Consulting Firms Step Up Efforts To Push Out Their Low Performers

Professional services
Consulting firms step up eﬀorts to push out their low performers

McKinsey’s mid-year reviews are the latest attempt to increase ‘attrition’
There is a slump in voluntary departures at professional services firms © FT montage/Dreamstime
Stephen Foley in New York and Simon Foy in London 4 HOURS AGO
As McKinsey’s 3,000 partners gathered this week in Copenhagen for

their first in-person meeting in two years, the firm’s leadership was
projecting a positive message and pointing to a consulting market that
appears to be picking up after more than a year of sluggish growth.
The mood in the halls was somewhat more nuanced, however, because
an upturn has not come soon enough to prevent another big push to cut
staff numbers across the 45,000-person firm.
McKinsey is in the middle of a brutal round of career reviews, according

to people familiar with the process. Its consultants will all be graded this
month and those deemed to be underperforming will be — in McKinsey
parlance — “counselled to leave”.
https://www.ft.com/content/8c3679c4-b34a-41d0-93c9-af96ea6f90e2 22.04.2024, 08 44
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In the past few years, these mid-year performance reviews have been
something of an informal catch-up with managers, much less significant
than the year-end reviews that take place around October. The return to
a formal grading system at the halfway point of the year is a way to
speed more staff towards the exits, the people said.
Two years on from the Great Resignation, when a roaring jobs market
and the effects of the pandemic encouraged swaths of the workforce to
switch employers, the situation could not be more different. In the
professional services, the numbers leaving firms of their own accord
have swung to historic lows, as tech groups, investment banks and other
destinations have gone from hiring mode to firing mode. Bosses of
consulting and accounting firms have been desperate to increase what
they call “attrition”.
At McKinsey, in recent weeks, this has taken a variety of forms. Mid-

level staff have been offered financial incentives to leave: nine months’
pay while they look for another job. Others have simply been laid off: up
to 400 jobs were axed this month in specialist areas such as data and
software engineering.
Bob Sternfels, McKinsey’s global managing partner, signalled the firm

would be “back in balance” by the end of this year, according to people
familiar with his message, implying more large-scale departures. One
person said the percentage of McKinsey consultants who leave in a
typical year is about 20 per cent, but in 2023 it slid to 15 per cent.
A return to normal cannot come soon enough for senior partners whose
profits have been held back by the cost of all these unwanted salaries.
“We somehow stopped the meritocracy,” said one former McKinsey

partner who remains close to the firm. “We stopped pushing people to
leave and had an enormous overhang of people. When that happens the
numbers just get staggeringly bad. Don’t we advise companies on this?”
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The sharp decline in attrition is a phenomenon across professional
services firms and around the world, compounding the effect of a
slowdown from the post-pandemic boom in advisory work on digital
services and mergers and acquisitions.
Deloitte publishes a staff turnover figure in its annual report, which last
year showed departures at their lowest level in a decade both globally
and in the Americas. KPMG noted “capacity issues created by ongoing
and historically low attrition” when it cut jobs in its US audit business in
March. Bain also cited lower attrition when offering some consultants in
London redundancy with six months’ pay, partly paid temporary leave,
or an option to relocate to one of the firm’s offices abroad.
Page 3 of 7
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Percent
Global
25
20
15
10
20141516 17 18 19 20 21 22 23
Americas
25
20
15
10
2014151617 18 19 20 21 22 23
Source:Deloitte
©FT
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Most accounting and consulting firms have conducted lay-offs, pushed
greater numbers out through the performance review process, or
created voluntary schemes to encourage people to leave — and usually a
combination of all three.
Some appear to have acted earlier and more forcefully than others. In
contrast to the sharp drop at McKinsey, attrition at rival BCG was in line
with the 12-year average last year, according to people familiar with
statistics circulated internally. But that was achieved via a notable shift.
In the eight years from 2012 to 2020, voluntary attrition was about half
of the total at BCG, while in 2023 it was only one-third. In other words,
two-thirds of those who left had been told to go.
“We hire exceptional people with a promise of enormous personal

growth, substantial development opportunities, and a very honest
culture around feedback,” said Rich Lesser, BCG’s global chair. “If that’s
what you’re offering, then you have to aim for consistency in
promotions and attrition, which we’ve worked hard to deliver over many
years.”
He acknowledged the “emotional reality” of the swing from voluntary to

involuntary attrition. “The job market for BCG-type talent was very
robust in 2021 and 2022,” he said. “It was much less so in 2023. So, for
anyone departing, that wasn’t easy.”
A slump in voluntary departures is a challenge to professional services

firms’ traditional “up or out” model. Less “out” means less “up”, a
phenomenon suggested by data from across the sector.
Live Data Technologies, which tracks the job titles of millions of white-
collar workers, observed many fewer promotions in 2023 than in the
previous year at consulting and accounting firms. At Bain and BCG, the
proportion of staff spotted making upward moves was back down to
pre-pandemic levels; at McKinsey it was below anything seen in at least
10 years.
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“It is more difficult to get promoted,” said Namaan Mian, chief
operating officer of Management Consulted, which coaches students
through the consulting firm recruitment process. “The performance
reviews are getting tougher, and more of the work is going to top
performers. Low and medium performers are spending more time ‘on
the beach’ [without projects to work on], which means they are not
getting visibility internally, they are not learning.”
Surveys point to better growth for the consulting sector this year. “While
far from a return to the prior bull market in professional services, many
firms headed into 2024 with greater confidence that revenue targets
could be met, now that most have accepted the gold-rush years of 2020-
2022 were outliers and not the new normal,” Adam Prager, co-head of
the recruitment firm Korn Ferry’s professional services practice, wrote
in a report last week.
It could take until 2025 for hiring, firing and promotions to settle back
into their pre-pandemic patterns, however, said Mian. “We can see the
light at the end of the tunnel,” he said, “but we are not out the tunnel
yet.”
Copyright The Financial Times Limited 2024. All rights reserved.
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Consulting Firms Step Up Efforts To Push Out Their Low Performers

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Professional services

Consulting firms step up eﬀorts to push out their low performers

There is a slump in voluntary departures at professional services firms © FT montage/Dreamstime

As McKinsey’s 3,000 partners gathered this week in Copenhagen for

McKinsey is in the middle of a brutal round of career reviews, according

At McKinsey, in recent weeks, this has taken a variety of forms. Mid-

Bob Sternfels, McKinsey’s global managing partner, signalled the firm

“We somehow stopped the meritocracy,” said one former McKinsey

“We hire exceptional people with a promise of enormous personal

He acknowledged the “emotional reality” of the swing from voluntary to

A slump in voluntary departures is a challenge to professional services

Copyright The Financial Times Limited 2024. All rights reserved.

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