In case you haven't noticed, McKinsey's been in the news lately. Of course you've noticed, as has The Financial Times, The New York Times, The Wall Street Journal , BusinessWeek and just about any publication (or Web site or blogger or Twitterer) that even remotely follows business news.
Of course, it's not the type of press McKinsey wants. No game-changing strategy, no operational breakthrough, just some ugly terms the firm—and the profession—would rather not see associated with it. Terms such as "insider trading," "wiretap" and even "Madoff." (As in a recent CNBC headline: "Rajat Gupta: Bigger Than Madoff?") Clearly not the association McKinsey is seeking.
At press time, the case was still ongoing and details were literally changing by the minute. But the news, for McKinsey at least, seems to keep getting worse. At the trial, wiretaps were played in which another McKinsey executive was accused of providing client-sensitive information. That's the third former McKinsey executive to surface in this mess—along with Anil Kumar, who has already pled guilty to conspiracy and securities fraud, and Rajat Gupta, the former McKinsey chief that's been
accused of insider trading by the SEC.
Regardless of how it all plays out, it's awfully unseemly stuff, and certainly not what the profession needs right now. Criminal or not, hearing Gupta on wiretaps sharing sensitive Goldman Sachs information or acknowledging that a McKinsey partner had been getting $1 million a year from a hedge fund manager for trading on client information, is stunning. At the very least, it blasts the sanctity of the "trusted-advisor" relationship straight to hell. But will it have a lasting impact on McKinsey? Surely, its reputation is taking a hit. Just how much remains to be seen.
Executive recruiters I've spoken with say this news will have little, if any, impact on campus. Plenty of people, particularly blue-chip MBAs, have short memories. McKinsey's competitors, no doubt, will beg to differ, and I'm sure many firms will be on campus stressing their own commitment to ethics. And why not? Achilles has a heel, after all.
The big loser in all of this is, of course, the profession. It took years to overcome Arthur Andersen/Enron (and some would argue we're still not over it), and now new headlines are questioning consultants' integrity all over again. Clients, unfortunately, have cause for concern. These types of ethical lapses don't go away quickly enough, if at all.
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