Sunday, December 16, 2018

McKinsey responds to New York Times hit piece (Michael Simkovic)

The consulting firm McKinsey is a leading employer of graduates of elite law schools, business schools, medical schools, and other professional programs.  The New York Times recently ran a piece attempting to link McKinsey to regimes that abuse human rights.  McKinsey's response appears below.

Readers of this blog are probably familiar with how uneven in quality New York Times coverage can be in the higher education context.  I would encourage readers not to jump to conclusions about McKinsey based on N.Y. Times coverage. 

Note: I worked as consultant at McKinsey in New York approximately 10 years ago.  I have published in the N.Y. Times within the last 3 years.

From Thomas Seitz, Senior Partner, McKinsey & Company:

As you may have seen, The New York Times ran an article yesterday about our work in Southeast Asia, China, Eastern Europe and the Middle East. We realize this article, along with other recent coverage of our Firm, has raised questions. We therefore want to take this opportunity to respond, especially as we expect The New York Times to continue to write about our Firm.

We knew The Times had an agenda when a friend of the Firm forwarded us an email he received from one of the authors of yesterday’s article seeking information about connections, “no matter how tenuous,” between our Firm and “institutions that support anti-democratic activities” in a certain country. He added that such tenuous connections would be “of great interest to our readers.” We nevertheless engaged with the journalists over the past five months to try to correct facts and help them understand our Firm’s approach to client service and selection.

With yesterday’s story, The Times selectively uses a handful of engagements and one office retreat to fundamentally mischaracterize our Firm’s presence in large parts of the world. In building their narrative, the reporters ignored or discounted facts that did not support their argument. They bent unobjectionable facts, used innuendo and implied causality to build a deeply misleading account of how we operate.

As a global Firm, we fundamentally disagree with the assertion that our colleagues in Southeast Asia, China, Eastern Europe and the Middle East should not be serving clients where we have a demonstrated record of making a positive difference in the countries where they live, and on behalf of their fellow citizens. Together, these countries represent more than two billion people.

Indeed, the authors do concede that many other businesses operate legally in these markets, but they conclude that it is somehow different when McKinsey does so because “[no other firms] have the stature to confer credibility quite like McKinsey, a confidante for 92 years to many of the world’s most admired companies.”

A few points to keep in mind in light of this higher bar:

    • Broad swaths of The Times’ narrative are at fundamental odds with how our Firm works, such as the article’s insinuation that we have somehow orchestrated our work across multiple clients to support China’s Belt-and-Road initiative. To portray us as working behind the scenes to advance any government’s agenda – across separate CSTs – is simply untrue and impossible. We also dispute the inference that our client service on individual projects related to China’s Belt-and-Road initiative is somehow inappropriate. Each engagement was conducted and evaluated on its merits and not in any way as part of a coordinated effort to advance the initiative.
    • We comply with the law in all markets where we operate. Full stop. Despite The Times’ suggestive language about “clients under sanctions,” we fully comply with the requirements, and the intent, of all international sanctions –something The Times itself acknowledges.
    • We hire exceptional people. We have a robust and standardized global recruiting process, which ensures that every individual we hire into a client service role goes through a rigorous, meritocratic assessment process. As we explained to The Times, both of the individuals referenced in the article were hired through this process. To imply that either was hired for reasons other than merit is false and misleading.
    • Liu Chunhang was hired after graduating from Harvard Business School, where he was a Baker Scholar. He did not work for any Chinese clients while at McKinsey. There is zero evidence his relationships were used by anyone to help develop clients or engagements.
    • Yulia Poroshenko (the daughter-in-law of Ukraine’s current president) was hired from the world-leading MBA program at INSEAD Business School, before she was married and two years before Mr. Poroshenko became President. She had no visible connection to Mr. Poroshenko at the time.
    • Like many other major corporations, including our competitors, we seek to navigate a changing geopolitical environment, but we do not support or engage in political activities. Take for example the context for two of the examples The Times cites – our work in Ukraine and in Malaysia:
    • In Ukraine, we chose to join widely-respected leaders and other international institutions to help reform an economy in desperate need of jobs and growth at a time when many saw real hope of both political and economic change. The Times’ suggestion that we undertook this work to polish the image of Mr. Yanukovych is deeply misleading. The local Partners who led this work were committed to the cause of reform; yet when it became clear that the country’s President would not follow through on his stated reform agenda, we made the tough decision to walk away and end our service. And let us be clear: the innuendo linking our work to Paul Manafort’s reported public affairs and lobbying activities is plain wrong.
    • In Malaysia, we evaluated the feasibility of the proposed East Coast Rail Link. Our role was limited to studying socio-economic impact and financial feasibility. We played no role in the Malaysian government’s selection of China Communications Construction Company. Most importantly, in this engagement we abided by one of our values: we told our client the truth. We advised that the project was not financially sustainable as scoped and recommended an alternative approach. This alternative approach was unfortunately not adopted by the government.

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As a global Firm, we are proud of the positive contributions we deliver in all the geographies in which we are present. We are disappointed that The Times’ article ignored the work we do that makes the lives of millions of people and thousands of clients better from the impact we deliver. This work is one of the many reasons we are proud of our Firm, our impact and our people.  

We accept the scrutiny – including from the media – that comes with our work and leadership position in our profession. We also accept the commentary about the retreat in China, and we will be more thoughtful about such choices in the future. Yesterday’s article, however, crossed the line into criticism that is not justified by the facts of what we do and how we serve our clients.

Guest Blogger: Michael Simkovic, Ludicrous Hyperbole Watch, Of Academic Interest, Professional Advice, Student Advice, Weblogs | Permalink