Consultants, Exposed

Welcome back to The Supply Times. This week, we’re looking at the growing influence of the Big 3 management consulting firms and a new wave of wage transparency among companies, as well as a roundup of the things I’m reading, watching, listening to, and thinking about.

Let’s get to it.

Industry Highlights: Goliath's Fall

You can’t live in the supply chain world without being aware of the Big 3 consulting giants’ massive presence. Bain & Company, Boston Consulting Group, and McKinsey firms are the go-to sources for many managers that help them examine trends and forecasts—information that has been extremely valuable when attempting to navigate the tumultuous waters thanks to the pandemic.

There have long been rumblings that these consulting titans have let some of their dominance turn to hubris—Bain was embroiled in a South African tax office scandal and BCG raised red flags with its too-comfy relationship with Saudi Arabian autocrat. McKinsey, too, has its share of corruption allegations, practices brought even more to the forefront by a recent book that seems to have dragged lots of skeletons out of the corporate juggernaut’s closet.

Titled When McKinsey Comes to Town: The Hidden Influence of the World’s Most Powerful Consulting Firm, the exposé details decades of shady deals and exploitative practices. New York Times reporters Walt Bogdanich and Michael Forsythe allege McKinsey is at the root of facilitating the sale of opioids to addicts, as well as assisting a South African company to engage in corruption with high-ranking political officials.

But because of McKinsey’s notorious confidentiality policies, much of their (alleged) malfeasance has flown under the radar. “Because the firm won’t identify clients or disclose the advice it gives,” the authors write, “Americans and, increasingly, people the world over are largely unaware of the profound influence McKinsey exerts over their lives, from the cost and quality of their medical care to the jobs that pay for their children’s education.”

In a review of the book, The New York Times writes that Bogdanich and Forsythe create “a clear and devastating picture of the management philosophy that helped drive the decline of a stable American middle class over the last 50 years.” They promoted layoffs and offshoring of jobs to countries with cheaper labor, as well as encouraged companies like WalMart to increase their part-time labor force to keep health benefit costs low.

A recent Economist article suggests these three companies may soon see the end of their dominance. With more companies engaging in what’s been dubbed “woke capitalism,” there could be a turn toward more ethical management. But it’s always tricky when “greater good” choices affect the bottom line.

As someone who was once a consultant, I’ve taken a keen interest in this because it demonstrates the level of influence these three firms can have over the globe. To me, it shows that even when it comes to management consulting of the highest pedigree, the old adage is true: caveat emptor.

The Future of Work: The Future of Pay

It’s generally considered impolite to talk about religion, politics, or money in mixed company, but a series of new laws could spur a cultural shift toward transparency on the last one—at least in the office.

Thanks to impending legislation in several states, companies may soon be required to post salary ranges on job posts. The thinking behind the efforts, according to The Wall Street Journal, is to boost pay equity and address gender and racial wage gaps by ensuring workers in the same role earn similar pay. A 2020 Pew Research study found that women earned about 84 percent of what men earned—a figure that has remained relatively steady over the last 15 years. A similar Payscale survey reported a Black man makes 2% less than his white counterpart.

It’s common for employees to wonder if they’re getting paid what they deserve, as well as how their salaries stack up against their colleagues. And while it’s been legal for coworkers to talk about money for almost a century, in many workplaces the topic is considered taboo.

And yet, workers have expressed their desire for more transparency in numerous surveys. A Visier report found that 68% would switch employers for greater pay transparency—even if pay was the same. Survey respondents also said it would additionally motivate them in the workplace.

While there’s certainly a possibility that openly talking about wages can breed discontent, the benefit of fostering a culture of transparency can give employees a sense of togetherness, as well as an empowerment not found in firms where such topics are frowned upon. “[It] allows people to have a better ability to organize fair pay and living wages so that they are not disabused by monopolistic tendencies,” lawyer David Reischer told Monster.com.

Other experts agreed. “Pay transparency will quickly become a market advantage for companies that implement it, said Alexandra Carter, author of the book Ask For More: 10 Questions to Negotiate Anything. Carter added that more pay transparency could boost productivity and make for a healthier workplace.

Of course, there will be plenty of growing pains once this picks up steam. Not the least of which stems from the ever-increasing salary disparity between the worker bees and senior leadership.

The Supply Aside: What I’m Reading, Watching, Listening to, and Thinking About RE: Supply Chain, Work, and Beyond

📕 Read: I enjoyed this recent interview in the Financial Times profile of Elon Musk. Love him or hate him, you can’t help but be fascinated by the fact that he’s managed to become the richest man in the world by essentially acting like a WWE heel. By his own admission, Musk tells reporter Roula Khalaf that he loves “playing the fool” on Twitter. “I don’t know,” Musk said. “I find it vaguely therapeutic.” Some find it vaguely amusing.

📺 Watch: I’m watching the job openings and layoff numbers pretty closely lately, considering that August’s numbers suggest the labor market is starting to cool. The Bureau of Labor Statistics recently reported there were over a million fewer job openings—the largest decline since the early months of the pandemic. Is this an anomaly, or are we going to see a stabilization of a job market that has been wonky for two-plus years?

👂 Listen: The inimitable Jan Griffiths has had a wonderful podcast Finding Gravitas for some time, and she’s recently rebranded it The Automotive Leaders Podcast. The pod features in-depth interviews with leaders, authors, and thought leaders to give an insightful look at the future of the automotive world. Jan was the first female leader our firm helped place when starting out, and her accomplishments have been incredible to watch.

💡 Think: I’m still thinking about how my company, MRA Global, recently crossed the decade threshold and what an amazing ride it has been. To think that a decade ago I jumped from a cushy, corporate gig into the great entrepreneurial unknown and I’m still here is mind-boggling. I’m grateful for the clients, relationships, and team that’s surrounded me over the years, and I’m looking forward to what the future holds. Recently, I invited partners, friends, and clients to celebrate our anniversary, and it was great to hang out with the people who made it possible.

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