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FutureStarrMcKinsey Starts Laying Off 1400 Jobs This Week
McKinsey & Company is one of many large companies across multiple sectors, from technology to retail, that have announced they are cutting staff as the global recession approaches.
Recently, its management style has become increasingly controversial due to its selection of clients and connections to the tobacco industry. Furthermore, it has been accused of facilitating corruption in South Africa, Mongolia, Saudi Arabia and allowing oppression to persist - including through arresting a partner in an insider trading scandal.
McKinsey, the world's premier management consulting firm, has been embroiled in scandal this year due to allegations of its work with opioid manufacturers and connections to corruption in South Africa. As a result, they are reportedly laying off 1400 employees this week, Bloomberg reported on Tuesday.
These cuts are among the largest ever experienced by McKinsey and are expected to affect support staff who don't have direct client contact, such as human resources and IT, plus communications.
McKinsey has seen its headcount grow rapidly over the last decade. However, with the economic crisis, they were forced to restructure and undertake mass layoffs.
According to a person familiar with the company's strategy, the proposed cuts are part of Project Magnolia - an initiative designed to protect partners' compensation pools while cutting operating expenses.
Many consultants may be worried about job cuts at McKinsey, but it's essential to remember that the firm has a reputation for being values-driven and an environment where people are encouraged to collaborate rather than compete. That kind of environment can be hard to find in management consulting, yet that's exactly what sets McKinsey apart from competitors such as Bain & Company and Boston Consulting Group.
Consultants have the opportunity to progress their career and make a significant impact within the firm through collaboration and challenging projects that will test their abilities and expertise.
There's also a focus on providing them with an adaptable and dynamic workplace that will keep them challenged and inspired throughout their career. Furthermore, they can work on client engagements or projects they are passionate about.
At McKinsey, you have the unique opportunity to work in multiple offices around the world and travel extensively. This provides you with a unique chance to experience different cultures and learn how other companies operate. By doing so, you gain an international perspective and gain insight into the challenges other businesses face.
McKinsey is among many companies who have begun to reduce staffs this week due to a slowdown in the economy. Tech titans Amazon, Alphabet and Microsoft, as well as Wall Street giants Goldman Sachs, Morgan Stanley and KPMG are all cutting their workforces accordingly.
In an age where employee experience is becoming increasingly critical, HR leaders are refocusing their efforts on supporting employee health and resilience. They're rethinking ways to engage with employees beyond contractual moments and taking a more personalized approach that emphasizes their sense of purpose.
McKinsey interviews CHROs about their ambition to transform their departments into strategic partners to the business. To accomplish this goal, CHROs must first lay a foundation that allows them to sustainably provide value and effect change that will enable them to become more assertive and influential within the C-suite.
That requires revolutionizing HR's relationship with the business on strategic questions, including by creating new talent value leaders. Furthermore, HR must adjust its operating model in order to foster innovation at a faster rate that allows agile adjustments to how the company works and interacts with people.
To achieve this goal, HR must embrace technologies that will revolutionize how consistent process execution and superior customer care are provided. Examples include robotic process automation (RPA), which utilizes AI and machine learning capabilities to automate repetitive tasks humans have traditionally performed.
As these technologies advance, more and more organizations are adopting them in the HR environment. Specifically, they're using them for managing talent acquisition, performance management processes, as well as HR administration.
Automation tools are generally cost-effective and improving productivity for human workers, freeing HR to focus on more strategic matters such as helping the company develop its culture and aligning their people strategy with the business strategy.
McKinsey recently found that companies who reframed their talent strategy to emphasize the positive effect they have on society and the environment experienced more positive outcomes than those who focused on cost savings. Furthermore, this same study demonstrated that employees are more likely to feel engaged and committed to their employer if they view the company as an impact maker.
McKinsey & Company are reporting that they plan to begin cutting 1400 jobs this week, according to reports from Bloomberg and The Wall Street Journal. This marks one of their largest rounds of job cuts ever and is part of Project Magnolia - an initiative within the company designed to boost efficiency and effectiveness.
This round of job cuts is expected to focus on non-client-facing support staff. This could include roles like human resources, communications and technology.
According to reports, the company is considering restructuring how they organize their support teams, which have seen growth over the last decade. This follows suit with a recent trend among large companies to restructure and reduce staff as economic activity begins to slow down.
Accordingly, companies across multiple sectors - finance, technology and retail - are cutting back their workforces as demand slows and a recession appears imminent. Tech giants Amazon, Alphabet and Microsoft have all announced the elimination of thousands of workers while many financial services firms are also de-staffing.
Particularly in the technology sector, layoffs are expected to increase dramatically in coming months as post-pandemic economic boom fades and the market experiences its first full-blown recession since 2008-09. Following an aggressive hiring spree by many large firms to meet client demand for IT consulting, strategy work and transaction services, many large firms have now reached their limit.
Biotechs are increasingly cutting back on staff to streamline their teams and refocus on core business operations. For instance, Adaptive Biotechnologies and Gilead Sciences both announced the layoff of about 100 staffers in March as they shifted focus away from minimal residual disease to immune medicine.
Recently, several small and midsized biotechs have announced layoffs: ObsEva cut 70% of its workforce to reduce head count and fund an FDA submission for the uterine fibroids drug linzagolix. Finch Therapeutics also focused on microbiomes in February by downsizing their staff to focus on an autoimmune blood cancer candidate.
McKinsey is one of the premier management consulting firms worldwide, recruiting primarily from top business schools. It also hires a select few candidates with advanced academic degrees and in-depth field expertise. McKinsey upholds its core values throughout every step of its operations - from hiring and promotion to client work - while adhering to an ethical selection process that helps protect its reputation for ethical practices.
Though many may be surprised that a major consulting firm is cutting its own staff, this is actually quite common among companies experiencing rapid growth. It's an instinctive response to the pressure of expanding rapidly while still maintaining healthy profit margins.
McKinsey expects the job cuts at their headquarters to affect 2,000 workers, marking one of their largest round of layoffs ever. These reductions are part of Project Magnolia, a plan which McKinsey hopes will preserve partners' compensation pools.
Bloomberg News reports that those affected will largely be support staff without direct client contact. The firm plans to restructure how it organizes its support teams, centralizing some roles.
McKinsey anticipates this will have an effect on communication and technology staff as well as some individuals in the company's legal and compliance departments. In the long term, however, McKinsey is positioning itself for sustainable growth (and a larger profit share) by cutting unnecessary expenses.
It's a wise move for the firm, as it will help it retain clients. In turn, they should be able to charge much higher prices for their services compared with rival firms like KPMG and Boston Consulting Group which have seen slowdowns in growth recently.
It's essential to note that McKinsey does not lay off employees without client work, even if their performance is less than ideal. In such cases, an employee would typically be "counseled to leave" and may be offered another position within or outside of McKinsey itself.
McKinsey may face greater difficulty finding new talent this cycle, and the application process could become even more competitive. Nonetheless, we believe the firm can attract top talent through its core values and high standard of recruiting.