McKinsey & Co. plans to eliminate about 2,000 jobs, one of the consulting giant’s biggest rounds of cuts ever.
The firm known for devising staff-reduction plans for its clients is taking the ax to some of its own, with the move expected to focus on support staff in roles that don’t have direct contact with clients, according to people with knowledge of the matter.
Under a plan dubbed Project Magnolia, the management team is hoping the move will help preserve the compensation pool for its partners, the people said, asking not to be identified discussing non-public information. The firm, which has seen rapid growth in its headcount during the past decade, is looking to restructure how it organizes its support teams to centralize some of the roles.
The plan is expected to be finalized in the coming weeks, and the final number of roles to be eliminated from its 45,000 workforce could still change, one of the people said. That headcount is up from 28,000 just five years ago and 17,000 in 2012.
“We are redesigning the way our non-client-serving teams operate for the first time in more than a decade, so that these teams can effectively support and scale with our firm,” DJ Carella, a company representative, said in an emailed statement. Carella said the firm is still hiring professionals who deal directly with clients.
The firm posted a record $15 billion in revenue in 2021, and surpassed that figure in 2022, one of the people said.
Companies in industries from finance to technology to retailing are reducing staff amid a slowdown in demand and predictions of a looming recession. Tech giants including Amazon.com Inc. and Microsoft Corp. have announced plans for deep cuts, and Goldman Sachs Group Inc., Morgan Stanley and other top banks have been eliminating thousands of positions.
McKinsey’s move comes two years after Bob Sternfels took over as global managing partner following a vote by its roughly 650 senior partners to oust his predecessor, Kevin Sneader. The management shift was the culmination of a tumultuous period for the firm, which took flak for its role in advising the makers of the painkiller OxyContin and faced scrutiny of various other business ties.
Sneader now helps run Goldman Sachs Group Inc.’s Asia-Pacific operations.
McKinsey consultants helped popularize the phrase “War for Talent” in the late 1990s, a slogan that’s come back into vogue in recent years as the post-pandemic boom led to a frenzied period of hiring and headcount expansion across industries. With that growth now starting to wane, companies battling to preserve profits are turning to job cuts at a scale not seen in more than a decade.