VEP: McKinsey & Company 2003 (Vault Employer Profile)

Vault Employer Profile: McKinsey & Company

Staff of Vault

Vault

EMPLOY PROFILE VAULT EMPLOYER PROFILE:

MCKINSEY & COMPANY

BY THE STAFF OF VAULT

© 2002 Vault Inc.

Copyright © 2002 by Vault Inc. All rights reserved. All information in this book is subject to change without notice. Vault makes no claims as to the accuracy and reliability of the information contained within and disclaims all warranties. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, for any purpose, without the express written permission of Vault Inc. Vault, the Vault logo, and “the insider career networkTM” are trademarks of Vault Inc. For information about permission to reproduce selections from this book, contact Vault Inc., 150 W22nd Street, New York, New York 10011, (212) 366-4212. Library of Congress CIP Data is available. ISBN 1–58131–233–4 Printed in the United States of America

McKinsey & Company

INTRODUCTION

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Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 McKinsey & Company at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3

THE SCOOP

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History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

ORGANIZATION

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Managing Director’s Bio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Business Description . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

VAULT NEWSWIRE

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OUR SURVEY SAYS

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GETTING HIRED

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The Hiring Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Questions to Expect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Questions to Ask . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 To Apply . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44

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ON THE JOB

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Job Descriptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45 A Day in the Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .47 Career Path . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

FINAL ANALYSIS

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RECOMMENDED READING

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McKinsey & Company

Introduction Overview In an industry with a handful of leaders, McKinsey & Company is regarded as the most influential consulting firm in the world. Founded by James O. McKinsey in 1926, the firm enjoys more boardroom access, performs more industry-shaping work, disseminates more knowledge and earns more money per consultant than any other firm. With 84 offices in 44 countries and more than 7,000 professionals, McKinsey dominates the industry. McKinsey’s consultants are citizens of 90 countries, giving the firm a better claim than most to being a true global network. In a 2002 Universum survey, McKinsey was rated the company where MBAs would most like to work for the sixth year in a row. Former McKinsey managing director Fred Gluck once said of rival firms, “All I know is that every consulting firm anybody talks to always says they’re second to McKinsey.” Indeed, while not the largest consulting firm, McKinsey nonetheless sets the standard by which all other consulting firms are judged. In boardrooms and corporate offices around the world, McKinsey is known simply as “The Firm,” the first recourse for advice when business woes strike. Such a reputation makes McKinsey the most sought–after and expensive consulting firm in the world. McKinsey’s customers include some of the bluest of the blue-chip companies, including AT&T, Pepsi, GE, IBM and General Motors. McKinsey has longstanding ties with the CEOs of most major corporations, and many McKinsey alumni end up working for (or running) former clients. Powerful alums include Harvey Golub, chairman of American Express; Philip Purcell, chairman of Morgan Stanley; and Roger Ferguson, vicechairman of the Federal Reserve. (No wonder Fortune has called McKinsey “a CEO factory.”) Such close ties to McKinsey make the firm the natural choice for many CEOs when their corporations need management advice. A consultant at competitor Bain admits, “The hardest part about competing with McKinsey is that they have these deep relationships with senior management that lead companies to return to McKinsey, unquestioned, time and time again.” Besides serving huge global corporations, innovative startups, wealthy commercial banks, leading venture capital firms and vast technology companies, McKinsey also prides itself on offering pro bono assistance to educational, social, environmental and cultural organizations. McKinsey Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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McKinsey & Company Introduction

spokesman Andrew Giangola told Newsday that the firm takes on about 200 pro bono assignments each year, amounting to $100 million annually in donated time. Half of the firm’s consultants work on a pro bono engagement at some time during their careers. Recently, however, the golden child of consulting has faced its share of criticism and setbacks. The firm’s critics say competitors such as Bain and the Boston Consulting Group offer clients equally intelligent employees and a better record of strategy implementation. Insiders wonder whether the massive growth in the past decade – not to mention a stalled economy – might necessitate a less collegial management approach. And with major clients such as Enron, Swissair, Global Crossing and Kmart all filing for bankruptcy, McKinsey’s expertise has been questioned. Still, the increasing pressures and competition of the new economy have induced more corporations to turn to their old friends at McKinsey to get a jump on the competition. And McKinsey’s global orientation ensures that the firm, in serving clients, will be able to continue to draw upon a deep reservoir of talent and information worldwide. As a result, the firm’s pre-eminent position looks secure, at least for now.

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McKinsey & Company at a Glance Headquarters 55 East 52nd Street New York, NY 10022 Phone: (212) 446-7000 Fax: (212) 446-8575 www.mckinsey.com

KEY COMPETITORS • • • • •

Accenture A.T. Kearney Bain & Company Booz¦Allen¦Hamilton Boston Consulting Group

THE STATS

UPPERS

Employer Type: Private Company Managing Director: Rajat Gupta No. of offices: 84 2001 Consultants: 7,200 2000 Consultants: 12,000 1999 Consultants: 10,000 2001 Revenues: $3.3 billion 2000 Revenues: $3.4 billion

• Unsurpassed reputation • Strongest alumni network anywhere

DOWNERS • Draining intensity • Enron entanglement

PRACTICE AREAS Automotive and Assembly Banking and Securities Basic Materials Chemicals Consumer/Packaged Goods Corporate Finance and Strategy Electric Power/Natural Gas High Tech Insurance Marketing Media and Entertainment Nonprofit Operations Strategy and Effectiveness Payor/Provider Petroleum Pharmaceuticals and Medical Products Private Equity Retail/Apparel and Hospitality Telecommunications Travel and Logistics Services

THE BUZZ

WHAT EMPLOYEES AT OTHER FIRMS ARE SAYING

• • • • •

• • •

“The filet mignon” “Better at theory than practice” “Pinnacle of our profession” “Big brains, bigger bills, and even bigger egos” “Arrogant – every slide they present says, Source: McKinsey Analysis – but effective” “Quality of life sucks” “Family unfriendly” “The golden goose for strategy consultants”

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McKinsey & Company

The Scoop History Beginnings and endings McKinsey was founded in 1926 by James Oscar “Mac” McKinsey, a lawyer, CPA and University of Chicago management professor fascinated with the emerging science of management. McKinsey’s Chicago-based firm initially gave financial and management advice to accounting and engineering companies, focusing on serving its clients’ upper management – an unusual approach at the time. In 1929 James McKinsey took his first partner in Tom Kearney (who years later founded his own consulting firm, A.T. Kearney). In 1933 Harvard J.D. and MBA Marvin Bower, the man who would be king of McKinsey, joined the firm’s New York office. After James McKinsey left the firm to run and restructure the Chicago department store Marshall Field, Bower took over, essentially running the consulting partnership until McKinsey’s death in 1937. Following McKinsey’s passing, Bower and Kearney quarreled about the firm’s future, and in 1939 the two separated. Kearney retained the Chicago office and named it after himself, while Bower took the New York branch and named it after his mentor, McKinsey.

The Bower rules Bower installed a five-part code of conduct still followed today. He urged McKinsey employees to (1) put client interests ahead of firm interests, (2) serve the client in a superior manner, (3) adhere to high ethical standards, (4) preserve the confidence of clients and (5) be ready to differ with client managers and tell them the truth, however painful. Bower also redirected recruiting efforts away from experts who had worked many years in a single industry. Instead, Bower went after graduate business students, who could be molded into broad-based problem solvers and consultants. McKinsey thus became the first consulting firm to hire directly from business schools. Bower set other examples that were at one time part and parcel of McKinsey culture, but have either disappeared or are slowly disappearing. He mandated that all executives wear hats and long socks, to avoid the display of “raw flesh.” (The hat rule was eliminated amidst the creative dress codes of the 1960s.) Another Bower tradition that stuck, until recently, was his attitude

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McKinsey & Company The Scoop

toward the open discussion of money and profits: he thought there shouldn’t be any. Bower maintained that the firm would make more money if it did not worry about profits, and thus McKinsey fees were not performance-based or results-based. However, McKinsey has recently moved away from this practice. According to a July 2002 BusinessWeek article, “During the past 18 months, McKinsey has been structuring dozens of deals with blue-chip companies that call for the payment of an assignment-ending bonus if a client is satisfied with the results.” BusinessWeek also cited McKinsey’s newfound affinity to take equity in young companies in lieu of fees, largely in response to the dot com craze. A Bower “rule” that might prove to ensure McKinsey’s independence was established in 1963. Upon his retirement at age 60, Bower, instead of taking the company public for enormous profits, sold his shares back to the firm for book value – a precedent that future partners have since followed.

Losin ‘it The post–World War II era was a time of expansion for McKinsey, as companies seeking to profit turned to the consulting firm to be “McKinseyed.” The company expanded overseas in 1959, opening its first international office in London, followed by Melbourne, Amsterdam, Dusseldorf, Paris, Zurich and Milan. In 1964, McKinsey began publishing The McKinsey Quarterly, which BusinessWeek has called “The foremost journal of management ideas produced by a consulting firm.” But growth faltered in the 1970s, when the Boston Consulting Group began to market corporate strategy theories with catchy buzzwords such as “growth-share matrix” and “experience curve.” McKinsey, which rejects marketing fads on principle, ended up losing much business to BCG and other upstart consulting firms. And McKinsey realized that its expansive strategy backfired. “We discovered that, in growing too fast, we had threatened a precious commodity: our client relationships,” admits the firm on its web site. In 1986, when BCG and Bain began luring away Harvard’s Baker Scholars with extravagant signing bonuses, McKinsey fought back by creating the MBA summer internship; all the leading consulting firms and investment banks soon followed. In 1989, the acquisition of the Information Consulting Group proved somewhat awkward, as a company culture clash caused many former ICG employees to jump ship.

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McKinsey & Company The Scoop

Livin’ large again The worldwide 1980s economic boom got McKinsey back on track, and in the 1990s, the firm stepped up its overseas expansion. Rajat Gupta took over as head of McKinsey in 1994, becoming the fist foreign-born head of the firm. By 2001, Gupta had increased McKinsey’s number of offices from 58 to 84, raised consultant headcount from 2,900 to 7,700 and nearly tripled revenues (from $1.2 billion in 1993 to $3.4 billion in 2000). From 1994 to 1997, McKinsey opened offices in Moscow, Shanghai, Beijing, Perth, Kuala Lumpur, Bogota and Singapore. March 2000 saw a new office open in Tel Aviv. (Previously, McKinsey had performed client work for Israeli companies via other satellite offices.) The new office in Israel offered consulting services to large Israeli industrial companies and startups. In February 2000, McKinsey enhanced its presence in India with the launch of India Venture 2000, which was created to help Indian entrepreneurs establish and grow new IT or e-commerce businesses. In India, the firm has advised liquor company Shaw Wallace on an operational restructuring, engineering and construction firm Larsen & Toubro on strategy matters and Prime Minister Atal Behari Vajpayee on foreign investment issues. In January 2001, McKinsey took a stake in India’s Aptech Internet in exchange for providing consulting services. In March 2001, McKinsey implemented a plan to significantly strengthen its corporate finance and strategy practice in Singapore. (Launched just three years earlier, the Singapore office has counseled some of the country’s most prominent clients, including Singapore Airlines and the chewing gumbanning national government.) McKinsey signed a December 2001 agreement to counsel the Savings and Deposits Insurance Fund of Turkey on problems of that nation’s banking industry. In the past few years, McKinsey has also opened offices in Abu Dhabi, Athens and Dubai.

Dot–com delirium During the Internet craze of the late 1990s, McKinsey’s revenues, like those of most consulting firms, soared. During 1999 and 2000, the peak years of the dot-coms, McKinsey worked on more than 1,000 Web-related assignments. The firm’s revenues reached an all-time high of $3.4 billion in 2000. But when the bubble burst, many of McKinsey’s previously highflying e-commerce clients were unable to pay for the cost of a phone call, let alone an expensive monthly consulting fee. And while McKinsey, unlike many other consulting firms, avoided taking large equity stakes in clients that

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McKinsey & Company The Scoop

couldn’t pay in cash, the firm did take some small ownership chunks, many of which became worthless and thus decreased McKinsey’s bottom line. During the tech boom, McKinsey lost many of its best consultants, who (not surprisingly) jumped ship to latch onto alluring Web-related ventures. In 1999 the firm’s San Francisco office saw a third (150 members) of its staff walk out the door. One year later, though, McKinsey had more employees than it knew what to do with. Out of the 3,100 MBAs who were extended offers in 2000, McKinsey expected 2,000 acceptances; the firm received more than 2,700. “We honored every offer and didn’t push people out,” Gupta told BusinessWeek in July 2002, “and we had no professional layoffs other than our traditional up-or-out stuff.”

Not recession-proof Gold-standard McKinsey may have avoided much of the turmoil that hit lesser consulting firms, but it has not proved totally immune to the recession of 2001. In November 2001, the firm announced that it would cut 5 to 7 percent of its 3,000 support staff in the United States and Canada. Though no consultants have been laid off, more have been found lacking and asked to leave as part of the firm’s up-or-out policy. The “up-or-out stuff” amounted to 9 percent of all analysts and associates in 2001, compared with 3 percent a year earlier. (The firm’s voluntary attrition rate has dropped precipitously as a result of the recession.) In some offices, new hires have been asked to defer their start dates. McKinsey has looked to cut other costs as well. According to The New York Times, McKinsey “cut travel and canceled or scaled back training retreats – even the Reese’s Peanut Butter Cups at the firm’s New York reception desk were eliminated.” McKinsey also initiated a July 2001 capital call, in which many of its 850 partners had to make large cash contributions to the firm. Depending on tenure and performance issues, some senior-level directors ponied up as much as $200,000 each. The move was not a new one for the firm, which employs a “just-in-time” cash management strategy for tax reasons, but it appeared to be an indication that the economic climate had hit the firm hard. (McKinsey contends that that capital contributions are routine and are not a reflection of firm performance.)

The new guy In addition to its many international purchases during 2001, McKinsey acquired Chicago-based branding firm Envision in March for an undisclosed

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McKinsey & Company The Scoop

sum. But perhaps the firm’s biggest acquisition of the year involved just one individual: Michael Wolf. The media and entertainment consultant jumped ship in March 2001 from Booz Allen Hamilton. Wolf, whose client list at Booz Allen included MTV, Paramount Pictures and the National Basketball Association, became one of the first non-homegrown senior partners in McKinsey’s history.

Enron and other chapter 11s The fortunes of a consulting firm’s clientele can make or break its reputation. This has seldom been a major worry for McKinsey, given that its list of client companies reads like a Who’s Who of business success and power. In 2001, however, one prominent McKinsey advisee, Enron, underwent a complete and much-publicized collapse. Amidst the resulting morass of criminal investigations and bankruptcy proceedings, the relationship between the beleaguered energy company and McKinsey came to the fore. The two had ties dating back almost to Enron’s inception. Enron CEO Jeff Skilling joined Enron after working as a McKinsey consultant, and senior McKinsey partner Richard Foster served as an advisor to Enron’s board of directors. Over the course of a number of years, McKinsey consultants worked out of Enron’s Houston offices, racking up millions in fees – topping out at more than $10 million during one year – for dispensing strategy advice, according to BusinessWeek. As Enron’s accounting and legal advisors became embroiled in the scandal surrounding the company’s financial reporting irregularities, McKinsey’s role, predictably, was scrutinized. With dark clouds swirling, the firm sought to distance itself from the activities that brought on the investigation. “In serving Enron, McKinsey was not retained to provide advice to Enron or any Enron-affiliated entity with respect to the company’s financial reporting strategy, methods of financing, methods of disclosure, investment partnerships or off-balance-sheet financing vehicles,” a firm spokesperson told The Wall Street Journal. The firm further asserted that any allegations that McKinsey served as a “decision maker or a necessary review body on Enron’s asset investments are flat-out wrong.” McKinsey managing director Gupta also distanced the firm form Enron’s troubles. “In all the work we did with Enron,” Gupta told BusinessWeek, “we did not do anything that is related to financial structuring or disclosure or any of the issues that got them into trouble.” Enron wasn’t McKinsey’s only blue chip client to go bankrupt in 2001. Kmart and Swissair also filed Chapter 11 during the year. Kmart was a Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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McKinsey & Company The Scoop

McKinsey client from 1994 to 2000, during which time Kmart lost market share in a devastating price war with Wal-Mart. McKinsey advised Swissair on a strategy shift that led to Swissair paying $2 billion for stakes in other airlines. The large outlays played a major role in Swissair’s bankruptcy.

Compensation Pay According to Vault sources, base pay for all levels varies widely based on performance. McKinsey conducts two reviews per year, one in the summer and one in December, and salaries are revised at the beginning of the calendar year. However, any significant increase in base pay does not come until after an associate consultant or consultant has been with the firm more than one year (thus a June, 2002 hire will not receive a major upward revision until the beginning of 2004). Pay packages typically include signing bonus, salary, performance-based bonus, profit sharing and graduate school assistance. Total undergrad starting pay package (in the U.S.): $55,000 plus signing bonus and profit sharing Total MBA starting pay package (in the U.S.): $160,000 plus includes signing bonus and profit sharing

Perks • Laptop computers • Cell phones • Palm Pilots/PDAs • Profit sharing • Free food/drinks • Sports/theater tickets • Cafeteria • Employee lounge area • Tuition reimbursement • Gym membership discounts/On-site gyms • Long-term disability insurance • Accidental death/dismemberment insurance • Concierge service (for a nominal fee) 10

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McKinsey & Company

Organization Managing Director’s Bio Rajat Gupta, McKinsey’s managing director (the firm’s approximation of a CEO), is said to be the closest person in McKinsey, by reputation and deed, to founding partner and legendary McKinsey patriarch Marvin Bower. Like Bower, Gupta initially opted to relocate the firm’s de facto world quarters. Bower moved the firm to New York after James McKinsey’s death in 1939, and Gupta, after taking charge, decided to run the global company from Chicago rather than New York. Although Gupta has since moved back east (he’s now stationed in Stamford, Conn.), the initial change was almost as startling to some as Gupta’s election. Gupta’s personality doesn’t seem to fit the mold of the egotistical, WASPy, Ivy League grad said to be the McKinsey standard, and Gupta cites his election as proof that the McKinsey stereotype is mythical. “McKinsey is a meritocracy,” Gupta maintains. “We take a long-term view of people’s contributions.” And indeed, the mild-mannered Calcutta native admires humanitarians such as Mother Teresa and 19th-century Hindu reformer Swami Vivekanada. His method of leadership is said by peers to be nonconfrontational and conciliatory, devoted to consensus and the greater good of the company. Gupta received a scholarship to Harvard Business School in 1971, after obtaining a mechanical engineering degree from the India Institute of Technology in New Delhi. Upon graduation from Harvard, he emerged with an MBA and a reputation as the brightest member of his class. Still, Gupta was initially passed over for a job at McKinsey due to his lack of experience. After telling Harvard professor Walter Salmon of his fate, Salmon dashed off a letter to McKinsey, urging the firm to reconsider its decision. Gupta was offered a position, and the rest is history. Gupta continues to be something of an icon at McKinsey; employees describe him as omnipotent, admired and distant. Yet Gupta’s impact on the firm is anything but removed. Indeed, under his reign, McKinsey has metamorphosed and matured. Gupta has overseen the opening of 47 offices in 21 countries and a rise in revenues to over $3 billion. Gupta will step down in 2003; he’s on his third term as managing director, the most allowable under McKinsey regulations.

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McKinsey & Company Organization

Business Description Shunning publicity McKinsey is elitist and publicity-shy by design, and this mystique veils the inner workings of the firm. To prospective clients and the general public, McKinsey presents itself as a seamless continuum of brilliance, with its roster of consultants studded with Rhodes Scholars, law review editors, PhDs, and nuclear physicists. This network of high-quality brains continues for life; every year, McKinsey publishes a volume listing every living person who has ever worked for the firm, where they live, and their current occupation. Its cover cautions: “This directory is to be used exclusively by alumni of the firm.” Working for the firm has been compared to entering a secret society, and McKinsey consultants are said to possess outsized egos. McKinsey rebukes those who would call the firm a secretive organization. “Only after many years have passed and if our clients themselves publicly refer to our involvement, do we acknowledge that we have served a company,” the firm contends. “This policy is not the result of some cultivated secrecy or mystique. It is what we believe is professional behavior and the appropriate posture given our conviction that we supplement our clients’ leadership, but never replace it.” Of course, McKinsey consultants do often rise to lead client firms.

All over the map This web of insiders and alumni springs from McKinsey’s unique decentralized structure, a network of offices that operates as a unified firm. McKinsey is reluctant to admit it has a global headquarters at all (though it runs its backbone administrative work from New York City). McKinsey is a corporation, but operates as a partnership. The ownership and management of the firm is vested entirely in nearly 700 active directors and principals (which roughly correspond to senior and junior partners). The managing director (the firm’s chief) is elected every three years by McKinsey’s directors in a process some equate with the selection of the Pope by the College of Cardinals. Rajat Gupta is the current managing director, although he is most often referred to by a colloquial title: “Head of Firm.” Gupta is McKinsey’s first non-Western managing director, and his rise is indicative of McKinsey’s increasing internationalization. After 30 years of aggressive global expansion, a non-American majority controls its governing shareholder committee. A full 60 percent of McKinsey revenues come from 12

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McKinsey & Company Organization

overseas, with further growth expected from new markets in Russia, Eastern Europe and China. McKinsey’s work in India has greatly increased in recent years and the office in New Delhi is among the firm’s fastest growing.

Lead or leave (or both) Whether you call it “up or out,” “succeed or leave” or the natural workings of a pure meritocracy, the majority of consultants who start at McKinsey end up leaving along the way. On average, only one in four or five consultants who starts at McKinsey finishes the hallowed journey to principal. Then again, many leave by choice. “It’s a pretty competitive process,” says an insider, “though lots of people don’t want to make partner, so they leave.” Those who jump ship may find themselves in politics (like Roger Ferguson, vice chairman and governor of the Federal Reserve Board); as best-selling authors (the authors of the enormously successful business guide “In Search of Excellence” were former McKinsey consultants); or founders of rival consultancies (as Tom Steiner did with Mitchell Madison Group, subsumed into the failed e-consultancy marchFIRST). Many McKinsey consultants wind up in top spots in corporations: The CEOs of Delta Airlines, Polaroid, Morgan Stanley Dean Witter, Amgen, CNBC and Levi Strauss are all alums of the firm.

Doing its homework McKinsey publishes a large number of booklets, documents, papers and magazines, including the well-regarded McKinsey Quarterly (now available in an online version, which has more than 300,000 subscribers). McKinsey partners are notorious for writing books independently. In addition to In Search of Excellence, recent books penned by McKinsey alums include Competing on the Edge by Shona L. Brown and Kathleen M. Eisenhardt and Banks Strategic Choice, by Sakon Uda, both published in 1998. In 1999, publications included The Alchemy of Growth: Kickstarting and Sustaining Growth in Your Company, by Mehrdad Baghai, Stephen Coley and David White; Net Worth: Shaping Markets When Customers Make the Rules, by John Hagel and Mark Singer; The McKinsey Way, by Ethan M. Rasiel; and Do IT Smart, by six McKinseyites. In 2000, Measuring and Managing the Value of Companies by Tom Copeland, Tim Koller and Jack Murrin was published. And in 2001, titles include The War for Talent by Ed Michaels, Helen Handfield-Jones and Beth Axelrod; 20/20 Foresight: Crafting Strategy in an Uncertain World, by Hugh Courtney; and the must-read Creative Destruction, by Richard Foster and Sarah Kaplan.

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McKinsey & Company Organization

Instituting its clout Much of McKinsey, whose solid reputation comes from its history of research and content production, is known as a pre-eminent information source on globalization, governance, organizational performance and corporate strategy. The McKinsey Global Institute, established in 1990, combines the discipline of economics and management as an independent research group under the aegis of McKinsey. The Institute researches a variety of topics with a bent towards the global economy and publishes its findings in reports. The Global Institute, located just steps from the White House in Washington, D.C., has been estimated to spend more than $100 million a year on its information gathering and internal research. In 2001, the firm launched The McKinsey Institute on the Nonprofit Sector, with Senator Bill Bradley as chairman of its advisory board. The well-respected McKinsey Quarterly runs articles on e-commerce, telecommunications, strategy and other fields. And McKinsey also thinks about its own business approach, hoping to understand the difference between change that is fundamental and change that is fundamentally faddish. For example, where the firm had put client service ahead of wealth creation for clients during the recent Internet euphoria, it now applies the principles of strategic thinking, industry and functional knowledge and analytical rigor to today’s environment.

Giving something back McKinsey maintains a strong nonprofit practice, which coordinates the firm’s community and pro bono activities. Each office devotes 5 to 10 percent of its consultants’ time to work for nonprofit operations. The firm served more than 200 nonprofit and/or public sector clients in 2001, representing an inkind contribution of well over $100 million. The New York office, for example, has performed such work for the United Way, the World Economic Forum and the New York City Opera, in addition to several 9/11 relief-related engagements. In fact, in the wake of September 11, McKinsey’s Big Apple branch worked on nine separate pro bono assignments, including serving the Lower Manhattan Development Corporation, overseeing the development of a victims database for New York State Attorney General Elliot Spitzer and studying how New York Police Department and Fire Department members reacted during the World Trade Center attacks.

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McKinsey & Company Organization

Tech-savvy and prudent As an institution focused on the most important issues facing management, McKinsey builds relationships with clients – it has more than 400 active client relationships that span more than 15 years – and has historically been known as a strategy consulting firm. But the firm has been adapting to the dynamics of the changing economy and client demand, and is now pursuing technology clients and smaller, market innovating companies with more vigor. McKinsey’s technology arm (known as the Business Technology Office), comprised of more than 400 consultants and integrated into the firm’s mainstream strategic competency, helps clients manage their IT investments and integrate technology into core strategies. The firm will not, however, do full-blown systems implementation. (That’s for Accenture and its ilk.) While it has tried to remain at the forefront of technology, McKinsey avoided some of the other fads of the era. “During the dot-com era, we very much said, ‘We are a client services firm,’” McKinsey managing director Rajat Gupta told Singapore’s Business Times in June 2001. “Unlike many of our competitors, we decided we were not going to own businesses, we were not going to start funds, we would stick to what we know best. We were going against what was fashionable, but I’m happy that we did.”

@ the forefront McKinsey has also taken an aggressive stance in the acceleration/incubation space, with the launch of 26 “Accelerators” worldwide. The latest Accelerator to launch was a 22,000 square foot facility in Orange County, Calif., serving the “tech coast” community. The worldwide locations that can launch a fully functional business in six to nine months range from Sao Paulo to Hong Kong to Munich. In addition, since its e-commerce practice was founded in 1998, McKinsey has worked on more than 1,000 e-commerce engagements. Approximately one-quarter of this work involved building companies from scratch. The Firm has also been deeply involved in building business-to-business exchanges, including working with major online exchanges in the agricultural, chemical, tire and rubber and electronics industries. This ecommerce team has hands-on e-commerce operational expertise in more than 100 industries and has played key roles in more than 150 startups.

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The power of three Excellence-obsessed McKinsey has a term, “100 percent to the third power,” which means that the firm seeks to bring 100 percent of firm capabilities to bear on 100 percent of McKinsey clients, 100 percent of the time. According to senior partner Lowell Bryan, the head of McKinsey’s global industries practice, the key to achieving this goal will be to further increase electronic exchange of information within and without the firm.

Industry specialization Though it is still decidedly a general strategy firm, McKinsey is turning more and more to information technology assignments and industry specialization. The firm has upped its hiring of “specialized consultants” who mostly ply their trade in a single industry or functional area. “It’s still acceptable to be a generalist, but more and more people are doing specific work. Analysts are still generalists, but more associates are now specialists and managers are often specialists in a few areas.” One consultant says, “McKinsey is now more careful about how it builds its teams. They will staff with more experts and specialists.” Experts in almost all areas are said to be “in short supply.” The firm is most actively seeking experienced hires in the insurance, financial services, health care, electronics and consumer goods industries and functional hires in information technology, marketing (from branding to pricing), operations, business dynamics, corporate finance, e-commerce and energy.

Locations McKinsey operates out of 84 offices in 44 countries.

U.S. • Atlanta, GA • Austin, TX • Boston, MA • Charlotte, NC • Chicago, IL • Cleveland, OH • Dallas, TX

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• Detroit, MI • Florham Park, NJ • Houston, TX • Los Angeles, CA • Miami, FL • Minneapolis, MN • New York, NY (HQ) • Orange County, CA • Palo Alto, CA • Pittsburgh, PA • San Francisco, CA • Seattle, WA • Stamford, CT • Washington, DC

International • Amsterdam, Netherlands • Antwerp, Belgium • Athens, Greece • Auckland, New Zealand • Bangkok, Thailand • Barcelona, Spain • Beijing, China • Berlin, Germany • Bogota, Colombia • Brussels, Belgium • Budapest, Hungary • Buenos Aires, Argentina • Caracas, Venezuela • Cologne, France • Copenhagen, Denmark • Delhi, India

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McKinsey & Company Organization

• Dubai, United Arab Emirates • Dublin, Ireland • Dusseldorf, Germany • Frankfurt, Germany • Geneva, Switzerland • Gothenburg, Sweden • Hamburg, Germany • Helsinki, Finland • Hong Kong, China • Istanbul, Turkey • Jakarta, Indonesia • Johannesburg, South Africa • Kuala Lumpur, Malaysia • Lisbon, Portugal • London, England • Madrid, Spain • Manila, the Philippines • Melbourne, Australia • Mexico City, Mexico • Milan, Italy • Monterrey, Mexico • Montreal, Canada • Moscow, Russia • Mumbai, India • Munich, Germany • Osaka, Japan • Oslo, Norway • Paris, France • Prague, Czech Republic • Rio de Janeiro, Brazil • Rome, Italy • Santiago, Chile

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• Sao Paulo, Brazil • Seoul, Korea • Shanghai, China • Singapore • Stockholm, Sweden • Stuttgart, Germany • Sydney, Australia • Taipei, Taiwan • Tel Aviv, Israel • Tokyo, Japan • Toronto, Canada • Vienna, Austria • Warsaw, Poland • Zurich, Switzerland

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McKinsey & Company

Vault Newswire June 2002: Not using their time wisely McKinsey’s average utilization – a measurement of how busy consultants are – sank to its lowest level in 32 years. In a Webcast obtained by The New York Times, McKinsey managing director Gupta told employees that utilization declined 14 percent in 2001. A few weeks later, BusinessWeek reported that McKinsey utilization firm-wide was 52 percent, down from its lofty 64 percent level during the dot-com craze.

May 2002: Project Coolkat puts heat on McKinsey An internal McKinsey report revealed that the firm’s ability to manage research and information weakened during the 1990s, when the firm rapidly expanded its operations. According to Project Coolkat, the name of the report written by several McKinsey insiders, “The ability of our consultants to tap into and effectively leverage our knowledge is poor…The way knowledge needs are served is inefficient.” The analysis resulted in a shake-up in McKinsey’s research practices and an increase in the firm’s spending on research.

May 2002: Big merger means big fee for McKinsey McKinsey advised Hewlett-Packard on its controversial $19 billion acquisition of Compaq. McKinsey received $9 million in fees for its work on the deal, which finally closed the first week of May after an eight-month proxy fight and a three-day trial.

August 2001: An old-fashioned brand war In a move that might have signaled the beginning of a turf war between the advertising and consulting industries, McKinsey purchased Chicago-based branding consultancy Envision. Historically, branding strategy has been a closely guarded facet of the advertising business.

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McKinsey & Company Vault Newswire

April 2001: Leaner and meaner According to a study by the McKinsey Global Institute, Japanese companies exposed to foreign competition are 20 percent more efficient than their global counterparts, while Japanese companies that focus on the domestic market are 37 percent less efficient.

March 2001: Get out, already! In an interview with Financial Times, McKinsey managing director Gupta fretted that the attrition rate at McKinsey had fallen to 12 percent per year, 5 percent below the “equilibrium level” of 17 percent. Gupta also noted that during the height of dot-com fever, turnover rose to 21 percent at the firm.

October 2000: The European McKinsey mafia There are 750 McKinsey alums living in Britain, reports The London Times; 25 percent work for companies worth over a billion pounds.

May 2000: Hooking up with General Atlantic Partners McKinsey signed on as the strategic advisor to Apollis AG, a new company founded by General Atlantic Partners that will create and support wireless applications in Germany and soon throughout Europe. This alliance signaled McKinsey’s increasing efforts to expand into the trendy wireless space.

March 2000: Added bonus for The Firm’s consultants McKinsey has announced that associates’ pay will be increased. Crain’s New York Business reported that the total compensation package for incoming MBAs will be in the $150,000 range.

February 2000: Discord at the top? The Firm allegedly saw some seeds of discontent sown when managing partner Rajat Gupta was re-elected for his third three-year term. A report the following month in The Economist maintained that Gupta withstood internal challenges to the throne from Ian David, manager of McKinsey’s London office; Clay Deutsch, former head of the Cleveland/Pittsburgh office; and Michael Patsalos-Fox, the New Jersey office manager, among others.

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January 2000: India’s IT industry poised for huge growth A McKinsey study of the Indian technology industry has concluded that the industry could grow to $87 billion by 2008 if the government can improve its telecommunications infrastructure. In addition, McKinsey says that the IT industry has the potential to provide India with 2.2 million new jobs, attract foreign investment totaling $5 billion and account for more than 7.5 percent of India’s GDP by 2008.

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McKinsey & Company

Our Survey Says Getting there is half the battle … …the other half is staying. McKinsey is a faithful practitioner of the up-orout system for associates (people hired from graduate school or industry) – if in two years you don’t get a promotion, you get the boot. This sort of barebones meritocracy “makes the atmosphere very demanding and shortens people’s careers,” reports one McKinsey consultant. Many people thrive in such an environment; one respondent calls McKinsey “extremely performance-oriented, but at the same time very collegial and friendly.” McKinsey’s is by many accounts “a subtle pressure-cooker culture which people won’t admit to,” says another, while a third tells Vault that to succeed at McKinsey, “you sacrifice a great deal in terms of personal freedom. ‘Up or out’ is alive and well here – having it is good; getting caught in it will not be.” Nevertheless, it’s the place everyone wants to be; as one source reports, “everybody who goes to a B-school wants to work here. Who wouldn’t be proud of that?” The typical undergraduate stays at McKinsey for around two years, then leaves for graduate study or another industry. Indeed, many view their time at McKinsey as a stepping-stone. “The McKinsey name has a very strong reputation, which makes exit opportunities very attractive,” says one respondent. “It’s a fantastic springboard to where you want to work later on,” says another insider. “The McKinsey network is very strong.” And in any case, few see their careers as a long-term project: “I view working here like playing for the Yankees – I am not sure how long they will think I am good enough, but while I am here it is an amazing ride.”

I did it McKinsey’s way As the 800-pound gorilla of the consulting world, McKinsey expects its employees to do as it says – right down to their writing style and interpersonal skills. “It’s a very strong culture,” one consultant tells Vault. “You are required to learn the McKinsey way of writing documents, interacting with customers and presenting.” Unlike some firms, McKinsey is very concerned about its internal culture, and aspires to create “a collegial, relatively nonpolitical, and meritocratic environment in which people feel an obligation to express their opinions.” The company even includes an “obligation to dissent” in its values statement, meaning that if you disagree with someone, even a higher-up, you are required to say so. And we hear that such dissent is “always well-received, even in high-pressure situations.” But while most Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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sources say the firm has succeeded in that respect, it’s also a place where “people are a little more careful about what they say, have less time to shoot the breeze, and are a little more concerned with covering their own asses than with helping you out or being fair. However, it’s a friendly place on the whole.”

Getting along McKinsey may attempt to maintain a uniform culture, but insiders tell us that the day-to-day quality of life can vary greatly from office to office. One source, based in Dallas, tells us that that office is an “extremely friendly place where the partners, even directors, know all the business analysts and treat them well.” On the other hand, the source tells us, “Houston is quite the opposite.” Many agree that the firm’s culture is “very partner- and officespecific,” while one consultant comments that “usually the treatment is professional and respectful.” But even with well-regarded partners, the lines of communication are not always entirely open, says an insider: “Learn to wear the management mask and talk the management speak. Don’t spill your guts with them; they won’t tell you the truth exactly either.”

McKinsey culture: Land of the smart and insecure? “A group of energetic, intelligent young professionals,” is how McKinsey consultants describe the firm. A consultant in the DC office says: “The average age is 24 to 32 – it’s an environment geared toward that age group.” One consultant notes, though, that “a lot of the people here are pretty square.” Another McKinseyite praises the teamwork at the firm: “[The culture] is very collaborative. People in Australia will get on a plane and fly to your client in the middle of the night to help you out with a project.” Consultants also share ideas and expertise at McKinsey; employees say the firm “is very internalknowledge driven. Knowledge creation and dissemination gets rewarded internally.” As for prevailing attitudes, another insider notes that “most people are down-to-earth, although some are very elitist. I don’t find the analysts very competitive. They always want to help each other out. They have lots of committees and panels to assist each other.” A different insider, however, is not so sparing in her annoyance: “The people here are a step removed from reality. Because they’re making changes at a global level, they forget how to grapple with day-to-day issues. Thinking at a higher level leads to a lack of common sense.” Another insider says McKinsey’s culture is no worse than the rest of the industry. “Consulting is 26

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full of smart and insecure people. When you’re put in the same room with consultants, you want to be the best one. It has to do with self-generated pressure.”

Building leaders of tomorrow’s business McKinsey staffers enjoy quoting one of Managing Director Rajat Gupta’s sayings: “We are not about building partners at McKinsey, we are about building leaders of tomorrow’s business.” Others pick up Gupta’s banner, saying: “Everyone leaves, it’s just a matter of determining what’s the best timing.” When consultants leave, “it’s seen more as a positive opportunity for the departees than a huge loss to the firm”; therefore, “leaving is not a taboo subject.” Insiders feel that the turnover rate may seem high, but “a lot of people come to McKinsey for reasons other than making partner.” Thanks to a sickly Nasdaq, “people have been leaving much more slowly since the dotcom bubble burst.” And when consultants do leave McKinsey, they enjoy “a strong alumni network. The firm keeps in touch with you regardless of your status.”

Status and the occasional carpet stain The consensus among McKinseyites is that their employer is “widely considered one of the better consulting firms, if not the best.” One employee crows: “McKinsey just has an aura of prestige.” And in countries like Great Britain, McKinseyites reportedly are considered “intellectual demigods.” One associate claims: “McKinseyites can write their own ticket in British politics,” pointing to the fact that “several of the most senior members of the Tory party are ex-McKinseyites.” Nevertheless, not all McKinseyites are caught up in their firm’s sparkling reputation. “All that glitters is not gold,” remarks one. “You expect this place to be an Eden, but it’s not. There are stains on the carpet. Sometimes you work on a project and it winds up being fairly uninteresting. Sometimes a client changes his mind on a project plan and the result sucks.”

Stellar selectivity You’d expect a firm like McKinsey to be ultra-selective. You’d be right. In the recruiting process, the selection process is “very rigorous but very fair” and “completely merit-based.” Insiders describe it as “not easy” to make it into the firm. One insider explains, “Last year it was still very selective, and now the job market has changed. People are returning [from dot-coms]. The bar is set much higher now.” “Relative to other consulting firms,” boasts one Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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insider, “it is the most or among the most selective.” This means that “when people get offers from us and from others, the vast majority end up coming here.” A McKinseyite notes: “It’s self-perpetuating that McKinsey attracts the best people. Many people come into a place like Harvard Business School and decide they’ll never work for McKinsey because it’s too square and too conservative. But at Harvard Business School, they’ll invite almost any firstyear who wants to interview. Yet they’ll only hire a few summer associates.” The result, says one insider, is that “even if you don’t want the job, you want the offer, because it’s such a difficult and prestigious offer to get. It’s challenging to get and everyone wants it. Because it’s hard to get, they end up getting some damn good people.” Academics aren’t the only qualification, however, for becoming a McKinsey consultant. “Given two people with the same analytical skills, we always want someone who is fun,” says one McKinsey recruiter.

Tools of the trade For McKinsey, knowledgeable and capable consultants are its lifeblood. The Firm is the type of place where “you learn a lot and are given a lot of responsibility from the first day.” To make that possible, it puts all its new hires through a program called BCR, or Basic Consulting Readiness, that “teaches the approach to solving client problems.” It includes “introductory consultant training, basic framework training, introductory leadership training, engagement management training, client development training and partner introduction.” Advanced training follows a year later, when McKinsey brings in an outside training firm to go over the more qualitative aspects of consulting like communications, engagement/leadership and influencing skills. On average, a consultant gets two days of training a month, as well as a weeklong program with each promotion. But because McKinsey relies heavily on its apprenticeship program, which matches new hires with more seasoned staff, the “focus is very much on on-the-job coaching.” One caveat: Despite excellent training at the associate level, McKinsey’s efforts are “not as extensive for business analysts [i.e. undergrad hires].” Nevertheless, respondents tell us the opportunities are always there if you want them: “If you’re interested in learning about a particular industry, you just ask the partners.”

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Meant for mentors “McKinsey tries to keep its employees happy. Every incoming analyst and associate gets a Development Group Leader (DGL),” declares one enraptured McKinseyite. (Analysts get senior engagement managers as DGLs; associates get partners.) “The DGL is there to assist and advise you. Usually a senior person in the firm, the DGL has quite a bit of clout – especially if you’re experiencing a problem and need assistance. The firm has empowered the DGLs to help you. For some people they are simply safety nets, for others they become real mentors. My DGL was of huge assistance. When I explained I wanted to work in the telecom industry in Europe, my DGL advised me on the proper procedures. He also put in a good word for me with the staffing coordinators [people who do the matching between clients and McKinsey staff].” Another insider believes that the “Buddy Program” is a true McKinsey asset. “In the ‘Buddy Program,’ new analysts are assigned a second-year analyst who becomes their older, wiser cohort. Since your Buddy has been at the firm only a year longer than you have, he doesn’t have much pull. Unlike a DGL, he can’t remedy a bad situation.” Is the “Buddy Program” helpful or just a form of we-care-about-our-employees lip service? “My Buddy was important,” another insider reveals. “She gave me the inside scoop on things I was too new to know – like which people to avoid.”

Performance reviews: pressure or plus? Performance reviews are an essential part of life at McKinsey, according to insiders. “They give you feedback along the way. At least 50 percent of your promotional chances depend on your feedback.” Since “only one out of five new associates is still at the firm five years later,” the firm is “vigilant about pushing out those who don’t meet McKinsey’s exacting standards.” Insiders say “feedback is given in both formal and informal channels. The formal part is done a couple of times a week during a study. The informal feedback can be weekly.” Feedback is “both written and verbal. McKinsey has a template consultants fill out that covers four or five important dimensions.” Insiders say that, in giving feedback, “the emphasis at McKinsey is on problemsolving ability, working on a team, communications and client management.” Written performance reviews of junior consultants are comprised of page upon page of blunt criticism. Although superiors constantly monitor and review underlings, junior consultants rarely provide formal reviews of their bosses.

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Making partner Want to be a partner? You’d better deliver on the following: ‘stellar client service,” “contributions to the office [e.g., recruiting], contributions to a practice [e.g., knowledge development] or development of critical expertise that is avidly pursued by other consultants.” Another consultant gives this advice: “You have to become an owner of the firm, meaning developing or contributing to client relationships or developing specific knowledge in an area.” Starting off, “everyone has the same chance,” and “prospects are good.” Keep in mind that the road to partnership is “an extremely challenging route” which can take “about five to six years from an associate [or other graduate degree] level hire.”

What’s in it for me? Compensation at McKinsey is said to be “about average for the industry,” though one source says it “varies significantly, depending on geography, tenure, year of entry and performance. People with the same tenure in the same office may have differences of 30 to 40 percent.” Salaries are rumored to be “the same across all campuses in a country, so it’s country-based, based on competitive market conditions in a given area.” One McKinsey insider notes, “Future increases in pay are based on the previous year’s pay, so you basically have to push for a large first-year package to make the biggest bucks later on.” One McKinseyite warns: “You cannot negotiate with McKinsey. Your pay each year gets decided.” Pay at the firm is based on individual performance; McKinsey’s senior partners receive salaries in excess of $1 million a year. A McKinsey insider asserts that the pay package has four components: “One, signing bonus; two, salary; three, performance bonus; four, profit sharing – historically, it’s a set percentage of salary.” In some countries – especially the U.K. – the firm will “give people a car as a signing bonus.” Along with the industry-standard cell phone/PDA/laptop package, the firm also offers tuition reimbursement for advanced study. Business analysts receive “full tuition reimbursements if they go to a business-related grad school, including law school, and return.” As far as non-consulting staff, McKinsey will pay tuition for courses, provided employees get “a ‘C’ or better.”

What about the perks? “McKinsey offers the standard consulting perks,” say insiders. “When you work late, you get a dinner allowance. I don’t know what the limit is, but if you spend too much, you get reprimanded.” An American consultant says: 30

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“We have an organized social event every two months or so.” Apparently, there are also plenty of chances to eat extravagant meals, as long as you do it with your team or your client. “Halfway through your study, your team will have dinner at one of the fanciest restaurants in town. It depends on the client’s budget and the team,” says one insider. As far as travel expenses, McKinseyites told us that the firm imposes few caps on what consultants can spend. “There is no limit beyond what’s reasonable.” Another insider couldn’t be more enthusiastic about the little extras at McKinsey: “I wouldn’t change my job for the world. This company has a commitment to its employees that is unparalleled. Tonight, for instance, I’m going out – on the company – to drink with the other analysts. The sole purpose is to bond with your co-workers.”

What does it take? Success at McKinsey means work, and lots of it. Hours average between 50 and 70 a week, with spikes near deadlines. One insider says, “In my three years, work hours have ranged between 120 hours – the worst case – to 55 hours in seven days. The average was probably around 70.” One analyst who worked 16-hour days his first year recalls, “It was pretty bad at first. But in the second year, I got more responsibility and got to manage my own hours more.” A good work/life balance is tough, but possible: “In an American office you can certainly have a decent lifestyle, but you have to be organized.” Because McKinsey discourages weekend work, the typical day runs from 8 a.m. to 8 p.m., “although if the engagement requires [weekends], you have to. In my experience you work one weekend day a month on average, but it varies a lot from project to project.” Beach time has increased because of a decline in the availability of projects, and those projects that do come along “are becoming shorter and shorter to meet client budgetary constraints.” As a result, “you find that you go through long stretches of beach time punctuated by six-week studies in which you work 90 hours a week.” The travel demands can be tough. Because of McKinsey’s broad swath of clients, “almost all projects involve being at the client from Monday to Thursday.” And travel load is also at the whim of the client; as one consultant tells us, “some cheap clients prefer to lock you up in an office within the client building so they do not have to pay, while others will fly you everywhere to their individual country’s offices and pay for all your five-star hotel stays.” On the other hand, the four-days-a-week travel schedule applies more for consultants staffed on domestic projects than for those based in Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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offices outside the United States. McKinsey’s clients in France, Spain and many other international offices are concentrated in large cities where McKinsey has offices, so travel on those client projects is minimal – though we hear that “in Germany and Italy, you can expect to travel a lot.”

Daily diet: 40-30-30 As for what consultants do in the course of a workday, insiders report a lack of continuity: “My day varies depending on the project at hand. One morning I could be writing a memo; the next I could be buying CDs for a client presentation.” For analysts or associates, the breakdown of a typical day might include “40 percent of time devoted to specific analysis, 30 percent to a team project, and 30 percent to client assistance – with the greatest latitude given to specific analysis, which often takes precedence over everything else.” Days at a client site are said to be energy-packed and eventful: “There’s always lots of impromptu group problem solving. Some people will be on the phone, others will be on computers. But when someone has a question, everybody will jump up, brainstorm, draw on flipcharts and attempt to come up with the solution.”

Dress accordingly McKinsey allows each office to decide its own dress code. Increasingly, this means business casual in the United States. “At a minimum, every Friday is a casual day in every office,” reports one insider. “And as you go higher up the pyramid, the more comfortable you get with your work, the more comfortable you get dressing casual more often. The bottom line for more senior consultants is if you’re not at the client in a meeting, you don’t need to wear a suit.”

High job satisfaction “McKinsey really treats its consultants well, developing them, offering them great promotional prospects,” says one consultant, “and the pay is great.” One insider notes, “As for the long term, when you’re ready to move on to another firm or industry, McKinsey gives you a tremendous variety of career prospects. McKinsey is not only a great place to work, it’s a great place to have worked.” Others concur. “I have a lot of respect for this firm,” one employee says, adding: “I look forward to each project.”

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Starved into submission Most consultants find that the partners at McKinsey “give a great deal of autonomy and trust to talented managers and associates.” Some have “built quite close relationships with [partners],” “as a colleague and not as a subordinate.” “I’ve always felt that I’ve been treated well,” notes one consultant, “with high regard and with the utmost respect. I have chosen to continue to work with people I’ve become good friends with.” Another insider explains, “Because the staffing system is, in part, preference-based, horrible partners are normally ‘starved’ by the system into modifying their behavior or leaving the firm.”

Oh the social opportunities McKinsey insiders feel that “the people really are spectacular.” In order to foster this spirit, “McKinsey invests in developing opportunities for people to get to know each other socially, sponsoring wine tastings, paying for monthly spouse dinners and hosting some sort of annual offsite event to which spouses are invited.” Another insider claims, “I hate to use the word clique, but there are social circles of people who socialize together.” Events are organized “by tenure, practice, office and so on.” In fact, “At times there are too many social opportunities. If you allowed yourself to be immersed in the social life at McKinsey, you would be hard pressed to find time for a social life outside of the firm.”

New (but not unexpected) trends “There is definitely a move toward greater industry specialization going on at McKinsey,” discloses one insider. “The number of generalists is still high, but we are hiring more and more industry experts. In my [unit], we’ve recently taken in a health care expert and a market research expert.” How does McKinsey decide who qualifies as an “expert” in a particular field? “Our experts are usually PhDs,” confirms another insider, “or those with a great deal of experience in a desired industry – especially on the strategic side.” Another insider notes that “The number of generalists isn’t necessarily going down at McKinsey. Rather, the generalists here are simply becoming more accomplished in specific sectors.” What factors account for this change? “I think there are two reasons,” replies one thoughtful insider. “First, industry-specific firms like Greenwich Associates are giving us a lot of competition. And second, the other large strategy consulting firms like Bain are gaining industry-specific expertise that they didn’t have five or 10 years ago. To compete, we’ve needed to become sharper, more focused.” Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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Mixing with success Despite the fact that “there aren’t that many” minorities at McKinsey, our sources say that the firm is “proactive and genuine in trying to attract and retain” minority candidates. Insiders proudly point to the “demonstrable efforts” to “provide support and make sure candidates know we are a receptive environment.” There are both “formal and informal support networks,” and the firm has been supportive of these efforts “from the managing director on down.” The firm has been making some progress on this front – in Universum’s 2002 survey, McKinsey was the No. 1 preferred employer among minority MBA students. But despite these efforts, one consultant feels McKinsey “has had mixed success in getting blacks through the merit-based interview process and limited success in retaining partnertrack women.” One female McKinseyite points out that “Very few women are willing to put up with the McKinsey lifestyle past their late 20s and early 30s.” Another insider concurs: “As a partner, you have to travel a fair amount, and it’s hard to do that and have a family.” In short, diversity at McKinsey is “not perfect, but we’re getting better and [we are] conscious of it.” As one measure of McKinsey’s increasing progressiveness, the firm sponsors recruiting dinners for gay MBAs at Harvard, Wharton and some other elite schools. McKinsey also has a “manager of diversity initiatives” and a manager for “black recruiting.” These managers have links to “professional groups (like black MBAs) and they do events like career fairs” and “roundtable and/or panel discussions.” Although they participate in “few third-party diversity career fairs,” they have been known to “sponsor their own events.” McKinsey also recruits at historically black colleges like Howard University, Morehouse/Spelman, and Florida A&M.

Open but not flagrant Due to McKinsey’s large size, it is only natural that the office culture tends “to differ by geography and office size.” Los Angeles “in particular has a funloving, laid-back culture.” But not all consultants are created equal. One source wants to clarify that “There is limited tolerance for flagrant diversity in appearance (nose rings, flashy clothes). People who can’t communicate with clients in a polished way are sent to training.” In general, the “atmosphere is very casual, but people still work very hard.” Some find it “extremely intense or energetic,” but “not competitive as one against the other, since everyone wants to do the best possible job.” The rule on the job is “good ideas” and taking it “to the next level.”

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A comfortable place all around In general, McKinsey’s offices are said to be “fairly comfortable but not luxurious,” with most consultants sharing an office. In particular, we hear that Atlanta is “fine, well appointed, very nicely furnished without being ostentatious.” New York is “mediocre” but “undergoing a fairly dramatic renovation.” And “London is spectacular.” In general, southern European offices tend to be spacious, while northern European offices are more densely packed and organized around hoteling systems. There’s “quite a bit of latitude to what local partners do with the offices,” though in most offices, “space is tight, but the amenities are superb.” However, don’t get too hung up on office space – insiders ask you to “keep in mind that much time is spent at the client.”

Supportive staff McKinsey employees praise the support staff at the firm. “The research people are by far the key to our success,” says one McKinseyite. Support staff members play a more integral role in McKinsey studies at foreign offices than at U.S. offices. One insider says: “In some offices, research staff are treated as professional staff, meaning that we will give them a graph or slide showing what data we need and ask them to find the data and come up with some of the insights. In the U.S. offices, we use the research staff more to do literature searches. They’re more like research librarians, but they’re the best.” The firm reports that it employs a wide range of research staff in all offices.

Life at the top Measured in terms of prestige, McKinsey is considered the best of the best in the consulting world. So what are the best aspects of life and work at The Firm? For some, the best part of the experience is the number of doors the McKinsey name opens: “It’s a good reference for the future,” says one ambitious source. Other insiders point to more specific positive features. “Working in teams with smart people solving interesting problems,” offers one source. Another consultant continues on this theme: “Colleagues are the smartest people you could find anywhere. The clients are the largest and most exciting firms in the world.”

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Internal development as well In addition to polishing its reputation, McKinsey is also eager to get even more out of the best and brightest that it hires. For incoming associate hires without a financial or business background, the firm offers the Mini MBA, a three-week program that provides an opportunity to learn core business skills. In addition, all associates and business analysts attend Basic Consulting Readiness, a curriculum that prepares associates for client engagements. In addition, one- to two-week role-change courses are provided at each career milestone. McKinsey also provides an array of workshops and learning opportunities in a range of topics including communications, functional skills, coaching and team leadership and negotiating skills.

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Getting Hired The Hiring Process Easy sell, tough buy Think getting into a top-tier school is tough? Try McKinsey – only 2 percent of its approximately 150,000 applicants per year get offers, and a full half of those are from overseas. Put another way, one respondent says, “Some numbers I heard are that 15 percent of first round interviewees make it to the second round and only 30 percent of those get an offer.” A Texas-based insider admits that landing a spot at McKinsey has become tougher since he joined the firm a few years ago. “It’s ridiculously competitive relative to 1999-2000.” Strong academic records from high-ranking universities are just a prerequisite; strong analytical ability and smooth presentation skills will get you over the top. The firm recruits directly at its “core schools,” which include Stanford, Yale, Princeton, Columbia, MIT, the University of Chicago and Harvard (McKinsey aggressively recruits Baker Scholars, the top 5 percent of students at Harvard Business School). In addition, McKinsey conducts mock interviews and holds receptions at preferred business schools. While your school’s brand name is important, an Ivy League provenance isn’t essential: “The firm is pretty good at casting a wide net to reach out to schools not considered particularly prestigious because they have great talent as well.” Applications are accepted from graduates of any school, though resumes arriving from schools deemed not in the top echelon are read separately. Overall, the firm recruits at more than 75 graduate and undergraduate schools in the U.S. Ultimately, though, wherever they’re from, successful candidates have it all, says one source. “I am surrounded by everyone’s consensus all-American.”

To be an MBA, or not to be an MBA All MBA candidates are hired into McKinsey as associates, though more than half of the firm’s associates have graduate degrees other than business degrees: the firm also recruits law students, PhDs and MDs for associate positions. As of May 2001, McKinsey had 90 MDs on staff. “We are also looking for people who hold APDs – Advanced Professional Degrees,” says

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one firm insider. “They are associates, not analysts, even if they graduate with a worthless PhD in Renaissance literature or what have you.” Although the majority of new consultants come to McKinsey directly from campuses or post-doctoral research programs, an “increasing” number of hires come from successful careers in such specialized areas as brand management, corporate finance, information technology, law and medicine.

The battle plan McKinsey’s recruiters visit a large number of schools, and we hear that “every office has its own recruiting schedule.” Depending on the school, candidates either apply centrally to a McKinsey school team or to the office of their choice. In either case, it is the office that has ultimate say over their offer. The firm encourages candidates at schools where it does not recruit on campus to complete an online application as a first step in the hiring process. The interview portion varies from school to school and office to office. The process consists of either two or three rounds of interviews, the first of which is usually held on campus. If there is an intermediate round, it may be held at a local McKinsey branch. The final round takes place at the specific McKinsey office to which a candidate has applied. Most interviews are conducted by current McKinsey consultants, and tend to include “a combination of cases, resume/personal questions and some behavioral questions.”

Round one The first round of interviews at McKinsey typically consists of two oncampus sessions, each lasting about half an hour, although the format varies from campus to campus. The first half-hour interview is intended to “get to know you.” You and your interviewer will discuss your experience, personality, whether you would be a good fit with the firm and what you want out of a career. (Incidentally, the consultants that interview on-campus come from McKinsey offices all over the country and the world; interviewees in New York, for example, can encounter consultants from Los Angeles and Caracas.) The second round interview is typically a case interview and immediately follows the first interview. The case interview is with one consultant and lasts half an hour to 45 minutes. Consultants begin by explaining the rules: you’ll be presented with a business scenario that you are expected to discuss. At McKinsey, the interview will almost always involve an industry that the 38

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interviewer has worked in recently. You should feel free (and are expected) to ask any questions if you need additional information. As you go along, the interviewer will throw out new information and inquire how this additional data affects your conclusions. A notepad and pen in this round, to take notes and make basic calculations, is a must. It is also vital is to ask the right sort of questions – questions that will give you the information you need to make a recommendation – and not to rush into your answer. Failing to ask the most obvious questions before jumping to conclusions won’t get you to the second round.

Rounds two and three The second and third rounds involve more case studies and personal interviews. (On some campuses, the hiring process is compressed into two rounds: one on-campus and a final round at the office.) Insiders say interview rules aren’t static, but recent case studies have focused on theoretical client situations. A candidate might be asked to determine the profitability of a computer manufacturer or the revenue opportunities of a pen manufacturer in Cleveland. As in the first round, candidates are encouraged to ask questions in order to ascertain specific information on the cases. While the first two rounds of interviews are usually held on campus or at an established recruiting site, the third round is most always at the McKinsey office where the candidate is hoping to work. Travelling expenses are, of course, on the company’s tab.

Cases n’ questions McKinsey has reportedly tinkered with its interviewing format. Under the revised format, two people might simultaneously interview you in the first round, and you might go through three or four interviews that day. In successive interviews, you might be interviewed by up to five McKinseyites at the same time. At all hiring levels, McKinsey has reportedly increased its use of case interviews, and decreased it use of “guesstimates” – which are questions such as ‘How many pay phones are there on the island of Manhattan?’ or ‘How many hot dogs do Americans consume each day?’ When asking candidates to make a guesstimate, an interviewer is not much interested in getting the correct answer, but rather wants to see a logical process for reaching some kind of answer. McKinsey is also experimenting with group exercises, in which approximately six candidates together solve a case in a period of an hour. These group cases are held on-campus at some universities.

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Throughout the interview process, candidates will encounter a mix of case questions and resume questions with “no brainteasers or market sizings.” Sources recommend that candidates “prepare for and be comfortable with the case process.” This is because “everyone has to be a great problem solver, so be ready to demonstrate that through the case interview process.” Also, “be personally comfortable.” Use the group exercise to demonstrate “how you work with others, how you behave in a group”; it is an opportunity to “be open, be forthright and show your personality,” but “don’t be competitive against each other.” During the case sections, insiders advise candidates to have “an open dialogue where we can see how people think.” Don’t search only for “a right answer or right framework.” The worst method is “force-fitting something that doesn’t make any sense because they think we’re looking for it.” McKinsey is looking for four key qualities during the interview process: “problem solving ability, leadership, personal impact/presence, and drive and aspiration.” McKinsey is essentially asking, “Is this person going to make a difference in the world?”

A word to the wise While case studies are used during most stages of McKinsey interviewing, the firm warns that specific questions may vary from one recruitment team to another. Each “campus team” is responsible for deciding what cases it wants to use. The morning of the interviews, the campus team members will usually present their cases to the team leader (a McKinsey partner), who will subsequently verify or modify their suggestions. Interviewers are told to use the same case all day so that they can judge each candidate by the same standards. However, a school team may modify its cases midway through the day to avoid ‘students spreading the word.”

The McKinsey underground Following the final interview round, successful applicants are offered positions by phone within 24-48 hours. To make the hiring decision, a campus team meets at the end of the final round. “It’s like a town hall meeting,” declares one insider. “We talk very openly.” For those who worry that McKinsey analyzes their every word and gesture, this report will do little to quell raw nerves. McKinsey recruitment teams do examine the smallest details of each applicant, even employing “high-tech screens” to examine “resume,” “intelligence,” and “which events” the person attended. “Candidates really will get a fair hearing,” proclaims one zealous 40

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McKinseyite, “[At the final round] we presume that candidates are innocent until proven guilty.” If McKinsey can’t decide upon an applicant, even after the third interview, it takes other avenues of opportunity: “[We] find out more about this person from the [former business analysts] we have on campus.” Those enrolled in business school classes with McKinsey alums should take note. Fortunately, those lucky enough to pass McKinsey’s initiation processes will find themselves amid open arms. “We consider them part of the McKinsey family,” reveals another insider. About 75 to 80 percent of McKinsey job offers are accepted. Disbelief, curiosity, or a fondness for radar surveillance prompts McKinsey to keep track of any candidate who turns down a job offer. The firm is under the impression that anyone who turns down an offer does so because of an “entrepreneurial situation, like starting a business. Other people join large and small consulting firms or investment banking companies.”

The web site McKinsey’s improved web site offers pointers on McKinsey’s infamously rigorous interviews. The “Careers” section of the site (www.mckinsey.com) offers a number of employment hints, including two hypothetical case studies. Candidates are invited to analyze a client’s scenario, “ask the right questions,” detail the “sub-issues,” posit “recommendations” and discover “the solution.” Although a similar case study is unlikely to appear during an actual McKinsey interview, candidates might boost their chances of success by completing this practice version. McKinsey also offers a “follow the project” section, where prospective employees can see the various stages of several different McKinsey projects. In addition, the site includes profiles of McKinsey insiders and why they love working there.

Questions to Expect 1. Case: You are the head of a large corporation. Your company must build a new paper plant. You must decide which country to build the plant in. What factors would you consider? The point of the case interview is to evaluate your analytic capabilities and your eloquence. You are expected to ask the interview questions to obtain additional information before answering the case (as any good consultant would do). Some questions to ask for this case would be: “What does the corporation I head do? What does the company plan to do with the paper Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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produced by the plant? Use the paper in its own manufacturing process? Sell it to other companies? Do we even need to build the plant? Can we satisfy this need in another way?” Factors to consider in answering this case: each country’s labor costs, political stability, government treatment of foreign investments, price of raw materials, proximity to raw materials for the plant, relevant shipping costs, tax laws, skill and availability of local labor force, access to local capital markets, etc. As the interview goes on, the interviewer will typically add information or constraints to the case (for example, he could tell you that you must decide only between Brazil and China as a paper plant location). 2. Case: It’s 1982. You’re a consultant sitting on a plane next to your client, who is the CEO of American Airlines. The client tells you that American can’t seem to keep many repeat customers and wants to institute something called a “frequent flyer” program to reward loyal passengers with “points” they can redeem for free flights. He turns to you and asks you to analyze the merits and faults of the program. 3. What is it about consulting that interests you? Be honest, but try not to let the dollar signs in your eyes shine too brightly. 4. Why would you be a good fit at McKinsey? Talk about your thirst for knowledge and addiction to problem solving. 5. Case: You are a manufacturer of laundry detergent and thinking about shifting into the dry cleaning business. Decide if this is a feasible and/or lucrative option. McKinsey wants to know if you fathom the many factors that go into making such a momentous business decision. Here are a few crucial questions you need to ask your interviewer: Can the assets be transferred from business to business? What is the determined location – both geographical and operational – of this new dry cleaner? Will it be accessible to a necessary number of customers? Is building a new brand in dry cleaning going to be important or can we depend on an existing clientele? Obviously, there are dozens, if not hundreds, of other factors to take into consideration. McKinsey doesn’t necessarily expect you to acknowledge all of them. 6. Case: You are in the trash collecting business in a town with a population of 25,000. Everyone – from the municipal level on down to the citizens – is losing money. Why? What can be done to change profitability?

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7. Case: You are a gumball manufacturer in Cleveland. Business has declined for the last five years. What are some things you can do to improve growth? You need to assess what has halted growth during the past five years. The two vital elements of profit, revenues and costs, also need to be evaluated. 8. Case: You are an automobile manufacturer and you want to move into the luxury sector. Do you build your own brand or buy an existing one?

Questions to Ask 1. For prospective analysts: How solid is McKinsey’s acceptance rate into business school? How helpful is McKinsey in placing its analysts into graduate school? Given McKinsey’s four star reputation, an interviewer won’t have any trouble expounding the firm’s impressive business school stats. However, by asking these questions, a candidate opens up the floor for the interviewer to discuss related perks: exceptional prestige within the field, an incredibly powerful alumni list, and tremendous connections. 2. For prospective associates: Please describe how McKinsey evaluates promotion at the firm. McKinsey’s “up-or-out” policy is a point of contention among many, including McKinsey staff. Any question concerning promotion implies that you are interested in learning more about the firm’s supposed “cutthroat culture.” 3. What most distinguishes McKinsey from its competitors? Go on – give your interviewer a chance to brag. 4. How much responsibility will I be given in my first year? Both analysts and associates are given a considerable amount of independent work their first year at McKinsey. Your interviewer will likely reiterate this fact and cite the tasks typically completed by incoming McKinseyites. Remember that McKinsey is looking for employees who are motivated, ambitious, and ripe for work-related conquest. There is no such thing as “too much responsibility.” 5. How does McKinsey apply the advice it gives clients to its own practice? Keep your interviewer on her toes. Not every consulting company practices what it preaches.

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6. Please tell me more about the training McKinsey provides. Flaunt the fact that you require constant mental stimulation and a high learning curve. 7. How would you describe McKinsey’s culture? Employees of McKinsey swear that their corporate culture is unlike any other in the industry. You”re likely to hear tales of fabulous clients, unbeatable training and prestigious awards. Nevertheless, McKinsey is a mercurial firm: its policies, procedures, size, and focus are in a constant state of flux. There is no better way to stay abreast of the latest changes than by hearing them straight from the horse’s mouth. 8. What effect is McKinsey’s increasing industry and IT emphasis having on its commitment to strategy?

To Apply If McKinsey doesn’t recruit on your campus or if you’re an experienced professional, you can search for available positions and apply online by going to the Careers section of the firm’s web site, www.mckinsey.com. In addition, the company also posts some of its openings – including various IT positions – on Career Mosaic, Monstertrak, and other popular employment sites.

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On the Job Job Descriptions Analyst Analysts, who are placed on consulting teams, typically gather and analyze data for McKinsey studies. They do Internet searches and conduct interviews over the phone and in person, in order to collect information on companies, industries, and market segments. Analysts then create models and analyses of the data obtained. Analyst positions, like all McKinsey consulting jobs, usually involve extensive travel. Daily activities include: • Interviewing industry experts, government officials and client’s customers and competitors • Meeting with research staff and gathering data to complete study • Creating financial models using Excel • Gathering data needed to prepare graphs, charts and slides for client report • Traveling to client to tour facilities and collect documents

Associate Associates are staffed on teams that normally include a partner, a senior associate and one to four other associates. Associates are problem solvers who take responsibility for designing and carrying out the analyses needed to resolve issues that the team has identified. Associates often meet with client executives and contacts, make presentations and write workplans and reports. More experienced associates who have gained the title of engagement manager take responsibility for the day-to-day management and performance of the team and coach other team members. Associates with little or no business experience may take a “mini-MBA” course that covers key finance concepts and consulting frameworks. Daily activities include: • Meeting with key industry experts, government officials, and client’s customers and competitors • Meeting with research staff and determining data needed to perform study • Creating financial models using Excel • Assigning graphs, charts, and slides needed for client report to analyst Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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• Traveling to client to meet with client team, plan strategy for study, and assign needed tasks to McKinsey and client teams • Attending presentation of study results to client; leading select sections of presentation

Summer associate Summer associates at McKinsey are reportedly treated “just like regular associates.” The summer begins with a day and a half of orientation, which may include some computer software training. Summer associates are placed on teams, assigned projects and may contribute to reports, interview members of client companies and make presentations. One summer associate says he was “given an [assignment] that involved evaluating a project for a large manufacturing company. At the end of the summer I presented my analysis to three vice presidents, one of whom was the No. 2 person in the company.” Contact with senior management is generally above average, depending on the office; such contact is apparently more difficult at overseas offices than in the United States. However, most summer associates have found that “the attitudes of the consultants toward us are very receptive.” Some summer associates spend as much as 60 percent of their time in team meetings and the balance in data gathering; others may work more independently on quantitative projects. Summer associates recommend that interns “take initiative immediately” and “get into it from day one. The summer is very short.” Other former McKinsey summer associates advise: “To increase your chances of a full-time job offer, socialize outside of work with office mates frequently.” The complexity of studies assigned depends on each summer associate’s background and experience. Summer associates are sent on regional mid-summer training programs, which also permit them to meet other summer associates. McKinsey does have a summer associate program for MBAs; a small number of APDs, as well as law students, also participate. These associates receive two days of training at the beginning of their stints, but are “expected to hit the ground running.” In July, there is a four-to-five day off-site training program held in a “very nice place.” (In the Americas, Aspen is a popular site, while Barcelona often serves the European candidates.) McKinsey is eager to have their summer associates bond with full-time consultants; as such, the firm schedules group activities such as tennis, horseback riding, sightseeing and scavenger hunts. For hiring decisions, there is a summer associate recruiter at each office. At the end of the summer, a hiring team will convene for performance feedback on each associate. An estimated 90 46

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percent of summer interns receive full-time offers; approximately 75 percent accept positions.

A Day in the Life Analyst (an office day) 6:30: Climb out of bed, pull on sweatpants and head to the gym 9:00: Get into the office and eat breakfast (bagels and “darn good” cream cheese provided by McKinsey) 9:15: Read The New York Times online; check voice mail and e-mail 9:45: Spend remainder of morning working independently on client-related spreadsheets and phone interviews 1:00: Eat lunch with a co-worker at a local restaurant 2:00: Attend meetings with team members (one senior partner, one regular partner, one engagement manager [EM] and one associate) to discuss a current client 6:00: Dinner on the run 7:00: Get call about a McKinsey-sponsored volunteer activity. (“There’s usually one conversation unrelated to firm work per day.”) 8:00: Finish spreadsheets left over from the morning 8:45: Leave to grab dinner and drinks with a friend

Analyst (a client site day) 7:00: Haul your tired body out of bed, shower and down two cups of coffee 8:00: Arrive in the “team room” of the client site. Greet other McKinsey team members and client affiliates 8:30: Discuss the agenda for the day 9:45: Get to work on collecting data and creating a graph for a future presentation 12:00: Eat lunch with the team

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1:15: Engage in impromptu group problem solving, complete with brainstorming, flipchart scrawling and Q&A sessions 3:00: Conference call with several partners from a small financial services company 4:00: Meet with team for a brief project update 7:45: Leave with team for a swanky dinner at a swanky restaurant (“On McKinsey, thanks. McKinsey encourages camaraderie between its consultants, and will pay for it”) 9:30: Open door to hotel room door and crash into bed. Flip channels and check out the paucity of late night TV options. Settle on a pay-per-view movie and fall asleep before the end

Associate 7:30: Alarm goes off 9:15: Arrive at the office (“We don’t start earlier than this in any office”) 9:30: Sit down with research professionals to figure out what data is needed for the day 10:00: Call president of a division of a large media company to arrange a tour of his facility in order to perform industry research for a client 11:00: Prep for team presentation 11:30: Meet with team to go over presentation for the board of directors tomorrow 2:00: Eat lunch in McKinsey cafeteria 3:30: Attend meeting with middle-level manager at client site to discuss issues related to study 5:30: Meet with research professional to review data she compiled. Become disappointed after hearing that critical international data was difficult to obtain. Decide on alternative approach 6:30: Work on slides to prepare for board of directors meeting 8:00: Meet with production staff to make graphs and slides for tomorrow’s meeting 8:30: Meet with the team to go over presentation materials for tomorrow 10:30: Leave for dinner with friend and then head home 48

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Career Path Undergraduates The typical analyst stays at McKinsey for two years, the designated length of the business analyst program. A few analysts may be invited to remain for a third year, which is spent at a different office of the analyst’s choice, often overseas. McKinsey says that an employee must “earn the right to stay a third year” and is “encouraged to be in another office, usually another country if possible (though you must speak the language). Some offices are experimenting with having a third-year [employee] work at a company. Some do pro bono work. Some will do a non-consulting job – like in McKinsey corporate communications.” In general, analysts are not promoted directly to associate positions without further schooling, usually business school, though McKinsey does promote some top-performing analysts directly.

MBAs and others with graduate degrees MBAs and other advanced degree holders are interviewed for associate positions. New McKinsey associates enter as either generalists or specialists. Candidates who wish to incorporate their knowledge of a range of industries (or no industries at all) can join as “generalist consultants,” while those who have expertise in a specific area come onboard as “specialized consultants.” Although the firm is veering more and more toward industry-specific expertise, it emphasizes that both career paths offer “continuous learning and a high degree of intellectual stimulation, as well as rapid advancement for successful performers.” The firm has recently modified its associate career path. Previously, associates moved up to engagement manager in their second or third year at the firm (if they survived that long), and to senior engagement manager by their fourth or fifth year. However, the firm recently instituted an accelerated path to partnership based on “personal readiness.” With the change, high performers can become a partner as early as their fourth year with the firm, though they have the option of waiting until years 10 or 11.

Movin’ on up Promotion at McKinsey is contingent upon an unusually intense and detailed feedback process. To move up the ranks, McKinsey demands “superior quality work and commitment to client service.” And for a piece of the pie Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

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(a partner position), you must also be willing to care for people and develop their skills, inspire others, be pleasant, dedicate yourself to clients, exhibit “partnership behavior” and have personal integrity and maturity. To ensure these standards are met, McKinsey employees are subjected to frequent contribution to the partnership through teamwork, and collaboration and assumption of the responsibility of self-assessments by other McKinseyites. They receive reviews at the midpoint and end of each study in addition to a formal review process at the end of each year. Senior partners may spend “up to a third of their time” serving on committees that examine the work of their co-workers and subordinates.

Life on the outside McKinsey still retains its “up-or-out” policy, requiring consultants to leave the firm if they languish at any one level for too long. The “up-or-out” policy seems to be a brutal concept, but many insiders report that it doesn’t necessarily foster intra-company rivalry or competition. Because McKinsey teams unite and divide every few months (depending on a client’s needs), employees who are on the same level typically don’t compete on the same projects. In fact, many aren’t even aware of the cases their peers are working on. Indeed, the “up-or-out” policy has been known to foster cooperation rather than bitterness. “The company is very supportive about helping you find your next job or work engagement,” one insider admits. “A pink slip seldom, if ever, comes as a surprise. You will have plenty of time to prepare for your departure. And quite often, you’ve built up strong enough relations with the partners that they will provide you with contacts and resources. Sometimes, a manager will even cut down on your workload so you have time for interviews.”

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Final Analysis Despite its share of recent missteps, McKinsey remains the gold standard of the consulting industry. Even though a few of McKinsey’s large clients filed Chapter 11, its billable hours have plummeted to record-low levels, and its revenues are flat, McKinsey is still the company that MBAs rate as the one they most want to join. In corporate boardrooms around the world, McKinsey is the most widely known and trusted of all consulting firms. Alumni of McKinsey can expect to be courted and welcomed in a vast variety of companies and industries, as well as in the realms of government and education. Indeed, McKinsey is the consulting firm of choice among large corporations; according to BusinessWeek, McKinsey has a 41 percent share of the consulting business among large companies. With respect to its recruiting efforts, McKinsey has expanded its reach beyond MBAs into law schools and other non-business graduate programs. Even in the current economic downturn, McKinsey was one of the few firms not to rescind offers. If you have the pedigree and can stomach the long hours and the firm’s “up-or-out” policy, you can’t do much better than joining this progressive, high-powered consultancy.

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Do you have an interview coming up with a consulting firm? Unsure how to handle a case interview?

Vault Live Case Interview Prep Vault’s consulting experts bring you a new service to help you prepare for interviews with consulting firms. We’ll help you prepare for that all-important case interview with a 30-minute mock interview and a 30-minute question and answer session with our consulting expert over the telephone.

A Vault consulting expert will put you through a real case used by the major consulting firms. You will be given the case at your appointment and will be asked to explain it, dissect it, and give a rationale for your responses.

The prep session will cover: • Case strategies for attacking different case types • Case frameworks, including Value Chain Analysis and Value Drivers Frameworks • Market sizing cases • A representative business strategy case (for example, a market-entry case) • And more!

For more information go to http://consulting.vault.com

McKinsey & Company

Recommended Reading To begin your further study of the king of consultants, head to McKinsey’s web site. The company’s site links to several recent articles about the firm and to books and studies authored by current and former McKinsey employees. The site also offers limited access and subscription information to McKinsey’s consulting journal, The McKinsey Quarterly. For additional information on the firm, check out the following recent articles: • “The Talent Myth,” The New Yorker, July 22, 2002. • “Inside McKinsey,” BusinessWeek, July 8, 2002 • “Hurt by Slump, a Consulting Giant Looks Inward,” The New York Times, June 30, 2002. • “Growth at McKinsey Hindered Use of Data,” The Wall Street Journal, May 20, 2002.

Visit the Vault Consulting Career Channel at http://consulting.vault.com — with insider firm profiles, message boards, the Vault Consulting Job Board and more.

CAREER LIBRARY

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