McKinsey & Company is implementing major governance reforms, including changing how it elects its global managing partner and restructuring its board. These changes come after a period of internal dissent and public scrutiny, particularly regarding its past consulting work. The firm will now elect a global managing partner for a single six-year term, with a confirmation vote scheduled at the four-year mark. This replaces the previous three-year term structure, which saw partners voting out former leader Kevin Sneader in 2021 before he could secure a second term, marking the first time in decades a McKinsey leader hadn't been reconfirmed. Partners were reportedly dissatisfied with Sneader's reforms aimed at preventing scandal, as these changes were perceived to limit partners' autonomy.
Alongside the leadership term extension, McKinsey is also significantly reducing the size of its board, cutting it by more than half, from 30 to 12 members. The firm also plans to appoint an independent board chair. These structural adjustments are intended to mitigate the internal politicking and succession conflicts that have characterized recent leadership elections, which have sometimes extended to multiple rounds of voting.
The context for these governance overhauls includes a criminal investigation by the U.S. Justice Department into McKinsey's advice to opioid manufacturers. The probe focuses on consulting advice given to companies like Purdue Pharma, Endo International, and Mallinckrodt, regarding strategies to boost opioid sales. McKinsey previously settled civil opioid-related litigation, agreeing to pay $642 million to all 50 states, five U.S. territories, and Washington, D.C. in 2021, and an additional $347 million in 2023 to Native American tribes, public school districts, and other entities, without admitting wrongdoing. Federal prosecutors are also investigating potential obstruction of justice concerning records related to its opioid consulting. Documents revealed McKinsey's consultants advised Purdue Pharma on how to increase OxyContin sales, including targeting high-volume prescribers and even the U.S. Department of Veterans Affairs, while simultaneously consulting for the VA itself. McKinsey ceased all work on opioid-specific businesses in 2019.
