How McKinsey, the secretive global consultancy firm, is gaining influence at the heart of UK plcVariously described as the Brotherhood, the Firm, or the Jesuits of capitalism, the global consultancy firm McKinsey likes to maintain an aura of secrecy around its work. It never advertises for clients and through a close network of alumni across the international business world it has developed an elite and loyal following who endorse the need to keep the secrets of success within the extended family.
With McKinsey consultants right at the heart of government, however, questions about the company's philosophy, cost-effectiveness and level of influence on policy are increasingly being asked.
Yesterday the Guardian revealed that David Bennett, a former partner at McKinsey, who has been hired by Tony Blair to head Downing Street's policy unit, will have a key role in deciding the appointment of the new £220,000-a-year cabinet secretary. Mr Bennett is one of a number of McKinsey-trained people already advising the government: Lord Birt, Nick Lovegrove and Adair Turner, who now heads the commission into the future of pensions, to name a few. The firm has landed contracts worth tens of millions of pounds as Mr Blair increasingly turns to private-sector consultants to drive through change in Whitehall.
Lord Hanningfield, the Conservative peer, is still waiting for answers to questions he tabled a month ago about McKinsey's influence on the government. He asked how many civil servants from Downing Street are on secondment to McKinsey, and vice versa, as well as what government contracts the company holds and how much they are worth. The answers were expected a fortnight ago, but the Cabinet Office said yesterday that they had still not been completed. Asked when they were likely to be ready, a spokesman said: "I am sorry, I don't know."
What the answers will not address is the innate loyalty to the McKinsey brand held by all those who leave to work outside the plush offices in Jermyn Street, London, and venture into the upper echelons of Whitehall. All were brought up on the McKinsey philosophy: "Everything can be measured and what gets measured gets managed."
Within the firm hours are long, expectations high and failure not acceptable. "Nothing is ever done for the sake of enjoyment, there is a purpose to everything," said one former McKinseyite. "There is a policy of up or out. If you don't get promoted every year or two you are out. They just tell you you are not getting anywhere."
"Working at McKinsey is a combination of being cossetted and terribly stressed," said Eileen Shapiro, a former McKinsey consultant. "It is a very plush environment but it is also extremely stressful because it is very long hours and a very intense kind of environment."
Ms Shapiro, however, questions whether McKinseyites have the capability to carry through the kind of radical policy change that Tony Blair is calling for. "As consultants you are not accountable," she said. "You advise on the bets but you don't place the bets. Some consultants who shift out of consultancy into a position where they actually make the bets make that transition fabulously, others don't because they don't understand the difference between advising and acting."
McKinsey's blue-chip reputation was shaken in the 1990s when its involvement with Enron, the energy company that collapsed in scandal and accounting irregularities, was revealed in detail.
Enron was regarded as the house that McKinsey built. The consultants were being paid $10m a year for their advice; the company was run by Jeffrey Skilling, a former McKinsey partner; and the in-house journal the McKinsey Quarterly regularly lauded Enron as an exemplar of its philosophy of "creative destruction".
Though McKinsey survived Enron's collapse, it prompted a return to a more conservative style under Ian Davis, who became the first Briton to lead the firm in July 2003.
The new McKinseyites increasingly see sitting at the right hand of the prime minister as their rightful place.
Alumni speak the same tongue, one that is very different from Whitehall's. "Language gets mangled within McKinsey. They never speak about 'a project'; it's always 'a study'," the former employee said. "McKinsey itself is always 'the Firm' with a capital F and the job titles are really modelled on those of a legal partnership."
In the 90s McKinsey recruited the brightest graduates from Oxford University and Harvard Business School. But however clever you are, there is a more important condition of employment. "The question they always ask is 'do they fit?'," said the former employee. "It's not good enough just to be clever; you have to fit."
A brief history
· James 'Mac' McKinsey founded firm in 1926, quitting as professor of accounting at Chicago University
· McKinsey's boast was that its 'management engineers' could not only help ailing companies but show healthy ones how to grow
· As part of globalisation in the 1990s, McKinsey helped privatise services in former East Germany
· Today it employs more than 6,000 consultants in 80 locations around the world
Source: McKinsey & Co