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How McKinsey & Co. makes people work for less money

McKinsey & Co, the very esteemed management consulting firm, is known both for its work with banks and for its tendency to feed alumni into the banking sector. For example, McKinsey consultants have helped restructure the Royal Bank of Scotland. Citi has hired a former McKinsey consultant, David Chubak, to help oversee its cost cutting programme. And James Gorman, chief executive of Morgan Stanley, was once a senior partner at McKinsey before he went into banking.

When McKinsey talks about pay, therefore, bankers need to sit up and listen – especially when the firm specifically talks about how organizations can get ahead whilst paying less.

Yesterday, McKinsey hit subscribers to the its Quarterly with a recycled ‘classic article’ from 2009 titled, ‘Getting beyond Money.’ Therein, McKinsey identifies three ways of encouraging employees to get motivated by more than just the money. They are:

  • Regular praise and commendation from immediate managers
  • More attention from senior leaders
  • New opportunities to lead whole projects or task forces

James Gorman seems to have been putting some of this into effect at Morgan Stanley. Having said on various occasions that bankers are overpaid,  Gorman praised Morgan Stanley’s capital markets bankers last year after their part in the problematic Facebook IPO. He also said last month that Morgan Stanley’s poor fixed income performance in the first quarter had nothing to do with its people. Meanwhile, at RBS pay has been cut savagely but the bank has more than enough projects underway (the latest being a plan to float 25% of Citizens) to keep its underpaid bankers engaged and happy in mini-leadership roles.

Banks that rely on McKinsey’s principles for paying less may come undone however. Harvard’s recent study of the careers aspirations of graduating students showed that people still expect to spend no more than ten years working in finance after leaving university. Financial services is still seen as a career for earning a quick buck – not for taking control of a change management initiative or getting praise from higher-ups who made their money before the crisis.

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Comments (1)

Comments
  1. Mckinsey make their people work for less by promising them more in the longer term, having worked with them for years (note with – not for) all I see is that they create a dependancy, very rarely, if ever actaully give you a sustainable outcome and then continue to pedal the “solutions” to other clients.
    The model is fundamentally flawed, what gets you promotion in a consultancy – Sales, whats easier to generate sales, making a lasting sustainable solution that will negate the need for a consultancy or create a solution that looks like it works then after a while, they are back in and charging you a fortune again to fix a different problem offering “paradigm shifts” (utter nonsense), models to transform (nonsense again), silver bullets (only work on vampires or is it werewolves) and general panaceas (when you get one, give me a call).
    But back to point in case, McKinsey promise people careers that most people will never have a chance of aspiring to, these guys spend a couple of years offering the above, then their colleagues or alumini (another nice word for nepotism), then hire in images of their past selves, and then starts the creation of the cult.
    In closing, the crisis that we know face is based on short-termism, I wonder where that came from ???

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