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“The Price We Pay for Being ‘In the Arena'”: McKinsey’s Chief Writes to Staff About Media Scrutiny and Scandal

Future South Africa civil group urges McKinsey to come cleanFuture South Africa civil group urges McKinsey to come clean
Protesters picket outside the McKinsey offices on Oct. 5, 2017 in Sandton, South Africa. The consultancy has come under fire for its ties to the business empire of the Gupta family, which has been accused of corruption.Foto24 Getty Images

McKinsey & Co. is the world’s most prestigious consulting firms, counting dozens of Fortune 500 firms among its current and former clients, and many CEOs and other business leaders among its alumni. The company studiously keeps a low profile, avoiding taking credit for the results of its advice—and also typically managing to skirt blame when its clients falter under McKinsey’s tutelage.

Over the past year, McKinsey has been the subject of a range of investigative news stories that trained a spotlight on its business practices. That coverage includes articles alleging conflicts of interest in McKinsey’s bankruptcy practice; raising questions about its role in advising politically repressive regimes; and probing its ties to South African business leaders who were subsequently accused of corruption.

In an interview this week, Kevin Sneader, McKinsey’s global managing partner and de facto chief executive, spoke with Fortune executive editor Adam Lashinsky about how the firm is responding to the ongoing controversies. You can read that interview here. Sneader also sent a letter Thursday morning to the company’s North American employees, covering similar ground. Below is the text of that letter in its entirety.

***

Hello,

After 30 years here, I think I know this Firm.

I have seen the good that we do. I know the people we recruit, their motivation to make others successful, their sense of purpose. I know what drives them.

I know the clients that we serve. I know that they create the jobs and opportunities that make this world a better place. I know how they value the McKinsey teams that every day go above and beyond to make them successful without any thought of taking credit in public. I know that is why our clients are standing with us, why this Firm is stronger than ever in so many ways.

As I answer friends, family, colleagues and clients who have asked about what they have read in the press over the past several months, I tell them about the people at McKinsey and their stories. I tell them about the work that we do and why it matters. I share with them the impact that we have, the difference that we make.

All that said, while much of the media coverage has been plain wrong, there have been moments when I have paused and thought, “We should not have done that. It was a mistake.”

So as I reflect on what has been written, I am determined that we do three things:

  1. Learn the lessons from when we have got it wrong;
  2. Correct the record where the picture that has been painted is unfair and inaccurate;
  3. Do what we have done since this Firm was founded in 1926 by raising the bar ever higher for what it means to be a Firm with the highest professional standards.

It is with this in mind that teams of partners supported by input from colleagues of all tenures and roles will share a proposed set of actions at the Shareholders Council meeting taking place next month in Chicago. Here are some examples of what they are working on:

  1. Determining who we serve and what we do. This entails developing an updated set of criteria for client selection that more explicitly takes into account changing expectations on the part of society for what business does and does not do, as well as the topics on which we work and the types of institutions and individuals that we serve. The results will also help address concerns expressed internally and externally around some of our past choices.
  2. Increasing transparency and accountability. We have a long-standing commitment to client confidentiality, shunning publicity and keeping a low public profile. The problem is that in a world of social media, distrust for business and heightened transparency, our historic approach looks evasive and secretive. That is why likely actions include stepped up efforts to share who we are and what we do with opinion leaders, media and others as well as seeking input from well-regarded external advisors along with the creation of an annual report that attests publicly to what we do.
  3. Tackling perceptions around conflicts of interest. Putting client interests ahead of our own has long been a core value of our Firm. Some recent coverage has suggested that we do not always do so or that we seek to profit from what we do in ways that are inappropriate. The reality is very different. But we should not leave this perception unaddressed and therefore are committed to steps that make even clearer how we put client interests first.
  4. Updating our mission and purpose. Our Firm has been and should be a force for good. There are many examples that illustrate this point ranging from our founding of Generation – the largest global employment programme that trains and places youth in jobs – to our work tackling the Ebola epidemic, Polio and SARS. But we can do more. It is why we need to look at evolving our mission in light of changing expectations and use this as an opportunity to engage across the Firm in a discussion as to how our purpose contributes positively to the world, one client at a time.
  5. Assessing our broader impact. We have always had a clear focus on creating “distinctive, lasting and substantial improvements in performance” for our clients. This has served us well. That said, we must also consider the full impact of our work on jobs, innovation, competitiveness and the community as a whole. And this requires a broader set of metrics to judge success.

Two points to keep in mind as we deliver on these actions: we cannot return to a time when we were in the background and unobserved. Those days have gone. Indeed, I have little doubt that scrutiny – fair and unfair – will continue. It is the price we pay for being “in the arena” and working on what matters. Second, we are at our best when we focus on our clients and on delivering positive, lasting and substantial improvements in performance. It is therefore important that we do not get distracted from this task and continue to innovate and reach out to our clients while we work through implementation of the changes this note describes.

As I reflect on the last few months, I recall the first time I heard about McKinsey. It was when the Firm put together a set of recommendations in the 1980s that helped spark the regeneration of my home town, Glasgow. The city was on its knees following the closure of the steel mills, ship building yards and coal mines that had previously powered its success. The blueprint was broadly credited as sparking a remarkable comeback.

That was over 30 years ago. Today the examples are perhaps even more powerful. You will have your own stories just as I do from visits to different parts of the world. Indeed, in the last couple of weeks, these have included hearing about efforts to help one of the world’s leading clothing manufacturers employ the latest technology to secure its leadership in an ever more competitive market; working with a major car manufacturer to navigate autonomous driving and the transition to electric vehicles; helping a retailer keep stores and jobs alive while building its online presence at pace and with purpose; partnering with the world’s leading public health organisation to reduce annual vaccine preventable deaths by almost two million people.

This is why I am so proud of the work that we do. It is what I tell people about McKinsey. And it is the story that I am determined to share with the world as I did last week on CNBC. I hope you are too.