McKinsey & Co. partners voted to replace Kevin Sneader as the leader of the elite consulting firm after internal dissatisfaction with the measures he took following a series of crises for the firm, people familiar with the matter said.
The decision – the result of a staggered voting process that McKinsey’s approximately 650 senior partners undertake every three years to elect or reconfirm the company’s global management partner – marks the first time in decades that a McKinsey leader has failed to win. a second term. Mr Sneader, who was voted general partner three years ago, failed to make it past the first round of voting, in part because partners faced changes aimed at keeping McKinsey free from scandal, but autonomy limited partners, people said.
Sneader, a 54-year-old Scotsman and McKinsey veteran for more than three decades, has spent much of his term trying to move controversial firms from the past about McKinsey’s previous work with clients, including the 573 agreement. $ million this month with labor states advising OxyContin manufacturer Purdue Pharma LP and other drug manufacturers to aggressively market opioid painkillers.
The company also discussed its work with e-cigarette maker Juul, as well as some autocratic foreign governments, including Saudi Arabia. In December, he reached a solution with the Justice Department’s watchdogs on how the company reveals potential conflicts of interest. McKinsey did not acknowledge any wrongdoing in either the opioid or the disclosure agreements.
Much of Mr. Sneader’s response to those crises came as McKinsey moved from a culture based on individual partners’ judgments to one based on systems, rules, and processes, fueling dissent in its upper echelons, say people familiar with the issue. Historically, its partners have enjoyed a wide latitude in terms of work and their clients. McKinsey declined to make Mr. Sneader available for an interview.
Historically, the McKinsey business model has been based on “hiring the best people to do the most important work at a premium price,” says one person who has spent years with the company. If a potential customer considered that it was not important enough or that it did not contribute to a larger asset, the company would take a permit. “It is essential to his ethos to refuse work,” he said.
But in the years leading up to Mr. Sneader’s rise, McKinsey undertook a rapid expansion. The company was looking for new ways to grow and, with a decentralized management structure, there were few protections to prevent an ambitious partner from taking profitable, albeit problematic, customers, the person said.
Under Mr Sneader, the company’s most important partners had to approve controversial new customers, and McKinsey said he would not serve defense, intelligence, justice or police institutions in undemocratic countries. This has made it potentially more difficult for non-US partners to take on some customers and has been seen as a centralization of power away from partners, according to people familiar with the operations. In an interview with the Financial Times published this week, Mr Sneader said the company’s customer service risk committee, which assesses any new work that could raise flags, looked at more than 2,000 projects in 2020.
“It has certainly introduced higher risk protocols; higher levels of due diligence; the red lines about serving the public sector in some countries, “said the person who spent years at the firm, adding that partners in Mr Sneader’s camp believed it was” not feasible to return to an era where you can only do what like it or not you have to be governed by a compliance regime ”.
The company’s recent opioid settlement has also attracted opposition from non-US partners who were more willing to fight, said people familiar with the issue. Mr. Sneader’s letter to employees about the settlement was harsh in criticizing the company’s behavior, saying McKinsey did not meet his standards and “did not adequately recognize the epidemic in our communities or the terrible impact of opioid abuse and addiction, and for I’m deeply sorry about that. ”
Some partners felt that the language was too strong and that McKinsey’s advice to clients was legal and given in good faith, said people familiar with the matter.
The change of power highlights the complexity of running a global partnership. As a global management partner, Mr Sneader was a peer-to-peer premiere rather than an executive director, and his reforms were endorsed by senior partners. But when he was re-elected 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 leaves two other senior partners in the race to succeed Mr Sneader: Bob Sternfels and Sven Smit, senior partners in the McKinsey offices in San Francisco and Amsterdam, respectively.
Senior McKinsey partners will decide whether Mr Sternfels or Mr Smit will replace Mr Sneader in a final voting round, which is expected to take place in March, people close to him said. Mr 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, then vote in a first round. The two candidates who receive the most votes advance to a final round.
Among the problems Mr. Sneader dealt with was McKinsey’s work with electronic cigarette maker Juul. In 2019, a former Juul employee stated in a court case that, even though the company said it was removing flavored products from the market, McKinsey recommended that it sell mint-flavored nicotine pods. The New York Times and ProPublica reported that year that McKinsey also helped with immigration and US customs enforcement with changes, including reducing food and medical spending for detainees and speeding up deportations. In addition to the Saudi government, McKinsey worked for the Chinese government and withdrew 4 miles from a camp where Uighurs, 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 Mohammed, the son of the newly crowned king, had no direct path to the throne. His father, King Salman, put the prince in charge of economic reforms, and McKinsey was involved in devising a strategy to move the kingdom’s economy away from oil dependence.
In late 2015, the company’s research group, the McKinsey Global Institute, published a public report called “Saudi Arabia Beyond Oil,” which said “we see a real opportunity for the Kingdom to inject new dynamism into the economy through productivity.” and investment- led the transformation. “
The report gave McKinsey the upper hand on the strategy that Prince Mohammed was pursuing at a time when he was seeking approval from foreign affairs and political leaders to legitimize his claim to a greater role in leading the 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 the MBS, has been the daily ruler of the kingdom. He presided over economic reforms, as well as a brutal bombing campaign in Yemen, which led to a humanitarian crisis, blockades of many of his critics and a team of men who killed dissident writer Jamal Khashoggi in 2018.
A major project the company recently worked on was the prince’s plan for a city built from scratch called Neom on the far 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 enlisted to help plan. In thousands of pages of internal planning reports reviewed by the Journal, McKinsey detailed the use of a “13-pillar viability framework” and big data to quantify how pleasant Neom would be to live. The Saudi government has begun relocating locals from the land building the city.
Addiction experts agree on the most effective way to help opioid addicts: drug-assisted treatment. But most in-hospital rehabilitation facilities in the United States do not offer this option. Jason Bellini of the WSJ reports why the medication option is controversial and, in many places, difficult to find. Image: Ryno Eksteen and Thomas Williams (originally published on November 16, 2017)
Corrections and amplifications
Bob Sternfels and Sven Smit are senior partners in the McKinsey 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 at [email protected] and Vanessa Fuhrmans at [email protected]
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