.

Support for Authoritarian Regimes

McKinsey’s consultancy work and policy backing for authoritarian regimes attracted attention in December 2018 after a company retreat took place near detention centers holding thousands of Uyghurs without justification in China. In December 2021, NBC News reported McKinsey’s connections to a manufacturing plant owned by DJI, a drone manufacturer sanctioned by the United States Department of the Treasury for alleged involvement in Uyghur persecution. In recent years, McKinsey’s clientele has included Saudi Arabia’s absolute monarchy, Turkey’s authoritarian leader Recep Tayyip Erdogan, former Ukrainian president Viktor Yanukovych, as well as numerous Chinese and Russian firms subject to sanctions.

China

In 2015, McKinsey's Urban China Initiative played an advisory role for the Chinese government regarding its 13th five-year plan and the Made in China 2025 strategy. According to a 2024 report by the Financial Times, McKinsey suggested to China's National Development and Reform Commission that there should be an intensified collaboration between commercial enterprises and the military, alongside efforts to exclude foreign firms from sensitive sectors. This prompted US lawmakers Marco Rubio and Michael McCaul to accuse McKinsey of compromising American national security and advocate for prohibiting the company from obtaining US federal contracts. In October 2024, multiple members of the US Congress called upon the Department of Justice to examine whether McKinsey had misrepresented its engagements with Chinese governmental bodies, including state-owned companies. On October 18, 2024, the US House Select Committee on the CCP declared that "McKinsey Equipped America's Foremost Adversary and Misrepresented Work for the Chinese Military Under Oath."

Work with Russian arms manufacturers

Reports indicate that McKinsey provided consulting support to Rostec, a Russian state-owned corporation involved in producing missile engines utilized in Russia’s military operations in Ukraine. A January 2023 report by Die Zeit revealed that McKinsey consultants simultaneously advised Gazprom and Rostec while also serving Germany’s Federal Ministry of Defence. US Senator Maggie Hassan pointed to a "pattern of behavior" by McKinsey that raises serious "conflicts of interest" concerns. Additionally, the firm has collaborated with Kremlin-affiliated organizations such as Sberbank, VTB Bank, Gazprom, and Rosneft.

Controversies

McKinsey has been implicated in numerous high-profile controversies, including its association with Enron's collapse in 2001, involvement in the 2008 global financial crisis, and enabling state capture in South Africa. The firm has also faced scrutiny over its ties to Purdue Pharma, US Immigration and Customs Enforcement, and authoritarian governments. Journalists Michael Forsythe and Walt Bogdanich authored When McKinsey Comes to Town, which explores the firm’s contentious ethical track record.

Enron

Jeff Skilling, who founded Enron, was a McKinsey consultant for over two decades, during which time McKinsey undertook approximately twenty projects for Enron. The consultancy assisted Enron in shifting its focus from oil and gas production toward trading electric commodities, a move that significantly increased its profits and revenue streams. Though McKinsey was neither investigated nor found culpable in the scandal, critics contend that Enron’s leadership arrogance mirrored aspects of McKinsey’s corporate culture. The government did not pursue an inquiry into McKinsey, which maintained it did not provide advice on Enron’s accounting practices.

The Wall Street Journal raised questions about McKinsey’s potential responsibility due to its close relationship with Enron. A 2002 BusinessWeek article suggested that warning signs were overlooked by the firm. In July 2002, John Byrne’s article in BusinessWeek characterized McKinsey as a principal architect behind Enron’s strategic direction, prompting debate over whether risk factors were ignored to preserve a key client relationship. The piece also highlighted how McKinsey’s expansion—from 427 to 891 partners—had diminished its personal touch; some consultants remarked that this growth led to a loss of core values. The firm moved away from serving exclusively elite clients toward less prestigious ones and shifted its priorities from knowledge development toward revenue generation. McKinsey denied these allegations as well as claims that it advised Enron on financing or suspected improper accounting methods.

2008 financial crisis

McKinsey was significantly involved in the 2008 financial crisis through its promotion of mortgage-backed securities and its advice to banks to increase leverage on their balance sheets, thereby escalating systemic vulnerabilities that contributed to the credit collapse of 2008. Furthermore, McKinsey counseled Allstate Insurance to minimize claim payouts by making the claims process expensive and protracted, discouraging claimants from seeking legal representation. In 2016, McKinsey partner Navdeep Arora was found guilty of unlawfully diverting over $500,000 from State Farm in partnership with an employee.

Valeant

The Canadian pharmaceutical firm Valeant, which came under scrutiny by the SEC in 2015 for questionable accounting practices and aggressive price increases, maintained extensive ties to McKinsey. According to the Financial Times, although McKinsey was not solely responsible for Valeant’s downfall, its influence was deeply embedded. Half of Valeant’s top executives were former McKinsey consultants, including the chairperson of the talent and compensation committee. McKinsey also provided guidance on drug pricing strategies and acquisition plans, while MIO Partners, a private equity investor in Valeant, had connections with McKinsey.

Role in opioid epidemic

McKinsey advised manufacturers of opioids on tactics designed to substantially boost OxyContin sales while countering emotional pleas from affected families and evading regulatory constraints. The firm suggested Purdue Pharma implement rebate programs for pharmacies based on the number of overdoses and addiction cases linked to their medications. In 2019, McKinsey estimated that over 2,400 CVS customers would experience overdose or opioid dependency, projecting that Purdue would owe CVS $36.8 million in rebates that year.

In February 2021, McKinsey reached a settlement with attorneys general from 49 states, five U.S. territories, and the District of Columbia, agreeing to pay nearly $600 million due to its role in promoting OxyContin sales. The company has since issued an apology for its involvement.

Documentation reveals McKinsey worked with Purdue Pharma and other opioid producers from 2004 through 2019, generating at least $400 million in consulting fees from pharmaceutical clients during 2018–2019. Among these clients were Mallinckrodt, the largest generic opioid manufacturer, and Endo International; McKinsey assisted Endo’s growth into a leading generics supplier by advising on marketing Opana. The firm also influenced prescribing habits among physicians treating elderly patients with back pain and those in long-term care.

In April 2022, reports surfaced that McKinsey permitted partners to simultaneously serve government agencies such as the FDA and pharmaceutical companies like Purdue Pharma, breaching internal ethical standards.

In December 2023, McKinsey consented to pay an additional $78 million to resolve allegations from health insurers claiming its consulting services exacerbated opioid addiction. This payment was described as the final settlement in a series of agreements; McKinsey did not admit liability.

By 2024, the US Justice Department initiated a criminal probe into McKinsey’s advisory role for opioid manufacturers’ sales strategies. A grand jury convened to evaluate potential charges against the firm amid investigations into possible obstruction of justice related to its conduct.

In December 2024, McKinsey agreed to a $650 million settlement concluding the criminal investigation and consented to a five-year prohibition on marketing controlled substances. This agreement was filed in federal court in Abingdon, Virginia, resolving criminal allegations connected to the promotion of addictive painkillers.

Rikers Island detention center

Between 2014 and 2017, New York City compensated McKinsey with $27.5 million to help lower assault incidents at Rikers Island. Despite this, violent acts escalated, and numerous recommendations from the firm were dismissed by the city. Critiques targeted the lack of engagement with inmates and healthcare personnel, the use of the encrypted messaging app Wickr to limit transparency, encouragement of wider deployment of Tasers, shotguns, and K9 units, as well as substituting difficult inmates with more compliant ones to manipulate outcomes. Moreover, flawed data analysis and spreadsheet mistakes resulted in inflated baseline violence figures used to assess progress.

McKinsey implemented its "Restart" violence reduction initiative within Rikers housing units, with jail officials reporting a decline exceeding 70% in violent offenses. Subsequent inquiries uncovered that the program was distorted by grouping cooperative inmates together, while actual violent incidents such as slashings and stabbings surged over 1000% between 2011 and 2016.

Penalty for insider trading involving investment affiliate

In February 2019, The New York Times exposed McKinsey’s internal hedge fund, McKinsey Investment Office (MIO Partners), raising concerns about potential conflicts between its investments and the firm’s consulting services. The issue centered on MIO potentially exploiting privileged information gained through consulting engagements to benefit its portfolio. McKinsey maintained that MIO operates independently from the consulting division with separate personnel, and that most investment decisions are made by external managers.

In 2019, McKinsey agreed to pay $15 million to the Department of Justice to resolve accusations of nondisclosure of conflicts in three bankruptcy advisory cases. In 2021, MIO Partners—managing nearly $31 billion for employees—was fined $18 million by the SEC. The regulatory body found that certain MIO decision-makers were also McKinsey employees with access to confidential client data. The SEC determined that MIO had prior knowledge of mergers, bankruptcies, and financial disclosures concerning clients advised by McKinsey.

Claims of conflicts of interest in U.S. bankruptcy proceedings

In January 2022, the Second U.S. Circuit Court of Appeals reinstated a lawsuit brought by retired restructuring expert Jay Alix against McKinsey & Co., alleging that the firm concealed conflicts while seeking bankruptcy court approval for lucrative restructuring assignments.

In July 2023, Dan Gerawan, former CEO of Prima Wawona, filed suit alleging that investment firm Paine Schwartz exploited Prima Wawona—then the largest stone fruit producer in the U.S.—to generate profits for McKinsey. The complaint notes that many Paine Schwartz employees were ex-McKinsey consultants. It asserts that in late 2020, Paine Schwartz engaged McKinsey as consultants without board consent to revamp operations at Prima Wawona; following this involvement, the company’s performance sharply deteriorated. Moody’s downgraded its credit outlook from "stable" to "negative." Prima Wawona declared bankruptcy in October 2023 with McKinsey as its largest creditor, owed $8 million. The company defaulted on $679 million in debt obligations. Attempts to sell the business were unsuccessful, leading to an announcement in January 2024 outlining plans for liquidation—including layoffs of all 5,400 employees and sale of more than 13,000 acres of farmland.

South African corruption scandal

The Gupta family systematically embedded compromised individuals within various sectors of South Africa’s government, utilities, and infrastructure. McKinsey was accused of collaborating with the Guptas to obtain consulting agreements from state-owned entities such as Eskom and Transnet. Partnering with Trillian Capital Partners—controlled by a Gupta affiliate—McKinsey delivered services valued at R1 billion (approximately $75 million) annually, while Trillian earned commissions for facilitating these deals.

For an internal review, McKinsey engaged the law firm Norton Rose Fulbright. Dominic Barton, the Managing Partner, admitted breaches of professional conduct but denied any involvement in bribery or corrupt activities. The South African NGO Corruption Watch lodged a complaint with the US Department of Justice, alleging criminal conspiracy among McKinsey, Trillian, and Eskom.

In January 2018, the South African Companies and Intellectual Property Commission filed criminal charges against McKinsey. The National Prosecuting Authority confirmed that assets had been seized from the firm. By mid-2018, McKinsey consented to return R1 billion (around US$74 million) to Eskom, which included R99.5 million in accrued interest.

In 2018, accusations of corrupt conduct emerged at Transnet involving former CFO Anoj Singh and extravagant foreign trips reportedly financed by McKinsey following contract renewals. After a thorough investigation, McKinsey denied funding Singh’s travel expenses.

The US Treasury imposed sanctions on the Gupta brothers and their associates in October 2019 under the Magnitsky Act. In November 2019, The Economist highlighted that McKinsey’s controversies—including those in South Africa and issues linked to its $12.7 billion investment arm, McKinsey Investment Office (MIO)—occurred alongside rapid expansion from 17,000 employees in 2009 to 30,000 globally.

During 2020 testimony at the Zondo Commission of Inquiry into State Capture, former partner Vikas Sagar was identified as responsible for McKinsey’s role in the scandal. In 2021, McKinsey agreed to repay R870 million (approximately US$63 million) to Transnet while distancing itself from contracts tainted by corruption. The Zondo Commission recommended criminal probes into key Eskom executives for improperly awarding contracts.

On 30 September 2022, South Africa’s National Prosecuting Authority charged McKinsey South Africa and Vikas Sagar with fraud, corruption, and theft related to a Transnet locomotive contract. In 2024, McKinsey was ordered to pay a $122 million criminal fine and enter into a three-year deferred prosecution agreement to resolve investigations by the US Justice Department and South Africa’s National Prosecuting Authority concerning violations of the Foreign Corrupt Practices Act; approximately half of this penalty (about R1.1 billion) will be allocated to South Africa. McKinsey admitted to bribing government officials between 2012 and 2016.

French presidential corruption scandal

In December 2022, authorities from the French National Financial Prosecutors' Office conducted raids at both President Emmanuel Macron’s Renaissance party headquarters and McKinsey’s Paris offices. These searches were part of inquiries into fraudulent election campaign accounting practices, allegations of favoritism, and conspiracy. Initially centered on McKinsey’s tax affairs, the investigation broadened in October 2022 to examine underreported consulting expenses during campaigns and claims of preferential treatment.

Despite generating €329 million in revenue, McKinsey reportedly did not pay corporate taxes in France for ten years according to findings by the French senate. Additional allegations emerged that McKinsey consultants volunteered without compensation on Macron’s presidential campaigns in 2017 and 2022, which would violate French electoral laws. The company faces accusations of leveraging privileged access to secure profitable government contracts, leading French media outlets to dub the controversy as 'McKinsey Affair' or 'McKinseygate.'

McKinsey is confronting possible charges involving corruption and tax evasion linked to this probe. As of July 2023, the investigation had yet to reach a conclusion.

Consulting controversy involving the Canadian government

An investigative report published in January 2023 disclosed that since assuming office, Prime Minister Justin Trudeau’s administration has allocated at least $117.4 million to McKinsey consulting services, a stark increase compared to the $2.2 million spent by the preceding government. All contracts awarded to McKinsey were granted through sole-source agreements, circumventing competitive tendering processes. Specifically, from March 2021 to November 2022, expenditures on McKinsey’s consulting amounted to no less than $84 million.

Confidential informants within Immigration, Refugees and Citizenship Canada (IRCC) revealed that McKinsey has increasingly influenced Canadian immigration policies, with key decisions reportedly made without input from career public servants or consideration of public interest. Immigration targets appear aligned with a strategy devised by former McKinsey leader Dominic Barton, as outlined in his 2016 report for the Advisory Council on Economic Growth and supported by the Century Initiative, both advocating for a population growth to 100 million by the year 2100. IRCC whistleblowers described this strategy as "foundational," despite concerns raised by then-immigration minister John McCallum.

On January 10, 2023, opposition parties—including the Conservative Party of Canada, New Democratic Party of Canada, and Bloc Quebecois—called for a parliamentary investigation into federal contracts awarded to McKinsey. They demanded full transparency regarding contracts, correspondence, and work documentation related to McKinsey since the Liberal government came into power. While McKinsey declined to respond to inquiries about its role within the government, officials withheld company reports. The firm stated it "welcomes the opportunity" to provide information to Parliament but denied involvement in policy recommendations concerning immigration or other issues.

In response, Prime Minister Trudeau assigned Treasury Board President Mona Fortier and Procurement Minister Helena Jaczek to conduct a review of these contracts. On March 23, 2023, the Treasury Board reported that audits identified inconsistent compliance with administrative procedures but found overall adherence to values and ethical standards. Although concerns were raised about fairness, transparency, and potential conflicts of interest, no proof emerged indicating political interference in awarding contracts.

Employee climate action letter and AMC initiative

In 2021, more than 1,100 employees at McKinsey signed a letter criticizing the firm’s engagement with 43 of the world’s top 100 polluting companies—entities responsible for over one-third of global carbon emissions in 2018. The letter called on McKinsey to disclose its clients’ carbon footprints. Despite this internal pushback, McKinsey executives confirmed ongoing advisory roles for major polluters, prompting several employee resignations. In April 2022, McKinsey partnered with Alphabet Inc., Shopify, Meta Platforms, and Stripe, Inc. to announce a $925 million advance market commitment (AMC) aimed at supporting carbon dioxide removal (CDR) technologies over a nine-year period.

Protests at the 2023 Africa Climate Summit

Over 400 civil society organizations protested Kenyan President William Ruto during the 2023 Africa Climate Summit, accusing McKinsey of influencing the summit’s agenda to prioritize US and Western corporate interests. Leaked documents suggested that the firm advocated for contentious carbon market mechanisms that would benefit its fossil fuel industry clients.

COP28

In 2023, an investigation by AFP uncovered leaked documents revealing that McKinsey, serving as the chief advisor to the United Arab Emirates for COP28, was promoting the agendas of its oil and gas clients such as ExxonMobil and Aramco. The firm was accused of placing its commercial interests above climate objectives during the lead-up to COP28. McKinsey’s energy scenario for the event’s presidency allows for ongoing fossil fuel investments, which conflicts with the goals outlined in the Paris Agreement. The suggested "energy transition narrative" envisions only a 50% reduction in oil consumption by 2050 and anticipates sustained multitrillion-dollar funding in carbon-intensive assets through at least mid-century.

Diversity, equity, and inclusion

McKinsey & Company has released studies emphasizing the advantages of diversity, equity, and inclusion (DEI) in business contexts. Nonetheless, these publications have drawn criticism for failing to adequately separate correlation from causation, lacking methodological rigor, and making sweeping claims about DEI’s influence on corporate performance.

McKinsey Partner Rachel Riley and DOGE

In January 2025, Rachel Riley, a McKinsey consultant, transitioned to the Department of Government Efficiency (DOGE), an organization headed by Elon Musk. This appointment reflects a strategic effort to apply consultancy expertise toward enhancing government cost management and operational efficiency.

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