McKinsey may not care whether it’s on the right side of history, but its clients and employees surely do. The ouster of boss Kevin Sneader, a $573 million settlement over advice it gave to opioid maker Purdue Pharma, and work for the U.S. immigration authorities and Saudi Arabia’s autocratic government all further the impression of a business struggling with its own direction. This public dilemma may have a public solution: become a listed company.
Sneader, who was unusually denied a second three-year term in the firm’s ongoing internal elections, took steps to weed out unsavory clients, like beefing up the committee that vets controversial relationships. McKinsey rides on its reputation, after all. But it needs a more obvious revamp if it wants to attract the brightest talent and retain clients grappling with their own purpose. It doesn’t help that Sneader’s successor, to be selected in the coming days, will be an insider.
Going public would show the firm has turned a page and might also change McKinsey’s culture for the better. Having a stock-exchange listing is like taking on thousands of reputational advisers, from giant index-tracking investors like BlackRock to small issues-based groups. Many Wall Street banks have used shareholder feedback to manage links to, say, firearms makers or private prisons. Public investors can be a pain, but they’re also a barometer for issues that could become material later. McKinsey, judging by recent scandals, could use an early-warning system.
Sure, listed companies can’t escape pressure to make money, and they deal with masses of red tape. But they gain transparency and the discipline of a moving share price. Mining group Glencore and data firm Palantir Technologies both sacrificed privacy without losing their nimbleness or publicity-shy clients. Goldman Sachs in 1999 boasted that its initial public offering had made thousands of employees into owners who would now behave as such.
If McKinsey still isn’t convinced, it could look at companies who seem to have their cake and eat it too. Blackstone, the private equity firm run by Steve Schwarzman, listed its shares in 2007 but retains features that prioritize insiders, such as supervoting shares and partnership-like profit-sharing arrangements. Going public isn’t a cure-all, but it could be an effective way to rebadge McKinsey as intelligent as well as clever.