‘Influence Without Power’How Management Consultants had a Very Profitable Pandemic
As news emerges that the Test and Trace programme budgeted for £438 million to be spent on management consultants, Matthew Gwyther delves into the inner workings of the industry
There have been many winners and losers during the COVID era. Whereas the pandemic has ramped-up demand for epidemiologists, critical care nurses and Amazon delivery drivers, the prospects remain far less rosy for casino croupiers, wedding planners, actors, airline pilots, coffee baristas and nail bar technicians.
One group that has certainly benefitted, to the ire of many people, are management consultants. The conventional Civil Service was deemed to be either too small or too rigid to deal with the task at hand during the Coronavirus crisis – indeed, we are all familiar with the views of Boris Johnson’s former chief aide Dominic Cummings.
So step forward the emergency shock troops, paid by the hour: the consultants.
One reason management consultancies get such a bad press is their reluctance to talk about their work. They do perform valuable tasks. However, bound by client confidentiality, they are rarely able to crow when their advice leads to wild commercial or organisational success. Thus, when COVID-19 struck, while they sniffed blood in the water, they will have also sensed the potential for a PR disaster – after all, their controversies have filled large parts of the rear end of Private Eye for decades.
The crème de la crème is McKinsey – or ‘The Firm’ as members call it.
McKinsey is the Goldman Sachs of the consulting world. The company reportedly receives 800,000 applications per year for 8,000 jobs. It is a brand built on mystique and secrecy and its alumni network stretches across the global corporate and political elite.
“A job at McKinsey is a ticket to almost anywhere in the world,” observed Duff McDonald in his 2013 book The Firm. “A McKinsey consultant… is not a banker, accountant or lawyer. He [funny that – it’s often a ‘he’] is a thinker. He has had the chance to whisper into the ears of power, to exercise influence while being insulated from responsibility.”
Last year, McKinsey was paid more than half a million pounds by the Government for six weeks of work to decide on the “vision, purpose and narrative” of a new public health authority in England. The contract shows that McKinsey was enlisted by the Department of Health and Social Care in May to prepare a report on the options for a new body that would run the English ‘Test and Trace’ programme.
Half a million is chicken feed. Just ask anyone at BCG, one of McKinsey’s deadly rivals. BCG charged £10 million for 40 people to work on the Test and Trace operation over the course of four months, a source with knowledge of the contract confirmed to the Guardian. Therefore, while individual consultants from the firm could earn £2,400 a day, the most senior staff chugged down as much as £7,360.
Things frequently go awry and, in recent times, McKinsey’s Teflon-like qualities have been challenged. In early 2019, it paid $15 million to settle allegations that it did not make required disclosures of its financial connections with other parties while working on bankruptcies. And it has come under scrutiny for links to governments in South Africa and Saudi Arabia.
Still worse was the extremely ugly opioid pill-pusher affair. On 4 February, McKinsey announced a $573 million settlement with attorney generals in 47 US states, the District of Columbia, and five territories – based on the advice it had given Purdue Pharma, the maker of OxyContin, and other pharmaceutical companies on marketing and sales strategies for opioid products. This, it has to be said, is a very bad look indeed.
Oxycontin put paid to the firm’s last global boss, Kevin Sneader, who was stood down earlier this year after only one term in office – an unprecedented punishment. Sneader knew McKinsey had some serious problems and had pledged to make the firm more transparent and to learn from previous mistakes.
“There used to be a mystique about McKinsey and that was seen as a good thing,” said Sneader, who was appointed global managing partner in July 2018, becoming only the 12th person to hold the role since the firm’s inception in 1926. “I’m not sure that is anymore.”
I interviewed Sneader’s predecessor, Dominic Barton, a few years back. When I was ushered into his presence, I goaded him gently by showing him a headline from The Economist that read: ‘To the Brainy, the Spoils – As the World Grows More Confusing, Demand for Clever Consultants is Booming’.
He visibly winced. “No. No! We don’t dominate the brain pool,” he insisted. “Our clients are talented, brilliant people and we’re there to enable them to do what they want to do. We help them be better.”
Surely, he protested too much. McKinsey prides itself on providing the most prestigious, and probably the most expensive, advice that top corporates and governments can buy – though this does create a certain sort of employee.
One McKinsey ex-director explained the downside of this approach, describing his one time colleagues to me as “a band of insecure, deeply left-brain, hyper-intellectual, OCD over-achievers”.
He said “Barton’s biggest task is trying to manage this global network while maintaining scale and quality control. The days when everybody knew everybody are long gone and all that modern cultural stuff could well come and bite them. The cats are going to be even more difficult to herd in future”.
“In the past, we believed any problem could be cracked by analytics,” Barton told me. “You know: get the smartest people together, throw them a piece of meat and things will happen. It’s not just the sharp and bright that we look for. At McKinsey, you need to be practical, patient and able to build trust. You’ve got to be able to convince and persuade. You’ve got to work out how to influence without having power. It’s what my predecessor Ian Davis called RQ: the Relationship Quotient.”
Barton was most proud of the fact that, when he was in charge, there were 359 ex-McKinsey employees across the planet running $1 billion-plus companies.
He preferred McKinsey to be seen as a leadership factory. And look at the output list: Vittorio Colao of Vodafone; Sheryl Sandberg of Facebook; Tidjane Thiam from the Pru; the multi-purpose Adair Turner; Tom Peters; former HSBC chairman Stephen Green; William Hague; Chelsea Clinton; and, of course, the head of Test and Trace Baroness Dido Harding.
Who said that the power of the filofax contacts section was no more?
what the papers don’t say
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