McKinsey cuts 2,000 jobs in one of the biggest budget cuts ever

McKinsey & Co. plans to cut about 2,000 jobs, one of the biggest cuts ever at the consulting giant.

The company known for devising workforce reduction plans for its customers is taking the ax to some of its own, with the move expected to focus on support staff in roles that don’t interact directly with customers, according to people with knowledge of the matter.

Under a plan called Project Magnolia, the management team hopes the move will help preserve the compensation pool for its partners, the people said, asking not to be identified when discussing nonpublic information. The company, which has seen rapid growth in headcount over the past decade, is looking to restructure the way it organizes its support teams to centralize a number of roles.

The plan is expected to be finalized in the coming weeks, and the final number of positions cut from the 45,000 employees could still change, one of the people said. That workforce is up from 28,000 just five years ago and 17,000 in 2012.

“We are redesigning the way our non-customer-served teams work for the first time in more than a decade so that these teams can effectively support and scale our business,” DJ Carella, a company representative, said in an emailed statement. . . Carella said the company still hires professionals who deal directly with customers.

The company posted a record $15 billion in revenue in 2021 and surpassed that figure in 2022, one of the people said.

Companies in industries from finance to technology to retail are cutting headcount amid a slowdown in demand and forecasts of an impending recession. Tech giants including Amazon.com Inc. and Microsoft Corp. have announced plans for major cuts, and Goldman Sachs Group Inc., Morgan Stanley and other top banks have cut thousands of positions.

McKinsey’s move comes two years after Bob Sternfels took over as global managing partner following a vote by the approximately 650 senior partners to oust his predecessor, Kevin Sneader. The change in management was the culmination of a tumultuous period for the company, which received flak for its role in advising the makers of the painkiller OxyContin and came under scrutiny from several other corporate ties.

Sneader now helps run Goldman Sachs Group Inc.’s operations. in Asia and the Pacific.

McKinsey consultants helped popularize the phrase “War for Talent” in the late 1990s, a slogan that has come back into vogue in recent years as the post-pandemic boom led to a frenzy of hiring and workforce expansion across industries . As that growth begins to slow, companies scrambling to maintain profits are turning to job cuts on a scale not seen in more than a decade.

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