McKinsey & Company: Case Study

Introduction

This paper addresses the way management processes can be chalked out in various ways, producing various outcomes. The results obtained have shown the way McKinsey & Co. can amend their previously present management, and make further improvements to excel in their consultancy. The company has had a good record, with numerous branches all over. To obtain success in a business, it is necessary to have a good managerial setup that could run the enterprise smoothly.

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Management

Management is essential for the running of a system or business. The only difference that creates good or bad outcomes of the business is, whether good or bad management is employed. A company may hold a set system according to which it is being run, without a good managerial workforce that could assist in rising to competitive levels. On the other hand, another corporation may work wonders to attain their high goals, which may make them renowned in the business world. The path that takes them higher needs an efficient management system, without which the progress of a company would remain static.

For any program to be run, a proper system of setting goals, looking into future prospects, and executing plans accordingly, is needed. Every aspect to achieve the goals, like management of time, energy, resources (human and material), is crucial for reaching the ends for which the struggle is being undertaken. Management is the proper handling of resources to attain certain goals. It is a process in which an organization takes place with the aim of achieving goals that one has set. Management is carried out at the individual level, as well as the corporate level.

The various approaches which are taken for the establishment and growth of a business affect the outcomes. In every good company, there exists some managerial effort, which is put forth by the topmost employees who are designated as the managers, and who is responsible for the up boosting of the company at the corporate level. Each enterprise is unique in its own way and has different aims and objectives to reach. The ordinary method that is used to obtain company objectives is for the top management to set goals every year, bringing in new ideas on a regular basis, and act upon them strategically, with maximum effort to attain them. Goals are the ends that are worked for and are kept according to the existing conditions of the economy, and turnovers.

McKinsey & Company

McKinsey & Company was founded in 1926 by Professor James McKinsey of the University of Chicago. It was a firm aimed at employing accounting and engineering advisors for the masses. The professor hired executives to be employed in the newly founded company, whom he trained personally. With the passage of time, the number of recruited individuals increased, and there were frequent training sessions held, in which they discussed matters related to how maximum excellence may be achieved since the company was getting a name in the business world now.

McKinsey was a well-renowned setup by 1967, both in the United States and Europe. But after 1967, a halt came, which affected the company’s profiteering business. Despite the many good plans that had been chalked out by the then managing director, Marvin Bower, the company had to face a steady pause, which affected the company’s presence. The goal behind the company’s strive for excellence, was to attain knowledge, which was also called the “lifeblood of McKinsey” recently. The employees were constantly trained to aim for high levels of integrity, for the attainment of top-level management, keeping in view professional ethics.

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Management Philosophy and its Importance

For the effective running of an enterprise, it is beneficial to have a set of philosophies according to which the managers will work. These philosophies are to b followed religiously if optimum benefits are to be obtained. They help in sticking to a certain pattern, according to which all plans will be executed, with minimal confusion. This is specifically necessary for large firms, with large amounts of personnel employed in a variety of branches spread over the globe.

The management philosophy that can be employed in the McKinsey & Co. situation is Douglas McGregor’s Theory X and Theory Y. These were two models that were devised by McGregor, which were based on the behaviors of individuals at work. This philosophy can be associated with McKinsey’s case because they had previously chalked out and tried implementations of plans that were related to the development of the consultants themselves. This could help enhance their strengths and abilities, and provide better consultancy, which would, in turn, be beneficial for the company.

Key Aspects of the Theories

Theory X states more about the negative emotions an individual possesses, regarding work.

  • If a person is unhappy with work, he will not perform as efficiently as he should. To make people work harder than the input they are currently producing, they should be controlled and threatened, according to McGregor’s theory.
  • The employees at McKinsey & Co. would prefer to be directed rather than hold responsibility for any deed.
  • Organizations have ‘tough’ and ‘soft’ management, according to the penalties or harmony aimed at the workplace these days.
  • People generally wish for more than just monetary benefits from a company, therefore the aforementioned aspects are wrong. Some extra motivation is also longed for.
  • The managers who practice the X theory leave their staff deprived of these aspects.

Theory Y contains more facts about work.

  • Physical and mental stress is natural at work.
  • The employees will work if they understand the aims of the organization. They need not be penalized at all times, or be treated with strictness the whole time to get work done.
  • Employees will be committed automatically if they are satisfied with their job.
  • If environmental conditions are favorable, the employees themselves hold responsibilities for their tasks.
  • If there are numerous employees at the workplace, there will be greater creativity and imagination.
  • The potential of individuals is partially utilized in today’s world, due to modernization (McGregor, 1960).

These facts have been based on scientific research, and if they are recognized, the organization can produce more effective results. The two theories that have been stated are two different concepts, for example, theory Y will be better linked to managing managers and professionals, rather than be in a large mass production center.

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Theory Y has been shown to produce more effective managers, which would make it best suited to the McKinsey & Co. case. McGregor states in his book that the theory Y helps solve problems too. He has explained further, that a manager is exercising his authority over subordinates only when they do not agree with the ends towards which they are working, and have to be imposed upon with rules and regulations, and orders.

If the employees are explained in detail about the ends that they have to meet, it will be easier for the managers to attain goals, because the working individuals will be more enthusiastic and dedicated towards their tasks, once they have been told what is to be achieved. However, if their goals are unclear, they will work half-heartedly, and the entire process will be a mere waste of time, with no achievement at hand. If they know and understand the goals they have to work for, the employees can also devise their own plans for the attainment of goals, and also contribute by giving their ideas. They can self-direct themselves once they know about what to do, and may also happen to give better ideas for the expected outcomes.

Since its inception, McKinsey’s developmental processes went through numerous alterations, with each managing director bringing in new strategies for the company’s boosting, especially after the pause in the upward graph. The three terms administration, managers and organization, are synonymous with one another, though each of these would portray a different meaning (Thompson & Sheldon, 2003). It has been seen that high-performance managers normally employ those techniques in their management processes which help them develop themselves, team environment, and employees. This is once again an example of the development of individual capabilities for the attainment of goals.

There are several other factors that are to be kept in view while carrying out managerial processes; they are the behavior of management, leadership and management skills, focusing on team development, accepting the consequences of team members’ actions, focusing on how the employee can benefit the company, and through which behavior, use of collaborative communication between the managers and employees, sense of self-worth of employees through their good performances, and encouragement of healthy relationships between the employees and the topmost managerial staff.

To elaborate on these points, we can begin by stating that the behaviors of each of the managers prevalent in the company affect the progress of the employees. They should be well-informed about the standards that are to be maintained in the company, in this case, McKinsey & Co. All the actions that are carried out by the employees affect the company standard. This can be kept in mind for McKinsey & Co. too, as the standards that they have set are always extremely high and non-negotiable. The leadership and management skills are to be of top quality because if the leaders are good and skillful, they can assist the subordinates to perform tasks. For McKinsey & Co., this is also a favorable element, because of the large amount of personnel. The decisions that are undertaken by the managers hold great significance and are to be strictly followed by employees. Team development is enhanced by the manager, by acceptance of all the actions of subordinates. He takes responsibility for the subordinates’ deeds.

Collaborative behavior between individuals, i.e. managers and subordinates would mean that the managers should instruct the subordinates explicably, and the latter should follow those instructions accordingly. This interaction, if carried out in a proper manner, may prove healthy for the company’s position. Performance would be negatively affected if conflicts keep occurring. Good collaboration would result in a good performance. This good performance could give rise to a feeling of self-worth to the individuals, who would resultantly put in more effort for further improvement (Nicks, M.).

Outcomes of Implementation

The outcomes of the implementation of the X and Y theories will surely be more positive, rather than contain a negative impact. This would be due to the fact that the individual behavior, attitude towards work, and perception of the goals that have been set by top management are considered. Individual development is also considered, which would certainly produce better productivity, once the goals are understood. In McKinsey & Co.’s case, we can see since it is a consulting firm, most of the aims would be regarding achieving maximum clientele, and keeping customers. By keeping customers, it is indicative of the fact that the clients who visit McKinsey & Co. once should get such good consultancy from the employees here that the customers should be able to look back and keep visiting for more service.

Since McKinsey & Co. is a consulting firm, and there are no sales of material goods which would involve marketing, etc, it is important for the company to recruit personnel of top quality. If managers and engineers are to be given consultancy in management and engineering, then the employees at McKinsey & Co. should be of exceptional quality, which would prove their worth with the services they provide. To teach managers what to do would require an incomparable managerial force here at McKinsey’s too.

The outcomes that have been seen by theory Y are favorable for McKinsey’s case. It relates to the improvement and enhancement of the individual, which is essential for the McKinsey & Co. personnel. The Y theory of McGregor is a strong motivational one, in contrast to the X theory he put forth, which compares the employees of a company to the parts of a machine, showing them having no say or understanding of what to do or achieve. The Y theory clearly states the importance of a person’s beliefs affecting his management style, and his viewpoints influencing the output of work produced. The greater the output is the more the self-worth, and progress of the company.

The authoritarian style of work will not produce the results the Y theory would because the Y theory makes employees gain insight into what is actually taking place in the company. These employees will work whole-heartedly for the achievement of company goals, as compared to the other management styles adopted within enterprises.

Conclusion

It is apparent from the case study provided, that McKinsey & Co., a consulting firm, needs to have recruitment of dedicated people, who will incorporate into the systems prevalent for carrying out their management steps, such effects, that would prove worthwhile. The management amongst each other to perform tasks is more essential for end results to reach satisfactorily.

The business can flourish the way it did in its inception, by raising awareness regarding the firm, through highly devoted and committed people as employees. When these employees work to produce positive outcomes for the clients, they help retain the clients to the company, enabling it to keep a steady amount of visitors.

References

  1. McGregor, D. (1960). The Human Side of Enterprise.
  2. McKinsey & Co.: Managing Knowledge and Learning. 
  3. Thompson, K. & Sheldon, O. (2003). The Philosophy of Management.
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