Conquering Consultants

The German Republic of McKinsey

mckinsey four consultants shot
Frank Appel of Deutsche Post, Oliver Bäte of Allianz, Claudia Nemat of Telekom and Martin Blessing at Commerzbank are all former McKinsey consultants.
  • Why it matters

    Why it matters

    The global consultancy has a growing influence in the top echelons of corporate Germany.

  • Facts

    Facts

    • McKinsey was founded by accountant James McKinsey in 1926 in Chicago.
    • The consultancy has huge influence in U.S. business and government – at least 70 of the 500 largest U.S. companies have, or have had, a former McKinsey employee as a boss.
    • In Germany, 48 former McKinsey consultants hold leadership positions in German companies (nine in Germany’s 30 DAX companies) and the government.
  • Audio

    Audio

  • Pdf

Allianz is currently led by a chief executive who started out selling insurance products door to door.

In May 2015, the company will be led by an alumni of McKinsey, one of the world’s most influential management consultancies.

Oliver Bäte spent 15 years at the management consulting group, rising through the ranks to head the European insurance and asset management unit before jumping ship to join Allianz, straight at the board level, in 2008.

Mr. Bäte joins a growing number of German business leaders who began their careers at McKinsey. They include Frank Appel, chief executive of Deutsche Post, and Martin Blessing, chief executive of Commerzbank.

When Mr. Bäte takes control next year, Allianz will be one of three DAX companies headed by a former McKinsey consultant.

Nine other former McKinsey employees hold senior positions in companies listed on Germany’s leading stock index. This is the highest number of McKinsey alumni on German boards so far, and the number is set to grow.

“The traditional German career path, where you start at the bottom and gradually work your way up, is becoming rarer,” McKinsey spokesman Kai Peter Rath told Handelsblatt Global Edition. “Companies now want senior managers with a broader background and international experience, which McKinsey definitely provides.”

“The traditional German career path, where you start at the bottom and gradually work your way up, is becoming rarer.”

Kai Peter Rath, McKinsey Spokesman

Each year, around 300 management consultants leave McKinsey in Germany to join various businesses. Sooner or later, they take up a senior role.

“They know you are somebody who thinks structurally, can communicate ideas and are smart,” said  Alexis Ellrichshausen, a former consultant at McKinsey, who will soon join the energy group, GDF Suez.

McKinsey has a sometimes mythical status in the global business landscape. Its up-or-out policy, where new recruits have to rise swiftly through the ranks or leave, is a byword for the type of ruthless competition that drives what is thought to be a particularly Anglo-Saxon form of capitalism.

The consultancy is often hired by executives at companies that want to push through unpopular restructuring programs – read job cuts – in the face of shop-floor opposition.

The fact that German companies, which have traditionally operated in a more consensus-driven framework, are now recruiting their chief executives from McKinsey, appears to signal demand for more strong-willed managers not afraid of a fight.

Once a company decides to recruit someone from McKinsey, more are likely to follow.

The consultancy’s success in Germany is largely the achievement of Herbert Henzler, the German economist who launched his career at the management consultants in the United States, rising eventually to become chairman of McKinsey’s European operations. He made team-building a core focus of the business. He was a keen climber and encouraged top executives to regularly go Alpine climbing together.

Talk-Show - Anne Will
Climb every mountain, and  former chairman of McKinsey Europe Herbert Henzler almost has. Source: DPA

 

In his biography, Mr. Henzler wrote about how he saw working at the consultancy as an all-encompassing way of life. “Consultancy is not a job, it is a profession,” he wrote in his book “Immer am Limit” (To the Limits). “Every weekend we partied together, like one big family.”

The sense of being part of a community pervades the entire company, even if many consultants only spend a few years at the firm before leaving. On average, new recruits stay five years at the company. Annually, around 20 to 25 percent of the 1,300 consultants in Germany will leave.

The high turnover is a deliberate policy. The company believes the ideal mix is a batch of enthusiastic young newcomers and experienced senior consultants, who can often earn around €5,000 ($6,275) a day.

Those leaving McKinsey, however, don’t struggle to find work. Germany has a budding network of former McKinseyites in the finance and service sectors.

Deutsche Post, which privatized in the 1990s, was lead first by former McKinsey alumni Klaus Zumwinkel and later by Mr. Appel. Deutsche Post’s supervisory board, which has the power to hire and fire top executives, is also led by a former McKinsey man, Wulf von Schimmelmann.

The head of Ergo, Torsten Oletzky, and the Deutsche bank board member, Stephan Leithner, also started their careers at the management consultancy.

“It is a business where you think about execution and big strategies, but focus less on details.”

Christian Grobe, Foermer McKinsey consultant and co-founder of ZenCap

Commerzbank chief executive Martin Blessing’s career is a prime example of how the network works. The banker spent seven years at McKinsey and was made a partner, before he moved to Dresdner Bank and then to Commerzbank.

When Mr. Blessing needed someone to help him overhaul the bank’s strategies, he turned to his former employer. He hired Bettina Orlopp, a partner at McKinsey for banks and insurance, as the new vice president in charge of corporate strategy.

Mr. Blessing’s wife, Dorothee Blessing, works at Goldman Sachs, which is headed by the former McKinseyite, Alexander Dibelius. And Mr. Blessing’s brother, who once led the real estate finance company, Hypo Real Estate, also began his career at McKinsey.

McKinsey is proud of these networks: They help boost its reputation as an attractive employer that hires the best talent in the country. McKinsey was one of the first consultancies to recognize the value of an alumni network. Rivals, such as Boston Consulting Group and Roland Berger, only began similar programs in the 1980s and 1990s.

Every two years, the former employees meet to exchange ideas. As the network has grown, these bi-annual gatherings have become more enterprising. At the last gathering, each alumni was given a GPS tracker to track down people they definitely wanted to meet.

McKinsey is not always successful and can often run foul of the traditional system of German labor relations. It was once hired by Volkswagen, which wanted to cut €5 billion in costs. But the arrival of McKinsey provoked uproar on the shop floor.

Unions fought hard, complaining that the consultancy would focus on cutting costs at the expense of other priorities. In the end, the unions won, and McKinsey was sent home.

So far, McKinsey has also had limited success with Germany’s famed Mittelstand, the small and medium-sized companies that form the backbone of the country’s economy.

“It is a business where you think about execution and big strategies, but focus less on details,” said Christian Grobe, who worked at McKinsey for six years. “I think this is why the transition from McKinsey to Mittelstand companies is difficult, because those companies think we don’t understand their businesses. Those companies have little experience with consultancies and don’t understand their added value.”

But even here, the culture is changing. McKinsey may not be able to get to the Mittelstand, but its alumni are creating their own small and medium-sized industry. Mr. Grobe himself left McKinsey to co-found ZenCap a peer-to-peer loan broker for small businesses that opened in Berlin in April. The company has raised a total of €2 million so far and is growing fast.

And companies like these are bound to want to use the services of McKinsey some time soon.

 

 

McKinsey alumni in top positions
McKinsey alumni in top positions.

 

Markus Fasse covers the automotive and airline industries at Handelsblatt. His colleague Axel Höpner covers the insurance company Allianz and engineering giant Siemens. Both authors are based in Munich. Meera Selva and Franziska Scheven are editors at Handelsblatt Global Edition in Berlin. Bert Fröndhoff and Peter Kohler also contributed reporting to this story. To contact the authors: fasse@handelsblatt.comhoepner@handelsblatt.com, selva@handelsblatt.com, scheven@handelsblatt.com.

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!