McKinsey & Co. ‘s partners have decided to replace Kevin Sneader as the leader of the elite consulting firm, following internal dissatisfaction with the steps he has taken following a series of crises for the firm, people familiar with the matter said.
The decision – the result of a staggering voting process that McKinsey’s approximately 650 senior partners undertake every three years to select or confirm the firm’s global managing partner – is the first time in decades that a McKinsey leader has not won a second term has not won. Mr. Sneader, who was elected as a global management partner three years ago, was unable to pass the first round of voting, in part because partners struggled to make changes aimed at keeping McKinsey free of scandals, but the autonomy of limited partners. the people said.
Mr. Sneader, a 54-year-old Scot and McKinsey veteran of more than three decades, has spent much of his tenure shifting the controversy surrounding McKinsey’s previous work with clients, including the $ 573 million settlement this month with statements about his works to advise OxyContin manufacturer Purdue Pharma LP and other drug manufacturers to aggressively market opioid painkillers.
The firm has also investigated its work with the manufacturer of e-cigarettes Juul, as well as some autocratic foreign governments, including Saudi Arabia. In December, it comes to a settlement with the watchdogs of the Department of Justice over how the firm discloses potential conflicts of interest. In the settlements on opioids and disclosure, McKinsey admitted that he did nothing wrong.
Lots of mr. Sneader’s response to the crises has been that McKinsey’s shift from a culture based on the judgment of individual partners to a system based on systems, rules and processes, fueling discord in his senior ranks, say people familiar with is with the case. Its partners have historically enjoyed wide spaces about their work and clients. McKinsey did not want Mr. Sneader does not make available for an interview.
Historically, the McKinsey business model has relied on “hiring the best people to do the most important work at a premium price,” says someone who has spent years at the firm. If a potential client is considered not important enough or does not contribute to a greater benefit, the firm will take a pass. “It’s at the heart of his ethos to refuse work,” the person said.
But in the years leading up to the rise of Mr. Sneader, McKinsey undertook a rapid expansion. The person was looking for new ways to grow, and with a decentralized management structure, there was little protection that prevented an ambitious partner from tackling profitable, if problematic, clients.
Under Mr. Sneader had to approve the firm’s top partners controversial new clients, and McKinsey said it would not serve defense, intelligence, justice or policing institutions in non-democratic countries. This made it possible for non-US partners to take on some customers more difficultly, and, according to individuals familiar with the operations, as a centralization of power away from partners. In an interview with the Financial Times, published this week, Mr. Sneader said the firm’s customer service risk committee, which reviews any piece of work that could produce flags, reviewed more than 2,000 projects in 2020.
‘He has certainly introduced protocols with higher risks; higher levels of due diligence; the person who spent years at the firm said that the partners in the camp of mr. Sneader believes that “it is not feasible to go back to an era in which you can only do what you want. Or you do not have to be controlled by a compliance regime.”
The people familiar with the matter, the firm’s recent opioid settlement also brought opposition from some non-US partners who were more willing to fight. Sneader’s letter to employees about the settlement was unequivocal to criticize the firm’s behavior, saying that McKinsey did not meet the standards and that he did not adequately acknowledge the epidemic in our communities or the devastating impact of opioid abuse and addiction. , and for that I I am deeply sorry. ”
Some people felt that language was too strong and that McKinsey’s advice to clients was legal and given in good faith, people familiar with the matter said.
The shift in power underscores the complexity of running a global partnership firm. As a global managing partner, Mr. Sneader more a first among equals than a CEO, and his reforms have been approved by senior partners. But when he was re-elected for another three-year term, there were enough dissidents to keep him from the last vote.
The fact that he did not advance to the second and final round of voting allows two other senior partners to succeed Sneader: Bob Sternfels and Sven Smit, senior partners in McKinsey’s offices in San Francisco and Amsterdam, respectively.
People close to the case will decide that senior partners of McKinsey will decide whether Mr. Sternfels or Smit mr. Sneader will replace. Mr. Sternfels is seen as a protégé of Dominic Barton, who managed McKinsey from 2009 to 2018 and increased its credit provision.
As part of the process, senior partners nominate multiple candidates and then vote in a first round. The two candidates who receive the most votes go to a final round.
Among the provocative issues that Mr. Sneader treated was McKinsey’s work with e-cigarette manufacturer Juul. In 2019, a former Juul employee told a court that although the company said it was removing flavored products from the market, McKinsey advised him to sell mint nicotine pods. The New York Times and ProPublica reported that year that McKinsey also helped U.S. immigration and customs enforcement with changes, including reducing food and medical expenses for detainees and speeding up speeding. In addition to the Saudi government, McKinsey worked for the Chinese government and held a refuge, 4 km from a camp where Uighurs, members of a Muslim minority, were interned, the Times reported.
McKinsey also played a central role in the rise of Saudi Crown Prince Mohammed bin Salman. In 2015, Prince Mohammed, the son of the newly crowned king, did not have a direct throne route. His father, King Salman, put the prince in charge of economic reforms, and McKinsey was involved in designing a strategy to move the kingdom’s economy away from dependence on oil.
At the end of 2015, the research arm of the firm, the McKinsey Global Institute, published a public report entitled ‘Saudi Arabia out of oil’, which states: ‘We see a real opportunity for the Kingdom to innovate. submit the economy through a productivity- and investment-led transformation. ”
The report gives McKinsey an impetus to the strategy Prince Mohammed pursued at a time when he was seeking the approval of foreign business and political leaders to legitimize his claim to a greater role in governing the kingdom. His father, the king, gave him extra responsibility, and in 2017, the prince captured his cousin, who was then crown prince, and took the title himself. Since then, the crown prince, known as MBS, has been the kingdom’s daily ruler. He advocated economic reforms, as well as a brutal bombing in Yemen that led to a humanitarian crisis, incarceration of many of his critics and a team of men who killed dissident writer Jamal Khashoggi in 2018.
One major project the firm recently worked on was the prince’s plan for a built-in city called Neom on the remote west coast of Saudi Arabia. The prince proposed a metropolis populated by the world’s elite, filled with flying robot taxis and an automated police force. McKinsey and other consulting firms were called in to help with the plan. In thousands of pages of internal planning reports reviewed by the Journal, McKinsey described a “13-pillar livability framework” and big data to determine how enjoyable Neom would be to live in. The Saudi government has begun relocating local residents to build the city.
Addiction experts are a broad consensus on the most effective way to help opioid addicts: medication-assisted treatment. But most inpatient rehabilitation facilities in the US do not offer this option. WSJ’s Jason Bellini reports on why the medication option is controversial, and difficult to obtain in many places. Image: Ryno Eksteen and Thomas Williams (Originally published on November 16, 2017)
Corrections and reinforcements
Bob Sternfels and Sven Smit are senior partners in McKinsey’s offices in San Francisco and Amsterdam, respectively. In an earlier version of this article it was wrongly said that they are heads of offices. (Corrected on February 24)
Write to Justin Scheck at [email protected] and Vanessa Fuhrmans at [email protected]
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