McKinsey & Company - Organization and Administration

Organization and Administration

The firm, while formally organized as a corporation, functions as a partnership in all important respects. Its managing director is elected for a three-year term by the firm's other senior partners. Each managing director can serve a maximum of three terms, a policy instituted by Gupta. At a strategic level, a number of committees are charged with the development of policies and making critical decisions. Committee memberships, senior roles, and the managing director position all rotate regularly among the firm's senior partners and directors.

Former managing director Rajat Gupta explains McKinsey's structure as follows:

It is very much, in many dimensions, like an academic organization. We have senior partners who are very much like tenured faculty: they are leaders in their own right. We have about 80 to 100 performance cells -- a geographic office or industry practice or functional practice. They are very much autonomous and they are not organized in any hierarchy beyond that. We don't have any regional structures or sectoral structures. So all these performance units, in a theoretical sense, report to me, which means they don't report to anybody, because nobody can have 80 or 100 people reporting to them.

The firm operates under a practice of "up or out", meaning that consultants must either advance in their consulting careers within a pre-defined timeframe or leave the firm. "25% of the firm is new every year," Gupta says, "so half the people have less than two to three years' tenure in the firm, and their values need to be reinforced." All senior roles rotate among the directors (senior partners).

McKinsey has about 9,000 consultants in 97 locations in 55 countries, working with more than 90% of the 100 leading global corporations and two-thirds of the Fortune 1000 list. Forbes estimated the firm's 2009 revenues at $6.6 billion. The notion of company growth has been controversial from the 1970s as the firm began its global expansion; McKinsey opened many new offices under Rajat Gupta's tenure in the late 1990s. The election of British-born Ian Davis as Gupta's successor was seen as "a return to McKinsey's heritage".

This philosophy has come under increased scrutiny with the Galleon case, with some questioning whether the firm is a discreet broker of confidential or even inside information marketed as "best practices".

Notable longtime McKinsey partners include: Dominic Barton; managing director, Ron Daniel; senior partner emeritus, Ian Davis; senior partner emeritus, Anil Kumar; former senior partner, Rajat Gupta; senior partner emeritus and Michael Patsalos-Fox; senior partner.