The management team is expecting that the move, nicknamed Project Magnolia, would help protect the pay pool for its partners, according to the sources, who asked not to be identified because they were discussing non-public information. McKinsey intends to lay off 2,000 people in one of its largest layoffs.
McKinsey & Co. intends to lose around 2,000 workers, marking one of the consulting firm’s largest waves of layoffs in its history.
According to persons familiar with the subject, the business known for creating staff-reduction programs for its clients is laying off some of its own, with the move anticipated to focus on support personnel in areas that do not have direct contact with clients.
The management team is expecting that the move, nicknamed Project Magnolia, would help protect the pay pool for its partners, according to the sources, who asked not to be identified because they were discussing non-public information. The company, which has witnessed substantial expansion in its staff over the last decade, is trying to reform how its support teams are organized in order to centralize some of the responsibilities.
The plan is anticipated to be formalized in the coming weeks, and the ultimate number of functions to be cut from the company’s 45,000-person staff might yet alter, according to one of the sources. This is an increase from 28,000 just five years ago and 17,000 in 2012.
“For the first time in more than a decade, we are redesigning the way our non-client-serving teams operate so that these teams can effectively support and scale with our firm,” DJ Carella, a company spokeswoman, said in an emailed statement. Carella stated that the business is still looking for specialists who work directly with clients.
According to one of the persons, the company made a record $15 billion in sales in 2021 and will surpass that amount in 2022.
Businesses in areas ranging from banking to technology to retail are laying off workers as demand slows and a recession looms. Amazon.com Inc. and Microsoft Corp. have announced significant layoffs, while Goldman Sachs Group Inc., Morgan Stanley, and other major banks have lost thousands of jobs.
McKinsey’s action comes two years after Bob Sternfels took over as global managing partner after his predecessor, Kevin Sneader, was ousted by a vote of the firm’s roughly 650 senior partners. The managerial change capped off a turbulent era for the company, which was chastised for advising the producers of the opioid OxyContin and was scrutinized for a variety of other commercial relationships.
Sneader presently assists with the management of Goldman Sachs Group Inc.’s Asia-Pacific business.
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.
