ORGANIZATIONAL DESIGN

PROJECT

Faculty: Prof. Rameshwar Ture

Organization Structure of Mckinsey & Company

Section B - Group 9

Candidate # Name Roll Number

Candidate 1 Ritwick Agarwal MBA20125

Candidate 2 Sachin Gupta MBA20126

Candidate 3 Samarth Garg MBA20127

Candidate 4 Satyam Sharma MBA20128

Company Overview
McKinsey & Company is an American firm which offers consulting services to other
businesses and government. It was founded in 1926 by the University of Chicago professor of
accounting James O. McKinsey, whose aim was to advise corporations and government on
strategic management. McKinsey expanded to Europe in 1940s and 1950s and in 1960’s
McKinsey, BCG, Bain and Company and Harvard Business School’s Michael Porter
transformed corporate culture. McKinsey and Company is one of the top 3 three consulting
firms in the world and has more than 100 offices in 50 countries. It specializes in problem
solving and program implementation, primarily for corporate clients. It works with the upper
management of the companies to provide them with solutions and strategies for their business
operations for better growth and revenue, in return McKinsey charges its clients heavily.
McKinsey has advised many of the Fortune 500 companies in the United States and top
corporations in other countries. Its list of clients includes General Motors, PepsiCo, Ford Motor
Company, and American Express. In its expertise areas, it addresses organizational, strategic,
technological and operational issues, always with a focus of improving the client's business.
Many former McKinsey consultants have gone on to hold high management positions in major
companies around the world. McKinsey growed by hiring more employees, who were mostly
industrial managers in their late 40’s whom he thought his clients would find interesting and
credible.
After McKinsey died, Marvin Bower, a Harvard graduate, took over the company. Bower laid
down the core principles of the firm and Bower is credited with making McKinsey a world
class company that it is today. McKinsey's billings increased from $2 million in 1950 to more
than $200 million when Bower stepped down in 1967.
Bower established the firm's core principles and created the practice of management
consulting. The first international office of McKinsey was opened in London in 1959 and since
the company is steadily growing.3McKinsey opened its first international office in London in
1959, and has expanded steadily since then. McKinsey mostly hires MBA’s passed out of ivy
league universities like Harvard, Stanford, North-western etc.
McKinsey has no headquarters office. Instead, the firm operates "one-firm" partnership model,
in which offices across the world shares culture and value norms.
This type of model enables the company to quickly assemble a team of consultants to work on
a project. The firm is also committed to make a social impact and uses its financial, intellectual
and convening power to resolve issues such as climate change, and natural disasters. The firm
heavily invests in research on topics such as education, global business, government policies
etc

Organizational Design
When a number of people, having common goals in their mind, come together to achieve it,
using the available resources efficiently, the structure thus formed is called an organization.
Organizations are thus, social entities, comprising of people having a common motive and a
plan to achieve it. But what is that force, which has led to such a large bank like Lehmann
Brothers to collapse, and which has led to such a widespread expansion of a once start-up,
Amazon. This driving force behind the success or failure of an organization is called the
organizational design.
At the core of any organization is effectiveness and efficiency. Effectiveness is how well, an
organization is able to achieve its pre-determined goals and efficiency means, how smoothly,
it can achieve them, using the available resources at hand in a well-planned and structured way.
The Organizational Design also tells us about how the information flows in an organization
and what is the structure and relationship between the different levels of employees. The design
of the organization and its culture plays a very important role in defining the course of action
for the organization and also explains and gives an insight into the relationships between the
employees and the hierarchical levels within the organization.

Structure of McKinsey
All the organizations follow one of the following structures
Types of organizational structures
· Hierarchical organization structure: It’s the most common structure in which the
command flows from top to bottom and each employee has a supervisor
· Functional organization structure: Almost similar to a hierarchical structure. Employees
are organized according to their skills and functions in the organization.
· Horizontal or flat organization structure: In this structure there are a few levels between
the upper management and the staff level. Usually, start-ups follow this structure
· Divisional org structures (market-based, product-based, geographic): In this the
company’s divisions have control over their own resources and have autonomy to utilize
them. Each division can have its own operations, marketing, IT team etc. This is followed
by companies with various divisions.
· Matrix org structure: It looks like a grid and it shows cross functional teams which come
together for some projects.
· Team-based org structure: The organization is structured as a team. It incorporates
Scrum teams and are more focussed on problem solving and employees have more
autonomy.

Initially, McKinsey & Company was organized as a partnership but in 1956 it got legally
restructured as a private company with shares owned by its partners. Though it is a private
company, it acts as a partnership and its employees are called partners. There are different
levels in the organization namely, Business Analyst, Associate, Junior Associate, Associate,
Engagement manager, Associate principle, Partner, Senior Partner.
The company follows a flat hierarchy structure and every member is allotted a mentor.
McKinsey's Managing Director is elected by a vote of senior directors and serves up to three,
three-year terms or until reaching the mandatory retirement age of 60. A series of committees
manages the firm by a series of committees which have their own area of responsibility and
functions.
 McKinsey also has a decentralized structure in which different offices operate similarly, but
independently. In McKinsey, individual consultants are given autonomy and independence to
carry out their work.

Organizational chart:

Alternative Organizational Structure:

HELIX Organization:
• Complex matrix structures won’t work as businesses have become more complex and
interconnected.
• Helix organization structure will help organizations to create balance between
decentralization and centralization as well as minimize complexity and become more
agile.
• In Helix the traditional hierarchy is separated into two parallel lines of accountability
which have equal power and authority but are fundamentally different.
• Of the two, one line helps in driving functional excellence by developing people and
capabilities and also set standards for work.
• The other line concentrates on people and capabilities that are high on priority for the
business, create value and provide fulfilling customer experience.
• This eliminates dotted line reporting and empowers employees to take decisions and
innovate.
• It also provides broader spectrum of opportunities to employees to grow in the
organization.
• As the two roles are different there is less power struggles and conflicts which are
common in traditional structures.
• Managers in two roles are called as capability leader and value-creation leader.
• By separating lines of authority helix helps free the functional experts from serving as
day-to-day supervisors.
• Employees participate in small ad hoc teams comprising employees from different
units and functional centres which helps in increasing the productivity.
• Helix helps in making resource allocation dynamic in order to achieve enterprise wide
agility.
• It also helps in reducing struggles between centralized and decentralized functions
which helps in flexible decision making.

• Both managers are considered of equal importance and both are intertwined playing
essential roles in leading teams.
 • Helix can help large organizations such as McKinsey to develop an agile and lean
organization structure.
• Operating model cannot be solved by structure alone. For successful implementation
of Helix, new processed and varied mindsets have to be embedded to get rid of
obstacles and overpower skepticism.

Porter’s Strategy
Introduced by Michael Porter, the model describes how companies can have a competitive
advantage by adopting the right strategy. The two broad divisions within this are the
Differentiation and the Low-Cost Leadership Strategies. Mckinsey, being a global brand,
having the advantage of high recognition along with a great brand value, has over the time
being following the differentiation strategy. It was very easy for Mckinsey to adopt the
competitive advantages over its competitors, due to the lack of competition in the market. But,
with the market competition becoming more and more fierce and intense and with the coming
up of new, equally good consulting firms, Mckinsey had to restructure its strategic design.
The company has now resorted to a mix of differentiation and cost leadership strategies to
handle the constantly increasing pressure from the growing competition. Focusing on the
customer base expansion and the sales growth, the company now focuses on the intensive
growth strategy based on the Porter’s model. The intensive growth strategy adopted by
Mckinsey includes market penetration, product development, diversification and market
development.
Cost Leadership Strategy at Mckinsey- This strategy focuses on gaining an upper hand over
competitors by lowering the cost. Mckinsey has been using the cost leadership strategy in
various consumer markets. By adopting this strategy, Mckinsey focuses on how to preserve the
market leadership position by adopting efficient value chain management.
Differentiation- To showcase its USP, Mckinsey has been using the differentiation strategy to
expand its customer base by emphasizing the unique products it has to offer. This strategy helps
it to create a differentiating factor in the minds of its potential customer base and helps its
products to stand out. High investment in marketing, advertisements is made just to
differentiate Mckinsey from its competitors.

Miles and Snow’s Strategy

According to this model, the business strategy of any organization can be classified into any
one of the following four types: Prospector, Defender, Analyzer or Reactor. For a large
company, which is a market leader like Mckinsey, it is imperative for it to fall in the category
of either prospector or analyser. Mckinsey, being a market leader and constantly thriving for
innovation and development, fits well in the category of Prospector. But with the growing
competition, for any firm, it becomes important to look at what its rivals are doing and which
of their policies are liked by the customers of not. So, this has become an important aspect for
any competitive organization, and adhering to this, Mckinsey to some extent also falls in the
Analyzer criteria.