Criticism about McKinsey

Source: Bhutan Times forum posted by Che

The firm itself will not discuss specific client situations and maintains a carefully crafted and low-profile external image, which also protects it from public scrutiny of the results of its involvement, making an assessment of its client base, its success rate, and its profitability difficult. This secrecy also helps conceal McKinsey's prices.
Client confidentiality is maintained even among former employees, and as a result, journalists and writers have had difficulty developing fully informed accounts of mistakes McKinsey consultants may have made, such as with Enron, which was headed by McKinsey alumni and was one of the firm's biggest clients before its collapse.[12][13] Jeff Skilling, sentenced to 24 years in federal prison, was a partner at McKinsey and "loyal alum." Another notably troubled company associated with McKinsey is Swissair, which entered bankruptcy.[14]. Other client companies that ultimately filed for bankruptcy include Kmart and Global Crossing.
McKinsey's reputation has come under scrutiny several times in recent years:
* Misguided analysis, such as its recommendation in 1980 to AT&T that cellular phones would be a niche market[15]
* Overemphasis on shareholder value, often at the price of investment and long-term strategy. For example, this may have doomed the British railway company Railtrack, which collapsed after a series of accidents, allegedly after following McKinsey's advice to reduce spending on infrastructure and return cash to shareholders instead.[16][17]
* Concerns from teachers and parents regarding their consultation for public school districts. Recently, McKinsey worked for the Minneapolis Public Schools, where the firm recommended that the district cut "high costs," such as teacher health care, and recommended converting the 25 percent of schools that scored the lowest on standardized tests to privatized charter-school status (a plan under which schools receiving public funds are run by independent charter associations, or for-profit entities, and operate outside the authority of local school boards). Teachers in Seattle passed a resolution of non-compliance with McKinsey's study of the Seattle Public Schools in protest of their record of favoring privatization, high-stakes testing, and other tactics associated with the No Child Left Behind Act.[18]
* Anil Kumar, a senior McKinsey consultant, pleaded guilty in January 2009 to the charge of accepting USD$1.8 million to provide the New York based hedge fund Galleon Group with inside information. He eventually earned $2.6 million from this dealings with Mr Raj Rajaratnam, the former head of the group. [19]
* Partially responsible for the demise of Swissair after they recommended The Hunter Strategy
Among other books and articles, The Witch Doctors, written by The Economist journalists John Micklethwait and Adrian Wooldridge, presents a series of blunders and disasters alleged to have been McKinsey's consultants' fault. Similarly, Dangerous Company: The Consulting Powerhouses and the Businesses They Save and Ruin by James O'Shea and Charles Madigan critically examines McKinsey's work within the context of the consulting industry.
McKinsey is cited in a February 2007 CNN article with developing controversial car insurance company practices used by State Farm and Allstate in the mid-1990s to avoid paying claims involving a soft tissue injury. This is done, the article alleges, because these types of injuries are hard to verify by X-ray or other common examination methods other than surgery.[20]
Former British Prime Minister Tony Blair faced criticism in the Financial Times for hiring McKinsey to consult on the restructuring of the Cabinet Office. A top civil servant described McKinsey as "people who come in and use PowerPoint to state the bleeding obvious."[21]
McKinsey is a named defendant in Hurricane Katrina litigation. Louisiana Attorney General Charles Foti's suit accuses McKinsey of being the "architect" of sweeping changes in the insurance industry, starting in the 1980s. The suit alleges McKinsey advised insurers to "stop 'premium leakage' by undervaluing claims using the tactics of deny, delay, and defend.