McKinsey begins cutting 1,400 jobs
McKinsey & Company is this week starting a round of layoffs that will affect 1,400 roles primarily in support functions, a person familiar with the matter told Bloomberg News.
The rare round of layoffs at the New York-headquartered management consultancy arrives one month after Bloomberg reported McKinsey’s plans to lay off approximately 2,000.
The layoffs are part of “Project Magnolia,” a strategy to preserve the compensation pool for McKinsey partners amid worsening global economic conditions. The firm posted record revenue of $15 billion in 2021 and surpassed that mark in 2022, the source told Bloomberg.
The 1,400 roles – which represent 3% of the company – are primarily in non-client-facing support functions, including HR, communications, and IT. McKinsey has grown significantly since 2012, increasing its headcount from 17,000 to 45,000 globally. The firm says it will now restructure the way it organizes its support functions.
“The painful result of this shift is that we will have to say goodbye to some of our firm functions colleagues, while helping others move into new roles that better align to our firm’s strategy and priorities,” Bob Sternfels, global managing partner, wrote in a staff memo. “Starting now, where local regulations allow, we will begin to notify colleagues who will depart our firm or be asked to change roles.”
Sternfels added that the company will look to implement job cuts through attrition or voluntary departures.
Outright layoffs are a rare occurrence at the firm, which is generally considered the most prestigious and expensive strategy consultancy. Underperforming employees will usually be “counseled to leave” rather than fired, and ex-McKinsey staff presumably have little trouble finding gainful employment elsewhere.
“With demand from our clients expanding, we continue to hire client-serving professionals and invest in our ability to serve clients,” McKinsey told CNBC. “In parallel, we are redesigning the way our non-client-serving teams operate for the first time in more than a decade, so that these teams can effectively support and scale with our firm.”
Accenture and KPMG have also announced cuts, with job reductions primarily hitting their consulting divisions, which have seen drops in demand.
