AI is driving McKinsey’s business model and talent overhaul
McKinsey & Company’s business model is changing to prioritise performance-based pay, a shift largely driven by the impact of AI, CityAM understands.
The Big Three consulting giant has told senior staff it plans to overhaul its remuneration structure for partners, with more of their pay potentially coming in the form of equity in the US-headquartered partnership.
The firm sits alongside Bain & Company and Boston Consulting Group (BCG) as the three most prestigious and highest earning management consultancy firms in the world.
McKinsey advises a wide portfolio of FTSE 100 companies, major private equity firms, and public sector organisations in the City, and works with the UK government, the financial services sector, and the oil and gas industry amongst other public and private sector clients.
AI is steering the overhaul as the technology continues to profoundly reshape the consulting sector – from business models to methods of billing clients – with increasing automation of of research and data analytics tasks.
“If AI allows projects to be completed quicker, then clients are going to want to pay less than when that project was completed by human hours and the fee was based on the hourly charge out rate,” recruitment specialist at McKellar Consulting, Craig McKellar, told CityAM.
“That will mean staff costs as an overhead will have to come down as well,” McKellar said.
McKellar said the McKinsey remuneration overhaul has been a few years in the making and reflects that “more clients want to pay their advisors in line with outcomes rather than billable hours”.
In May 2025, McKinsey cut roughly 10 per cent of its workforce. This was one of the biggest staff culls the company has ever faced, as part of a sweeping overhaul to reverse previous expansion plans which peaked during the pandemic in an effort to boost profitability.
McKinsey partners’ take-home pay is made up of a baseline salary, performance bonus, and a portion of profits.
The traditional model is based on calculating the rough number of hours for a project and if hours happen to be higher than first estimated, the fee would be hiked up to cover this cost.
McKinsey’s performance-based bonuses now make up roughly a third of total fees clients are charged, CityAM has learned from a person familiar with the matter.
The talent shift
McKellar said that consultancy firms “will increasingly look for projects where they can charge a premium because of the need for advice from their people, where the value added to a client can not be replaced by AI”.
This push for premium services could raise the bar for performance and mean only top talent is retained in consultancy firms, but may also make it less attractive to pursue careers in large firms and see new recruits go elsewhere.
“For a number of years now, I have seen talent move from large legacy firms to LLPs, boutique consultancies and private equity-backed companies where significant equity is promised if targets are met,” McKellar said.
A McKinsey spokesperson said: “As a private firm, we don’t discuss partner compensation. But we continue to evolve how we attract, develop, excite, and retain the world’s best talent.”