May 6, 2021

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McKinsey partners sacrifice ‘ritual cleansing’ leader

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This week’s news Kevin sneader would be McKinsey’s first global managing partner since 1976 to fail to win a second three-year term has stunned many partners and influential alumni at the consulting firm.

Few have been able to report a single misstep that brought down the 54-year-old Scotsman. “That added up,” a veteran said simply of the litany of reputation crises he had tried to resolve.

But many also didn’t think Sven Smit or Bob Sternfels, who beat Sneader in the last round of vote, would represent a sharper break with the past – or that whoever wins the final vote in the next few weeks would face an easier task than him.

A few days after taking office in 2018, Sneader flew to South Africa to apologize for the failures that had led the company into a corruption scandal. “We appeared to be arrogant or irresponsible,” he admitted in a speech it started with the word “sorry”.

This set the tone for a mandate defined by the need to offset other crises that largely preceded his promotion, from damaging headlines on McKinsey’s contracts in authoritarian countries to lawsuits by US states over his work to boost sales. of highly addictive opioids.

Speaking to the Financial Times less than two weeks before the key partner vote, Sneader said he focused on making the private company more transparent, more selective about the clients it accepts and better. structured to avoid surprises in a global group whose rapid growth had made things more complicated.

According to people who witnessed these efforts, however, pushing them through consumed much of the political capital Sneader needed to win re-election. For some, especially the younger ones, his reforms did not go far enough. For an older, larger group of the 650 senior associates who vote for their leadership every three years, they’ve gone too far.

Kevin Sneader’s failure to win a second three-year term as McKinsey’s global CEO has stunned many at the consulting firm © Charlie Bibby / FT

Sneader’s fall sounded like a case of “partners not wanting to take the drug,” a former partner said. Another argued that Sneader’s pressure for more oversight over partners who valued their freedom had made the company ‘too corporate’, while some of Sneader’s allies viewed the ‘protest vote’ as a rejection of his reforms. rather than a clear mandate for Smit or Sternfels.

Sneader was not helped by the timing of this month’s $ 574 million opioid settlement with 49 U.S. states, added Jeffrey Sonnenfeld, a professor at the Yale School of Management, who said the consultants in outside the United States did not understand why he was accepting payment.

Sneader could have reassured them in person, but with McKinsey’s frequent flyers stranded by a pandemic, “there is only so much you can do with Zoom.”

‘In business, like in poker, there is uncertainty’

Laura Empson, author of Leading Professionals, said a question now was whether the vote against Sneader was “a ritual sacrifice to appease bad public relations” or a sign that McKinsey’s partners were ready to take more drastic action.

The run-off between Sternfels and Smit may not solve that problem, say people who know them both, who note that they are the same age as Sneader and the board members who approved his reforms.

Sternfels, a California-born Rhodes Scholar who joined McKinsey in 1994, was Sneader’s 2018 finalist. As a ‘Customer Capabilities’ Manager, he has a role similar to that of an COO and is closely associated with the company’s rapid expansion under Dominic Barton, Sneader’s predecessor.

Based in San Francisco after six years in Johannesburg, the former college water polo player is known to be an efficient operator and, according to the second former partner, “the one who built the new business models”.

But some of McKinsey’s new activities got him into controversy: last year he was called to testify in litigation presented by restructuring specialist Jay Alix – the founder of rival consulting firm AlixPartners – on the McKinsey revelations while advising bankrupt clients.

When a frustrated judge asked if he was dealing with “a bunch of people who are so educated, so arrogant that they just can’t admit they’re wrong,” Sternfels apologized, insisting the fact that “we try not to promote arrogance”.

Smit, who joined in 1992 and is based in Amsterdam, is known inside McKinsey as a more cerebral figure. Now co-chair of the McKinsey Global Institute, the research arm of the consultancy firm, “there’s no college campus he couldn’t parachute into and be received as one of the smartest people in the room,” Sonnenfeld said.

The Dutch mechanical engineer previously ran McKinsey’s operations in Western Europe and might attract less support from his American peers, but the first former partner describes him as “the conscience of the company,” who will say no to ideas with which He does not agree. The second thinks he could “turn the firm back to an old school McKinsey.”

Smit’s writings on topics ranging from urbanization to the future of work made him popular with clients and provided insight into his thinking on strategy, which he compared in a report to poker. “In business, like in poker, there is uncertainty and the strategy is how to deal with it. As a result, your goal is to give yourself the best possible chance, ”he wrote.

The discontent runs deep

Whether the cards fall for Smit or Sternfels, colleagues then and now wonder if either will reverse the reforms that seem to have sparked unrest over Sneader.

“I don’t think Kevin had any choice but to centralize,” said an ally of Sneader.

One of the former partners added: “What were the alternatives? It’s a big business to run and you need structures. “

What the election result has already revealed, however, is that discontent with the McKinsey state runs into deeper races than it had been evident outside the company.

Whoever wins, he will need to seriously listen to the concerns of elders, clients and policymakers and make it clear that he is planning meaningful cultural reforms, Empson says.

Sneader’s successor will also have to defy all expectations in professional services firms, she adds. “A lot of times in partnerships, when something goes wrong, they appoint someone else in reaction to the problem and that’s not the solution either and they quickly move on to another round of leadership,” she said, “It’s almost like they have to leave through this cleaning ritual.”

McKinsey, which does not disclose its financial performance, had annual revenue of $ 10.5 billion in 2019 according to Forbes estimate. Sonnenfeld points to the irony that the company, which charges a premium for its services, has stumbled this way.

“It’s strange that McKinsey isn’t creating the kind of leadership that would thrive in a crisis,” he said. Before the succession process begins again in 2024, “they must embark on leadership development.”



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