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McKinsey, a leading professional services firm, has trimmed its workforce by over 10%—approximately 5,000 employees—in the past 18 months[1][3][5]. This reduction follows a period of exponential growth, particularly during the COVID-19 pandemic when the company aggressively recruited to meet the surging demand for consulting services[1][5].
The current streamlining is largely attributed to a combination of factors. McKinsey has been putting a stronger emphasis on its performance review process, leading to many employees receiving poor performance ratings and being given a limited time to improve before being "counseled to leave"[1][4]. Additionally, the consulting sector at large is experiencing slower revenue growth, causing firms to reassess their workforce size and structure[5].
Moreover, McKinsey has been affected by substantial legal settlements, notably a $1.6 billion penalty related to its past work with US opioid manufacturers, which have put a strain on the firm's financial position and prompted a strategic repositioning[5].
In the broader context of the professional services industry, firms are adapting to slowing growth, financial pressures, and the need for tighter performance management by reducing headcount and restructuring operations[5][1][2]. Many companies are also focusing on stricter performance review processes to boost productivity and lower costs, rather than resorting to massive layoffs[1][4].
The industry is also witnessing resource reallocation, with businesses moving away from back-office and non-core functions to concentrate on high-demand services, consequently leading to job cuts in administrative and specialist roles[5]. Despite cuts in some specialist areas, there remains ongoing investment in digital transformation and data-driven services, albeit at a more measured pace than in the pandemic era[5].
On the flip side, the sector is seeing fewer employees leaving voluntarily, which increases the pressure on firms to manage headcount actively[5]. This trend of lower natural attrition rates underscores the need for strategic workforce management in the current climate.
The strategic repositioning at McKinsey is influenced by factors such as a stricter performance review process, slower revenue growth in the consulting sector, and substantial legal settlements that have impacted the firm's finance. As a result, the professional services industry is adapting by streamlining operations through headcount reduction, restructuring, and focusing on high-demand services like digital transformation and data-driven services, while experiencing less voluntary employee turnover, thereby necessitating strategic workforce management.
