McKinsey Layoffs: Firm Offers Staff 9-Month Severance Pay Package To Leave, Says Report

Over the past year, McKinsey and other consulting firms have reduced staff numbers, postponed start dates, and moderated their hiring pace due to decreasing client demand in the consulting sector

McKinsey & Co. has reportedly presented an unconventional proposition to certain employees: Accept nine months' worth of pay and opt for a leave of absence. The management consulting company is offering this package, alongside career-coaching support and additional resources, to select UK staff members who are considering departure. Initially reported by The Times of London, this initiative represents the latest in a series of personnel adjustments within the esteemed advisor to CEOs and heads of state. It follows closely after McKinsey's cautionary notice to some consultants in the US regarding their diminishing window for promotion. 

Over the past year, McKinsey and other consulting firms have reduced staff numbers, postponed start dates, and moderated their hiring pace due to decreasing client demand in the consulting sector.

“These actions are part of our ongoing effort to ensure our performance management and development approach is as effective as possible and to do so in a caring and supportive way,” a McKinsey spokesman said, according to a Bloomberg report.

“A core part of our mission is helping people learn and grow into leaders, whether they stay at McKinsey or continue their careers elsewhere," the spokesperson added in the report.

According to the report by The Times of London citing sources, the offer will extend to McKinsey's engagement managers, who are responsible for overseeing consultant teams on client projects, as well as associate partners. Similar offers have also been extended to managers based in the US. The exact number of eligible staff members for this offer remains undisclosed.

At McKinsey, employees in client-facing roles who underperform typically leave after being advised to do so, a situation described as being "counselled to leave." This suggests that the company does not wish to involve them in client projects and suggests they seek opportunities elsewhere. However, in this instance, employees in good standing are opting to leave on their own accord. Those who opt for the nine months' pay offer would still be required to leave even if they were unable to secure alternative employment during that time.

Last year, McKinsey underwent an unusual round of layoffs, aiming to cut approximately 1,400 positions, primarily among support staff rather than those in client-facing roles. These reductions accounted for roughly 3 per cent of the workforce, which had grown from nearly 28,000 to almost 47,000 over five years. A McKinsey spokesperson told Bloomberg that the firm will “continue to recruit and hire robustly.”

McKinsey reported record-breaking revenue of $16 billion last year and recently reelected Bob Sternfels as a global managing partner despite competition from other internal candidates.