McKinsey & Co. has warned about 3,000 of the firm’s consultants that their performance was unsatisfactory and will need to improve.
The firm gave these employees a so-called “concerns” rating as part of their performance reviews in recent months, according to people familiar with the matter. With that rating, employees are typically given about three months to show improved performance. If they’re unable to do so, the firm may begin counseling some of them to leave the company entirely.
While the proportion of staffers receiving the “concerns” rating is largely in line with past years, the fact that the firm’s headcount has swelled so dramatically in recent years has meant that the ratings have been handed to far more employees than in prior periods, according to the people familiar with the matter. McKinsey’s headcount has swelled to about 45,000 employees, up 60% from the 28,000 it had in 2018.
“Our proportion of concerns ratings is consistent with our historical range,” a McKinsey spokesperson said in an emailed statement. “It is not an unprecedented year. The performance evaluation process we have today also remains consistent with years past.”
It’s the latest sign that the consulting industry is pulling back after the boom times of the pandemic spurred hiring sprees across the industry. Now, some of the world’s largest consultancies have said a growing number of clients are shelving longer-term investments as they navigate an uncertain macroeconomic environment, meaning there is less work for their consultants to come in and advise companies on.
For instance, Accenture Plc last year said it would slash 19,000 jobs. Ernst & Young LLP in December said it was cutting jobs and delaying start dates for some new hires across the US, while PricewaterhouseCoopers LLP in November launched a voluntary redundancy program with the bulk of those cuts aimed at the advisory division.
McKinsey, for its part, embarked on a plan to eliminate about 1,400 roles last year. It was an unusual move for the consulting giant, which rarely carries out job cuts in its own ranks.
Instead, underperforming employees in client-facing roles tend to depart after being “counseled to leave” — a phrase that indicates the company recommends they try to find a different employer.
“A core part of our mission is helping people learn and grow into leaders, whether they stay at McKinsey or continue their careers elsewhere,” the McKinsey spokesperson said in the statement. “This is why we are widely recognized as one of the best places for talent to learn and develop.”
McKinsey said this month that the firm’s 700 senior partners reelected Bob Sternfels as global managing partner for a second and final three-year term. Last year, Sternfels led McKinsey to a record $16 billion in revenue.
The consultancy was founded 98 years ago and has grown to employ 30,000 consultants around the world, a figure that includes more than 2,900 partners. The firm has offices in more than 60 countries around the world and currently has 4,400 active engagements.
“We have always maintained a high bar for performance, and for attracting and developing exceptional people,” McKinsey’s spokesperson said in the statement. “This ensures we can provide distinctive support to our clients, as well as distinctive leadership and mentorship for our people.”