What Advisers Tell Business
Terry H. Schwadron
Oct. 7, 2022
Even if you are not a die-hard consumerist who sees evil in excesses of corporate capitalism, it has been difficult not to notice the presence of the same corporate management adviser in scandal after scandal.
McKinsey & Company has been a strategic partner for companies involved in turning sales of opioids, including Purdue Pharma, into a national emergency, aiming vape marketing at kids, still pushing tobacco products, and in avoiding regulation and punishment.
It’s been part of a pattern of private advice that has led to trouble. McKinsey worked with the U.S. Immigration and Customs Enforcement agency to help develop harsh deportation policies and had to withdraw. It has paid huge settlements to resolve federal charges related to conflicts of interest in corporate bankruptcy practice. The same company has so upset its own employees by supporting the globe’s biggest polluters over years that the staff revolted last year. A top company leader was forced to leave after apologizing for working with a power company in South Africa fingered in a corruption scandal bringing down that country’s president.
Despite its self-portrayal as a “values-driven organization” dedicated to creating “positive, enduring change in the world,” its lasting social record is far more checkered.
Last month, two investigative reporters from The New York Times, Walt Bogdanich (a work colleague) and Michael Forsythe, published “When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm.” that details certain hypocrisy from corporate use of the gold-standard management consulting company
Indeed, Quartz.com says the company that has advised clients like the White House, the Vatican, NASA and 22 of China’s largest state-owned enterprises finds that its “shine has begun to tarnish.”
Management Advice as Its Own Business
If you’ve worked for a big company, you’ve heard of McKinsey or some other management company. For reasons beyond understanding, it became standard business school practice for companies to shun advice from their own employees to turn to hugely expensive independent outsiders to provide counsel on how to remake a company — basically with the single goal of how to make more money.
In comes a team of financial specialists from among the 30,000 McKinsey agents who generally know little about the specific practices or even industry to interview employees and to provide a strategic plan for more profit. Layoffs and reorganizations have abounded in their wake before new practices inevitably sour for under-explored practical, legal, worker or even marketplace consequences.
I went through any number of these working as an editor and manager in newsrooms and news companies. Most of the conclusions, which inevitably began with insiders forced to school these management consultants about the actual work, production and workflows involved, were seen seriously as off-base by anyone working in other than the top financial layers of the company. So, I own up to my skepticism even about the best intentions.
The reality, of course, is far worse.
In their book, Bogdanich and Forsythe shatter the more luminous image that the company projects by detailing the firm’s “unsavory work with fossil fuel companies, cigarette-makers, opioid distributors, regulatory agencies and autocratic regimes.”
Deepening their news reporting, the book explores McKinsey’s “culture of secrecy” to unearth conflicts of interest, corruption, hypocrisy and strategic blunders that read like a prosecutor’s indictment, as a Washington Post review found. In their telling, McKinsey was rife with conflicts of interest in which it advised multiple companies, advised cost-cutting resulting in safety concerns at U.S. Steel, Disneyland and American immigration centers, and shorted insurance policy holders of billions of dollars in claims.
It was profit, the usual driver, that led to gaps in what was said and what was done.
Even as McKinsey touted initiatives to cut carbon emissions, its clients included at least had at least 43 major carbon polluters since 2010, for example. McKinsey served both tobacco companies to avoid regulation and the government on controlling costs from smoking. The company advised foreign governments associated with human rights issues to avoid sanctions even while working with the United Nations on creating accountability. And it worked with Purdue Pharma and other pharma companies to target “high abuse-resistant patients,” urged providers to increase prescriptions and to avoid government enforcement in the opioids scandal — work that resulted in a $600 million fine for McKinsey.
Which American Dream?
McKinsey consistently denies any wrongdoing in helping to market opioids, vaping and cigarettes or that its F.D.A. contracts posed a conflict of interest, because it never advised the agency on any specific drug, a McKinsey spokesman said at the time. In the book, a former partner explained that the firm’s prevailing philosophy is “We don’t do policy. We do execution.”
Basically, the argument is that if McKinsey doesn’t take on clients, others will. Capitalism needs profit streams, and advice on the most inexpensive way to get there. Our companies don’t bring in expensive management companies to make themselves better community partners or better global citizens, how to increase diversity, promote volunteerism and philanthropy or to heal our political divides.
More broadly, the problems detailed at McKinsey reflect what we demand from our corporations as investors, profit-driven works that mirror the ever-present need for more money, more financial reward, even at the expense of the fate of workers, consumers or society at large.
It’s a statement of Business that we don’t want to recognize. Indeed, McKinsey and other such big management firms have produced a steady stream of political and business leaders across all parties and industries. The company’s august alumni include Sen. Tom Cotton of Arkansas, Transportation Secretary Pete Buttigieg and Sheryl Sandberg, the former chief operating officer of Meta.
Few people have paid any social, professional or monetary price for their work on questionable projects. At McKinsey, only a handful of people lost their jobs for the events chronicled in this book.
It’s not politics, it’s not elections or personality partnerships. But it does reflect a basic American Dream devoid of community healing.
##