How Could McKinsey Have Strayed So Far From Its Values?

When McKinsey recently settled its liability for encouraging opioid overuse with a $573 million settlement with 53 states and territories, we are forced again to ponder how an iconic company, one known for its strong culture and values, could have gone so wrong. I recently discussed the same pattern at Goldman Sachs.

McKinsey and other consulting firms are increasingly dependent on major and continuing client engagements. McKinsey for many years had benefited from a continuing relationship with the Sackler family and their Purdue Pharmaceuticals. When the Sacklers were eager to dramatically expand the sales of opioids, despite indications that such use led to dramatic rise in addictions and deaths, McKinsey consultants were ready to help. There is no evidence McKinsey contemplated the ethical compromise nor the violation of its longstanding values inherent in this assignment. As in every scandal, a small fact dramatizes the evil. A McKinsey report suggested Purdue might consider giving bonuses to pharmacies based on how many overdoses resulted from their increased sales.

I think I know why McKinsey and Goldman both succumbed to the temptation to sell their souls. It lies in the dramatic increase in CEO salaries at corporations, and the fabulous fortunes being amassed by entrepreneurs. McKinsey and Goldman partners have always considered themselves the elite of the business world, yet their incomes, while substantial by any measure, seemed to lag behind the tens and even hundreds of millions made by the CEOs and entrepreneurs they advised. This built pressure inside McKinsey and other elite firms to increase their most profitable engagements, and to ignore anything which might disrupt this gusher of cash. Whereas a McKinsey or Goldman partner might have been more willing to “fire a client” 20 or 30 years ago if they considered the assignment questionable, today I believe they would hesitate, and did so in the case of the McKinsey and the Sacklers.