McKinsey & The Mob

How’s that for a headline? Did it stop you in your tracks? Good. That’s the job of any writer, no matter how mediocre.

Now, allow me to explain why I linked these strange bedfellows in the same headline.

Kevin Sneader, the “newly appointed” CEO of McKinsey, the most respected, management consulting firm in  the world, will be in Johannesburg, South Africa, today to apologize for his outfit’s shameful behavior.

You can read the gist of it in the embedded link but, in essence, McKinsey knowingly got in bed with unscrupulous characters who had direct ties to the country’s corrupt government and bled the South African coffers dry with obscenely high fees.

Why did McKinsey knowingly hike its fees to stratospheric levels?

The semi-apologetic CEO explained it away as a relatively new office management wanting to establish a thriving practice in the shortest amount of time. So I guess their thinking was: Let’s bill the hell out of the South Africans. They’ll never know, and we’ll earn huge bonuses from the guys back in the home office.

Now, back to Sneader, who was named CEO in February and is FINALLY getting around to apologizing today, July 9. Talk about a day late and a dollar short. This is more akin to 150 days late and about $50 million short.

So where’s the connection between McKinsey & the Mob? It’s fundamental (minus the fun):

1) McKinsey saw corrupt South African pigeons as being ripe for the plucking (that’s La Cosa Nostra-speak, btw). So in the EXACT same way the Mob offers “protection services” for small merchants and shakes them down for exorbitant fees, McKinsey bled South Africa dry.

2) The New York Times ran a lengthy expose on McKinsey’s wrongdoings last week. Trust me, the two things McKinsey and the Mob do NOT want is high-profile publicity that will damage their business models.

So in McKinsey’s case, the heads of the South African office were fired (although the firm continues to deny any illegal deeds), the CEO issues his apology today and will no doubt speak broadly about new policies and procedures put in place to assure no such price-gouging EVER occurs again (and then hope the whole sordid affair will disappear in another news cycle or two).

The Mob, meanwhile, takes a number of slightly different approaches to solve their high-level and, unwanted, publicity problems: They whack the egomaniacal dons a la Bugsy Siegel, Carlos Gambino, Sam Giancana and Carmine Galante.

Whatever option they choose, McKinsey & the Mob always ensure they quickly recede back into the shadowy, murky worlds of high finance and racketeering (which some might say are one and the the same) and immediately revert to rewarding their highest earners (thereby setting the stage for a future crisis or the rise of another flamboyant publicity hound).

I don’t expect The Mob to know any better. They’ve been born and bred into a world of violence.

But if I were McKinsey’s chief human resources officer, I’d worry about the loss of key partners. And if I were McKinsey’s chief communications officer, I never would have allowed my CEO to wait for a major Times expose before apologizing. Finally, if I were Kevin Sneader, I’d be paying personal visits to the firm’s largest clients to ensure them this sort of behavior will never happen again on his watch.


One thought on “McKinsey & The Mob

  1. The analogy is correct, but in an atmosphere where many still say you do what you gotta do. Unless this is endemic to the whole organization I think McKinsey can do the bare minimum to keep their reputation relatively safe. The aura of their name may be strong enough to overcome this. That would change if there is a deliberate hard line of attack within the business press and by competitors — something they should by all means be prepared for.

    FYI, a bit of mob history: You’re right about Bugsy Siegel (who lost them lots of money when he opened the first big Vegas casino) Sam Giancana (who had a big mouth) and Carmine Galante (who wouldn’t share narcotics profits), But you’re wrong about Carlo Gambino, who died peacefully in his sleep in 1976. Gambino was deadly, but he was low-key and considered a “peacemaker” as things go in that line of work.

    Gambino’s successor Paul Castellano wasn’t as well-liked. He squeezed his underbosses too tightly. That is why ambitious John Gotti and Sammy “The Bull” Gravano whacked him in front of Sparks Steak House on December 16, 1985.

    Or maybe you mean “Crazy Joe” Gallo, who ended up in a plate of clams at Umberto’s in 1972?

    By coincidence I was in South Philly last week. I thought of a one-time boss who succeeded you at EPB. That’s where he hails from, and once summoned me for a sitdown at Dante & Luigi’s.