Company Overview

When Marvin Bower took over McKinsey & Company after founder James O. McKinsey’s death in 1937, he more or less invented the management consulting industry. And with his passing in 2003, he left behind what is now arguably the most powerful and intellectually formidable firm in the business. The Firm (as it is affectionately called) may have taken a couple of hits in recent years, and competitors such as Bain and Booz Allen Hamilton may be nipping at its heels, but at a job at McKinsey remains, year after year, the most sought-after in the world by MBAs. McKinsey’s standards are sky-high, the work is demanding, and the lifestyle is unrelenting. But insiders say the rewards, both financial and experiential, are hard to beat.

McKinsey’s reputation is built on a long history of providing strategic advice to the top management of the world’s largest corporations. Alumni are influential movers and shakers in the business world, in the political sphere, and in nonprofit and development organizations. A stint at McKinsey can open many doors, including the one to the CEO suite. In fact, more than 70 past and present CEOs at Fortune 500 companies—James McNerney of Boeing, Leo Mullin of Delta Air Lines (now retired), Kevin Sharer of Amgen, as well as the infamous ex-chief of Enron, Jeffrey Skilling—once worked for McKinsey.

Although McKinsey is considered one of the most prestigious management consulting firms, it is by no means the largest. The firm currently employs around 6,000 consultants worldwide and operates 92 offices (plus 27 business technology offices) in 52 countries. Whereas a decade or two ago the company might have felt intimate and clubby, it now feels much larger. And if you work in one of the bigger offices, don’t expect to know everyone you pass in the halls on a first-name basis.

A great deal of expansion occurred during the late ’90s tech bubble, and the firm spent the next few years quietly trying to shed a few pounds by moving “out” (as opposed to up) a much greater proportion of its staff than it had historically. The numbers have stabilized now, and the firm is again growing, with revenue gains of nearly 9 percent in 2005. So competition to stay on the “up” track is now merely intense, as opposed to  ruthless. Even McKinsey’s managing director, Ian Davis, admitted to a little overzealousness during the dotcom frenzy. As he once told the Financial Times: “On the dotcom Richter madness scale, we were probably a 2 out of 10. We weren’t a 10 out of 10. Should any similar business frenzy occur again, we want to make sure it’s zero or one.” Of course, one could interpret this to mean that the firm might be inclined to adjust to growth by piling more work on its consultants, rather than risk overstaffing.

The firm has an unrivaled depth of experience. Given the sheer number of engagements it takes, there is a good chance that McKinsey has prior experience in any conceivable situation. Critics charge that this can lead to a cookie-cutter approach to solving business problems, but even competitors acknowledge the formidable intellectual capital of the firm. Traditionally, McKinsey has been able to bank on its big brains, charging a premium of up to 25 percent over its competitors. But as budgets got tighter in recent years, companies began inviting more consulting firms to face off in pitches. And as companies have added capabilities in-house, the tasks outsourced to McKinsey are often much more targeted and the expectations greater.

The firm’s pristine image may have been tarnished a bit in recent years. In 2005, just as McKinsey was escaping the cloud of its intimate associations with notorious failures such as Enron and WorldCom, it found itself facing a new potential scandal in England. Critics charged that McKinsey had manipulated its connections with the Blair administration to grossly overcharge the Ministry of Defence for consulting work. In 2006, McKinsey alumnus Jeffrey Skilling became one of the highest-profile white-collar felons of all time for his role in the financial improprieties at Enron. A period of overexpansion during the bubble years left the firm a bit bloated and in the rare position of having to aggressively cut costs. While growth has returned, the storied spare-no-expense retreats and lavish lifestyle have been tempered, and some perks have been reeled in. Yet those who can cut the mustard and survive McKinsey’s unblinking up-or-out dictum will still find themselves handsomely rewarded.