One of McKinsey & Co.’s largest ever layoff rounds is expected to result in the termination of about 2000 workers.
Specializing in helping its clients reduce personnel costs, the company is, unfortunately, trimming its staff. According to those acquainted with the situation, the focus of the shift is likely to be on people working in support roles without direct client contact.
Efforts to Maintain Partner’s Pay Structure
Titled Project Magnolia, the management is taking steps to ensure that the pay structure for partners remains untouched. Over the past ten years, the organization has witnessed a tremendous increase in staff count. The company is presently reworking how its support teams are managed to centralize some of the duties.
The plan is anticipated to be completed within the next few weeks. According to one source, the number of positions to be cut from the 45,000-person workforce could still be adjusted. The employee count has significantly increased since 2012, growing from 17,000 to 28,000 in five years.
Individuals requested anonymity when they spoke of confidential details.
DJ Carella, a representative from the company, stated in an email that, for the first time in over ten years, they are reconfiguring how their non-client-serving teams run so they can better support and expand with the firm. Carella stated that the organization still seeks professionals to handle client interactions.
In 2021, the company recorded sales of $15 billion and achieved higher figures the following year, according to one source.
Impending Recession Forces Workforce Trimming
Organizations across the board, from finance to tech to retail, are cutting their workforce as the market faces decreased demand and expectations of an impending recession. Technology giants Amazon.com Inc. and Microsoft Corp. have decided to reduce staffing significantly. On the other hand, several prominent banks, including Goldman Sachs and Morgan Stanley, have downsized by cutting thousands of positions.
Two years ago, Bob Sternfels became the global managing partner elected by McKinsey’s 650 senior partners. The voting effectively removed predecessor Kevin Sneader from the role.
The shift in leadership marked the end of an uncertain period for the company. Mckinsey faced a lot of flak for its advisory role with Purdue Pharma, manufacturer of OxyContin, and the firm faced scrutiny for its other business ties. Sneader plays a pivotal role in directing the Asia-Pacific operations of Goldman Sachs Group Inc.
During the late nineties, consultants from McKinsey spearheaded the idea of a “War for Talent,” gaining popularity amongst industry members.
In recent years, as the post-pandemic economy boomed and caused a flurry of hiring and workforce expansion across various sectors, the slogan of headcount expansion re-emerged. But the growth has slowed, and companies are struggling to maintain their profits, resulting in massive job cuts not seen in the last decade.
