McKinsey & Company (informally McKinsey or McK) is an American multinational strategy and management consulting firm that offers professional services to corporations, governments, and other organizations. Founded in 1926 by James O. McKinsey, McKinsey is the oldest and largest of the "MBB" strategy consultancy firms. The firm mainly focuses on the finances and operations of their clients. Under the direction of Marvin Bower, McKinsey expanded into Europe during the 1940s and 1950s. In the 1960s, McKinsey's Fred Gluck—along with Boston Consulting Group's Bruce Henderson, Bill Bain at Bain & Company, and Harvard Business School's Michael Porter—initiated a program designed to transform corporate culture. A 1975 publication by McKinsey's John L. Neuman introduced the business practice of "overhead value analysis" that contributed to a downsizing trend that eliminated many jobs in middle management. McKinsey has been the subject of significant controversy and is the subject of multiple criminal investigations into its business practices. The company has been criticized for its role promoting OxyContin use during the opioid crisis in North America, its work with Enron, and its work for authoritarian regimes like Saudi Arabia and Russia. The criminal investigation by the US Justice Department, with a grand jury to determine charges, is into its role in the opioid crisis and obstruction of justice related to its activities in the sector. McKinsey works with some of the largest fossil fuel producing governments and companies, including to increase fossil fuel demand. McKinsey has a notoriously competitive hiring process, and is widely seen as one of the most selective employers in the world. McKinsey recruits primarily from top-ranked business schools, and was one of the first management consultancies to recruit a limited number of candidates with advanced academic degrees (e.g., PhD) as well as deep field expertise, particularly those who have demonstrated business acumen and analytical skills. McKinsey publishes a business magazine, the McKinsey Quarterly.
History
Early history
McKinsey & Company was founded in Chicago under the name James O. McKinsey & Company in 1926 by James O. McKinsey, a professor of accounting at the University of Chicago. He conceived the idea after he had witnessed inefficiencies in military suppliers while he was working for the United States Army Ordnance Department. The firm called itself an "accounting and management firm" and started out giving advice on using accounting principles as a management tool. McKinsey's first partners were AT Kearney, hired in 1929, and Marvin Bower, hired in 1933.
Bower is credited with establishing McKinsey's values and principles in 1937, based on his experience as a lawyer. The firm developed an "up or out" policy, where consultants who are not promoted are asked to leave. In 1937, Bower established a set of rules: that consultants should put the interests of clients before McKinsey's revenues, not discuss client affairs, tell the truth even if it means challenging the client's opinion, and only perform work that is both necessary and that McKinsey can do well. Bower created the firm's principle of only working with CEOs, which was later expanded to CEOs of subsidiaries and divisions. He also created McKinsey's principle of only working with clients the firm felt would follow its advice. Bower also established the firm's language. In 1932, the company opened its second office in New York City. In 1935, James McKinsey left the firm temporarily to be the chairman and CEO of client Marshall Field's. In 1935, McKinsey merged with accounting firm Scovell, Wellington & Company, creating the New York-based McKinsey, Wellington & Co. and splitting off the accounting practice into Chicago-based Wellington & Company. A Wellington project that accounted for 55 percent of McKinsey, Wellington & Company's billings was about to expire and Kearney and Bower had disagreements about how to run the firm. Bower wanted to expand nationally and hire young business school graduates, whereas Kearney wanted to stay in Chicago and hire experienced accountants. In 1937, James O. McKinsey died after catching pneumonia. This led to the division of McKinsey, Wellington & Company in 1939. The accounting practice returned to Scovell, Wellington & Company, while the management engineering practice was split into McKinsey & Company and McKinsey, Kearney & Company. Bower had partnered with Guy Crockett from Scovell Wellington, who invested in the new McKinsey & Company and became managing partner, while Marvin Bower is credited with founding the firm's principles and strategy as his deputy. The New York office purchased exclusive rights to the McKinsey name from the former McKinsey Chicago office which was separated with AT Kearney in 1946.
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