McKinsey & Co. partners voted to replace Kevin Sneader as the leader of the elite consultancy, following internal dissatisfaction with the steps it took after a series of crises for the company, people familiar with the matter said.
The decision, the result of a staggered voting process that McKinsey’s approximately 650 senior partners spend every three years choosing or reconfirming the firm’s global managing partner, marks the first time in decades that a McKinsey leader has not won. a second term. Sneader, who was elected global managing partner three years ago, failed to pass the first round of voting, in part because members were bothered by changes aimed at keeping McKinsey free of scandals, but with limited partner autonomy. , people said.
Sneader, a 54-year-old Scot and McKinsey veteran of more than three decades, has spent much of his term trying to move the firm controversy around McKinsey’s previous work with clients, including this month’s settlement of 573 million. dollars with work states advising OxyContin manufacturer Purdue Pharma LP and other manufacturers of drugs that aggressively market opioid analgesics.
The firm has also studied its work with e-cigarette maker Juul, as well as some autocratic foreign governments, including Saudi Arabia. In December, an agreement was reached with Justice Department vigilantes on how the company reveals possible conflicts of interest. In both the opioid and disclosure agreements, McKinsey admitted no wrongdoing.
Much of Mr. Sneader’s response to these crises has been to move McKinsey from a culture that was based on the judgments of individual partners to one based on systems, rules, and processes, which fueled dissent within his senior positions. , according to people familiar with the matter. Historically, its partners have enjoyed a great deal of latitude about their work and their clients. McKinsey declined to make Mr. Sneader available for an interview.
Historically, McKinsey’s business model was based on “hiring the best people to do the most important work at a premium price,” says one person who spent years at the company. If it is considered that a potential customer is not important enough or does not contribute to obtaining a larger good, the company would take a pass. “The foundation of their ethos is to turn down work,” the person said.
But in the years leading up to Mr. Sneader’s rise, McKinsey undertook a rapid expansion. The company looked for new ways to grow, and with a decentralized management structure, there were few protections that would prevent an ambitious partner from taking on lucrative, albeit problematic, customers, the person said.
Under Sneader, the firm’s main partners had to approve controversial new clients, and McKinsey said it would not serve defense, intelligence, justice or police institutions in non-democratic countries. This made non-American partners able to take on some customers, and was seen as a centralization of power outside of partners, according to people familiar with the operations. In an interview with the Financial Times published this week, Sneader said the firm’s customer service risk committee, which evaluates any new work that could raise flags, reviewed more than 2,000 projects by 2020.
“It certainly introduced higher risk protocols; higher levels of due diligence; red lines about public sector service in some countries, “said the person who spent years at the company, adding that Sneader’s camp partners believed it was” not feasible to go back to a time when only you can do what you like or it should not be governed by a compliance regime ”.
The firm’s recent opioid deal also drew opposition from some non-US partners who were more willing to fight, people familiar with the matter said. Sneader’s letter to employees about the deal was blunt in criticizing the company’s behavior, saying McKinsey did not meet its standards and “did not adequately recognize the epidemic that was unfolding in our communities or the terrible impact of opioid abuse and addiction, which is why I am sorry. ”
Some partners felt that the language was too strong and that McKinsey’s advice to clients was legal and given in good faith, according to people familiar with the subject.
The change of power highlights the complexity of running a global collaboration company. As a global managing partner, Sneader was more of a peer-to-peer than a chief executive, and his reforms were approved by senior partners. But when he ran for re-election for another three-year term, there were enough dissidents to keep him out of the final vote.
His failure to reach the second and final round of voting leaves two other senior partners in the race to succeed Sneader: Bob Sternfels and Sven Smit, senior partners at McKinsey’s offices in San Francisco and Amsterdam, respectively.
McKinsey’s senior partners will decide whether Messrs. Sternfels or Smit will replace Mr. Sneader in a final voting round, which is expected to take place in March, according to people close to the issue. Sternfels is seen as a protégé of Dominic Barton, who led McKinsey from 2009 to 2018 and was credited with accelerating his growth.
As part of the process, senior partners nominate several candidates and then vote in a first round. The two candidates who receive the most votes advance to the final round.
Among the slow-fire problems Mr. Sneader dealt with was McKinsey’s work with electronic cigarette maker Juul. In 2019, a former Juul employee said in a court case that while the company said it was withdrawing flavored products from the market, McKinsey advised him to sell mint-flavored nicotine pods. The New York Times and ProPublica reported that year that McKinsey also helped U.S. immigration and customs with changes that included reducing food and medical spending for detainees and speeding up deportations. In addition to the Saudi government, McKinsey worked for the Chinese government and retired 4 miles from a camp where Uighur interns, members of a Muslim minority, were interned, the Times reported.
McKinsey also played a central role in the rise of Saudi Crown Prince Mohammed bin Salman. In 2015, Prince Muhammad, the son of the newly crowned king, had no direct route to the throne. His father, King Salman, put the prince at the forefront of economic reforms, and McKinsey was involved in devising a strategy to move the kingdom’s economy away from its dependence on oil.
In late 2015, the firm’s research group, the McKinsey Global Institute, released a public report called “Saudi Arabia Beyond Oil” that said “we see a real opportunity for the Kingdom to inject new dynamism into the ‘economy through investment and productivity’. brought transformation “.
The report gave McKinsey’s primer to the strategy Prince Muhammad was pursuing at a time when he sought the approval of foreign business and political leaders to help legitimize his claim to a greater role in the leadership of the country. kingdom. His father, the king, gave him additional responsibility and in 2017 the prince imprisoned his cousin, who was then heir apparent, and took the title himself. Since then, the Crown Prince, known as MBS, has been the day-to-day ruler. He presided over economic reforms, as well as a brutal bombing campaign in Yemen that sparked a humanitarian crisis, closures of many of his critics and a team of men who assassinated dissident writer Jamal Khashoggi in 2018.
One of the big projects the firm has been working on recently was the prince’s plan for a city built from scratch called Neom on the remote west coast of Saudi Arabia. The prince imagined a technology-powered metropolis populated by the world’s elites, full of flying robot taxis and an automated police force. McKinsey and other consulting firms were hired to help with the plan. In thousands of pages of internal planning reports reviewed by the Journal, McKinsey detailed the use of a “13-pillar habitability framework” and big data to quantify how pleasant Neom would live. The Saudi government has begun relocating the local population of the land to build the city.
Addiction experts agree on the most effective way to help opioid addicts: drug-assisted treatment. But most in-hospital rehab centers in the U.S. do not offer this option. Jason Bellini, of WSJ, reports on why the medication choice is controversial and difficult to achieve in many places. Image: Ryno Eksteen and Thomas Williams (Originally Posted on November 16, 2017)
Corrections and amplifications
Bob Sternfels and Sven Smit are key partners in McKinsey’s offices in San Francisco and Amsterdam, respectively. An earlier version of this article incorrectly stated that they were the heads of these offices. (Corrected on February 24)
Write to Justin Scheck to [email protected] and Vanessa Fuhrmans to [email protected]
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