by Martin Kihn
He says, “I don’t think so.”
“What?”
“I don’t think it’s over.”
“Why?”
“I heard some things. There’s a ton of people on the beach. Louis told me they’re something like eighty percent below plan for the year.” Louis was a big media partner—an Ohioan with an oddly Southern cadence and a pals-y manner—he was known as the friendly partner. There was only one.
“Eighty percent?”
“Or something. It’s really bad.”
“Maybe the plan’s too high.”
Your friend lowers his voice, glances around. You would get used to this combination, repeated like a dance: Glance around, lean forward, lower voice, eyes forward. “The number I heard was twenty more,” he says. “By June.”
“June is like—it’s like two weeks away.”
“That’s right.”
“Who told you this?”
“Can’t say.”
You leave it there—it was probably Louis, which scares you some. Louis is a partner; he would most definitely know. Which meant that number twenty was more than Japanese food chitchat and chin music. Which meant the lowest value-add people would be chopped first… who adds less value than a guy who just (last week, in fact) graduated from business school?
This line of thought is unproductive. It represents your universe for the next eighteen months.
Two more things: (1) your friend chose wisely, even the little orange gooey thing with the skin on it was quite tasty; and (2) he is right about the month, wrong about the number—it is twenty-four.
He is one of them.
“One thing I need to stress to you—this is a onetime thing…”
This is the conference call. You all call in. By now you all know what has happened—have known, in fact, for weeks, largely because of people like Louis who tend to talk too much, or feel too much. And despite the fact that all twenty-four were from the same office on Park Avenue near Grand Central Station in New York City—despite the fact that it’s a Friday, and so every single person on the call is probably at this moment within four or five floors of one another in the exact same building10—despite this, the partners do not choose to meet downstairs in a private room off the first-floor restaurant called The Club, a room perfect for mass executions. They choose to talk by phone.
“We need to size the professional staff for the business that we actually have, not the business that we want. I need to stress now that this is a—not a sign that we’re in trouble. Don’t believe what you read on vault.com.11 Our balance sheet is very strong—we don’t have any debt. What we’re hearing about our competitors is… not good. They’re having capital calls on the partners. One of them [he names the firm] had to borrow money at near-junk interest rates. We heard that from the bank because we had to go in to meet some seasonal working capital issues—at our A++ interest rate. Like I said, we have no debt. But again, the business is not where we would like to be. The market is soft right now… very soft. Everybody’s struggling. Where you go on calls, you used to see one or two competitors—now there’re four or five. The whole market’s got some capacity issues because of all the over—overexpansion in the dot-com boom. We just went—we went crazy…”
Now you recognize the voice. It spoke to you at one of the sixteen gatherings the firm held at Columbia during recruiting season. You kept your name tags, hung them on the wall in your kitchen, out of pride. This voice is the skinny, tall, beautifully dressed partner with the goofy look on his face who does Telecom and, despite being based out of the New York office, lives in Arizona. That explains the conference call.
While he expands, you check out vault.com. As usual, it’s rather clearly accurate.
Cnsltngsucks: “Twenty-four people got whacked this week. They called them in from the clients & told them.”
Newsboy2: “I got deferred until January. Did they say anything about us deferrals?”
Insider27: “Hah! Hohohohohohoho…”
Doomsayer: “That firm is going bankrupt. Bain is in trouble too. Their [sic] borrowing at junk bonds, or they can’t borrow at all.”
Cnsltngsucks: “Deferred people are getting whacked, probably in August.”
Newsboy2: “How do you know this?”
Of all the questions dispatched during this difficult, difficult time rife with know-it-alls and real-smelling bullshit, Newsboy2’s is the one that never gets answered. Never can get answered. For that is the nature of rumor.
Managing Organizational Change: Best Practices… Managing the Transition
Develop and communicate a clear image of the future state
Use multiple and consistent leverage points
Use transition devices
Obtain feedback about the transition state; evaluate success12
As the call continues, you come to believe you are not the only one who has lost interest in this particular “clear image of the future state.” Your image is pretty clear right now: homeless, friendless, alone. No wife, no job, nothing but a buddy named Jimmy Beam and another named Johnnie Walker.
An MBA used to mean something in this world—when was that?—how little you know, how little. You went through the Columbia brochure with your wife, and she crossed off jobs you weren’t allowed to take because they started under six figures. The only options left were investment banking and consulting. You remember T. S. Eliot said the result of all running away was you end up in a shitty room in some stupid town in a gray undershirt, smoking Winstons, a single GE gray lightbulb dangling from a cord over your gaunt and aging frame, and you’re singing the song that has no verses, just one endless chorus: “Why… why me?… why me?…”
On the other hand, there are advantages to massive layoffs. These can be grouped into two divisions.
Division One—Real estate: You get more space. When you started, four weeks ago, you were put into a room on the twenty-fourth floor the size of your bedroom out in Queens. There were five desks in this room, a monstrous filing cabinet, and four associates. Five desks, four associates—already the benefits were showing, for that fifth person (there had once been a fifth person) was one of the ill-fated consultants. Her name plate made the migration of the departed: It was taken off the door and put on the side of the behemoth filing cabinet. This is an example of “subtle, passive ways to derail the new processes and procedures” (whatever they were).
So for four weeks there are four people, five desks. The desks have massive steel cabinets bolted to them at about eye level. Your colleagues peck at their firm-issued IBM ThinkPad 60s, keeping their heads down as though avoiding ray guns. Maybe it is your background in the arts, but you can’t help but notice these big cabinets block all light, sun, life, and a breathtaking view of Grand Central and the MetLife Building over it, so you ask Saint, the Caribbean office fellow with the religious medal and the big smile, to remove the bolts, take it away.
The day this happens you feel the brutal slap of “subtle, passive” conformity in the professional services firm. Saint comes in with his team and they unbolt the cabinets. It’s a Friday; your three colleagues, unusually, are all at their seats at the same time. The process is loud, but it is not the volume that disturbs them. They look at you—at you, not the far more interesting extrication process unfolding in their midst—they look at you as if you had asked Saint to please take a pair of pliers and remove your penis.
“What are they doing?”
“They’re taking out the cabinets.”
“Taking them out. You mean taking them out?”
“It’s going to be great,” you tell them. “There’s gonna be a lot more light. And it’s better feng shui.”
“I can’t believe you did that,” says a guy who, in four weeks, has said nothing else.
“You’ll thank me later.”
As usual, you feel your essence has been squandered on these clowns. There is scant room for light in the consulting firm in the midst of a massive round of layoffs
that manifestly is not—is most definitely, absolutely not—a onetime (two-time, now) thing.
But back to the conference call. It winds down, and you take solace in your lovely, completely unobstructed view of the MetLife Building. There is a highway slanting up that feeds into the building like an IV tube and is always filled with cabs. MetLife is kept alive by a continual infusion of the juice of yellow cabs.
“… Okay, so what we need you to do now is to put this behind us. We have no debt, we’re positioned for growth, we’re sized now perfectly for the market that we’re in. We have some capacity to meet the turnaround, when it comes—and we already see some signs of that. This is a onetime thing—it’s painful, but it’s over. We’ll work with our new alums to help in their transition. Okay.” There is a rather long pause. You think you can hear the sound of a wild coyote baying across the Arizona sands.
“… Now let’s get back to work.”
As the dust settles this morning and the latest victims become known, you learn that the quiet guy—the one who disbelieved your redecoration scheme—is gone.
Division Two: This is obvious, right? It’s schadenfreude.
After the conference call, you decide to have lunch with your mentor. At least you think he’s your mentor; the firm has restructured so many things so many times over the past two years, the mentorship situation is entirely clear to no one. Since your mentor also isn’t sure he is your mentor—he’s heard something about four-man mentor teams somewhere—he’s not sure he has a mentoring lunch budget, so he’s not sure he can pay, so you necessarily make your way to someplace cheap. The cheapest decent place happens oddly enough to be the same Japanese restaurant you were taken to your first week.
It is now week five. You may have changed, but the restaurant has not.
You let your mentor order.
Now you make a mistake. A quite conscious mistake.
You say, “You know the last time I was here?”
“Huh…”
“I came with”—here you say the name of the little bald fellow, the one who was axed. He was Mr. Media, and your mentor is known as something of a Mr. Media himself. Like all the media specialists at the firm, he knows almost nothing about show business you cannot learn from a 10-K. Your mentor was seen as something of a friend to the bald man; they would stand side by side at recruiting events (they both went to Columbia). This was pretty funny, since your mentor is an enormous man, someone whom people ask quite seriously if he ever played professional football. He always says, “I tried—but they don’t take Jews in the NFL.”
“Huh…”
“Why was he let go? I thought he was great.” Indeed, that was the rumor: he was great.
“Well, it’s complicated…”
“I don’t understand this. There are a lot of people worse than him.”
“Not anymore.”
“Sure there are. It seems almost as if they picked people at random.”
“Not quite. It was pretty careful.”
“That guy was always working. He went to every recruiting thing. He helped everyone who asked him. I saw those decks he put together—they looked really good to me. What’s the criterion they’re using?”
“He was behind on some development needs.”
“Which ones?”
“You have to compare him to his peers—it was a ranking order and on some of the dimensions he was coming up a little short.”
“How short? Which ones?”
Your mentor seems a bit uneasy; you have been pushing too hard. It occurs to you he might have been in the room when the decision was made. Associates are not allowed in any room when any decision is made, but your mentor is a senior associate on the verge of becoming a principal. He may have been in the room. He may have been in the room and said something like what he says right now, a thing that startles you and grows you up:
“Look, Marty, he was the last one on the list”—so the big guy was in the room after all—“it was really close. It isn’t easy at all to pick these people, but the partners give us a number, you know, we, we have to honor it.” He speaks in a low, slow, almost soothing voice; it starts to rise. “What happened was we had some other people on the list but they had defenders, there was some partner or principal in the room who spoke up for them. We went alphabetically. We got to him and no one spoke. I should have said something but—I don’t know. It was hours we’d been in there, I was hungry.”
The food arrives. It looks disgusting.
You say, “You guys were best friends.”
“Come on, Marty.”
“Are they gonna do it again? Next appraisal cycle?”
“I don’t think so. This is one time and move on.”
You realize that your mentor, who seemed so genuine and real when you worked at the firm last summer—the only Mr. Media with these qualities—has changed too. He has been sucked into the House of Lies.
You trust your instincts. Your instincts are good. Every instinct and outstinct you’ve got is telling you it’s not over, not over at all, not slightly, not hardly, not yet.
Later, you can’t believe how naive you were.
Some consulting statistics:13
Number of top-tier management consultants in the U.S. in 1990: 22,000
Number in 2000: 61,000
Number at the end of 2002: 49,000
Revenue of the top ten consulting firms in 1990: $5 billion
Revenue in 2000: $14 billion
Revenue in 2002: $10 billion
Average starting salary and bonus for associate at top-tier firm in 2000: $120,000
Average in 2002: $100,000
Average professional staff reduction at top-tier firms, 2001–2003: 25–30 percent
U.S. unemployment rate during the Great Depression: 25–30 percent
Average time laid-off U.S. worker spends looking for new job: 3–4 months
Average time ex-associate spends: 10–12 months
Number of years average U.S. worker stays at same firm: 3.7
Average for management consultant: 1.6
Average for statistician: 3.3
From Strategic Consulting14
“Top Ten Reasons Companies Give for Hiring Fewer Consultants”
Overall economic conditions
Mandate to control external costs
Professional fees not in line with value received
Bad experiences in the past
Services not required at the present time
Relying more on internal expertise
Developing internal strategic capabilities
Never used consultants
Hiring from the same talent pool
Lack of up-to-date industry knowledge
The McKinsey Problem—or, the Mind of Machiavelli
Immediately after starting work at McKinsey, the Rainmaker alters the Web site he created for the purpose of promoting his book. All remotely positive references to your firm are excised or replaced with neutral mentions of a former place of business. The firm itself is named nowhere. Its two-hundred-strong team of loyal consultants are commended nowhere. Aristotle is said to have believed rats could appear spontaneously from within a pile of dirty rags. Overnight, your firm becomes that pile.
At times, indeed, he appears almost ungrateful. His revised “Biography” starts like this:
Before joining McKinsey, the world’s largest consulting firm, [the Rainmaker] established and was the managing partner of the Entertainment, Media and Internet Group of a mid-sized consulting firm for more than ten years. (italics added)
Two observations come to mind. One notes how the Media and Entertainment Group so proudly described mere months before on his book jacket has magically become the Entertainment, Media and Internet Group—a retrospective rechristening that may not in fact have been wise, given the state of the Internet. But no matter: Internet it is.15 More insultingly, your firm has been demoted in a way that begs for argument. McKinsey is not in fact “the world’s la
rgest consulting firm,” unless one is judging size by the inflation of egos within its walls.
Sources: Business Week, July 8, 2001; Consulting News, August 2002.
Some might argue that what the Rainmaker really meant to say was not that McKinsey was “the world’s largest consulting firm” but simply that it was the firm that derived the greatest amount of revenues from strategy consulting, as opposed to the more lucrative but plebeian work done by the IBMs of the world, which focus primarily upon information technology and the integration of corporate computer systems. This is a fair point, although even industry-standard sources such as Consultants News are unable to come up with consistent estimates of exactly how much any firm makes from pure strategy—as opposed to pure IT—consulting. Estimates for McKinsey range from over 50 percent16 to less than 40 percent.17 Such distinctions are never easy to make.
If a certain workhorse company’s 2001 revenues from strategy consulting alone were bagged up and set beside McKinsey’s and those of the formidable number three, Accenture, they would stack up like this:
Who is looking distinctly midsize, now?
The Rainmaker’s “Biography” continues:
… During that time, he has represented the largest and most visible companies internationally and currently oversees a staff of more than 200 professional consultants worldwide. (italics added)
There it is again—his staff of two hundred! Did they follow him, every one, to the world’s largest consulting firm, there to work upon the Internet? Why, no, they didn’t—not a single person. You see them now, dejectedly swinging their résumés around the halls of your firm, by turns falsely optimistic and waiting for the ax drop. No one followed him, yet still he found 200 to command! There is apparently a rule of thumb in the military that war-fighting units under a single field commander cannot be larger than 200, and that 150 is more manageable. Does the Rainmaker know this rule? It seems he does.