People and companies both must have strong “moral compasses”. The McKinsey Example.

I was reminded that people and businesses need moral compasses recently, as another set of lawsuits were settled by the McKinsey Consulting firm because of their part in Purdue Pharma’s OxyContin sales. McKinsey had been sued because of its work to “turbocharge” opioid sales. That “engagement” is one of the most outrageous examples of a business – at least some of its leaders – lacking a moral compass. ?(And they were paid $84M for the “Turbocharging” effort.)

Prior to this latest settlement, McKinsey & Co. paid a total of $670 million for its alleged role in the US opioid epidemic. This round, they will pay an additional $230 million to settle most of the remaining suits. ?

A leader’s moral compass is what guides them to make the right choices. It is an internal compass that helps them navigate through ethical dilemmas and make decisions that align with their personal and business values.

It’s critical for company leaders to constantly emphasize what they stand for, what they value, and their company code of ethics. Leaders should not be judged solely on their decisiveness and efficiency but also based on values and moral reasoning. As a couple of examples, companies cannot destroy the planet just for revenue, or keep pushing the sale of cigarettes once it became known that cigarettes caused very serious health problems. In the case of the opioid crisis, people were becoming addicted and were dying. ?And McKinsey knew that.

Now, admittedly, everything is not black and white. There are grey areas, and those should be studied carefully. But most often, it’s obvious when a business is doing something that is flat out wrong. ?And a moral compass helps with this, as it relates to right and wrong, and not just what’s “legal”. In fact, if you are at the point of asking if something is legal in your company, your business moral compass is broken - to bits. ?

Now there are many different definitions of a moral compass, with most people associating it with ethics, accountability, principles, values, and integrity. I personally think it’s a bit broader than that, but regardless of how broad it is, as CEO of a software business, personally I put it in very simple terms; when I came home to my family at the end of the day, if they knew I took part in a business that did “x” would they be proud of me? And of course, one could use the simple mirror test.

In my opinion, a great starting point for a business to strengthen its moral compass, or to build it, is to state their core values. Core values can help create unity and synchronicity within workers toward a common goal. They are the base on which a business is built.

Now I admit, I’m not a McKinsey fan. I’ve seen their work firsthand, and I was not impressed. But it’s not just the Oxy work.

A few more examples of their “work”? ?These are just a few examples.

• They did work for All-State insurance on a profit strategy involving paying smaller claims to their customers.?
• They were paid $27M by New York City, to “help reduce violence at Rikers Island”. The advice they provided included the expanded use of more aggressive dogs, Tasers, and shotguns. Duh. McKinsey’s claim about their results? They stated their advice reduced violence by 50% in certain “Restart” facilities, though it's alleged they colluded with jail officials to stack the Restart units with inmates the company believed would not start fights or attack prison staff. McKinsey still denies this, but ProPublica alledged that was true and they also found evidence that violence rose 50% at Rikers overall after the company began its assignment.?
• Then there is the conflict of interest of McKinsey working for both Purdue on Oxy Food and the FDA at the same time. Don’t have a problem with that? Really? Trying to convince the FDA that Purdue’s products were safe when the data said they were even killing people?
• And McKinsey’s largest client for the 15 years prior to the collapse of their business due to fraud, was Enron, which of course took Anderson down along with it.

All the above is truly outrageous. And at the same time McKinsey charges off the page fees for mediocre work at best. I sure hope that the McKinsey business will turn around and they will truly do good for the world. ?Core values are not meant to be just words on paper. They should be put into practice by the company’s leadership and all employees. McKinsey and other companies must find their moral compasses and must walk the talk.

Note: A great read about McKinsey is:

When McKinsey Comes to Town: The Hidden Influence of the World's Most Powerful Consulting Firm Hardcover – October 4, 2022

by Walt Bogdanich (Author), Michael Forsythe (Author)

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