Performance Appraisal - McKinsey and Company - Essay Example

McKinsey’s main challenge in terms of sustaining high performance arises when its managers have to manage the performance of their business analysts that come from different backgrounds and perform distinct tasks.  McKinsey’s mission is to help its clients make distinctive, lasting, and substantial improvements in their performance and to build a great firm that attracts, develops, excites, and retains exceptional people (“About Us”). One of its values includes delivering the best in the most cost-effective manner to its clients, which necessitates high performance at all levels in order to achieve its mission. Such high performance and high motivation are achieved at McKinsey by following a comprehensive performance management system that is also congruent with the nature of their work and is apt for their employee skillset.  Performance assessment is based on objectives that are set in advance for every employee. 

1. Type of Feedback:

At McKinsey, all analysts, engagement managers, and principals receive periodic feedback from their reporting managers.  For instance, all analysts/consultants’ performance is reviewed at the end of each engagement and they receive detailed feedback for every activity performed on the job (Farshad). They receive feedback from their engagement managers at the end of each engagement. Here, engagement managers are evaluated on how well they train their consultants and not just the profitability of their particular practice; they are encouraged to provide balanced feedback to their team members (Ethan 150-155).  McKinsey also follows an annual performance appraisal process after a number of mini evaluations for every consultant so that they are on track and focused towards goals. 

2. Organizational & Procedural Justice

McKinsey’s unique policies and practices such as the alumni program, the mini MBA program, training and skill enhancement practices, etc. are highly appreciated and valued by its employees throughout the world (WetFeet Insider Guide 30). Many employees acknowledge that they receive full support and encouragement from their leaders and the company to pursue their interests, initiatives, and careers inside and outside McKinsey. McKinsey boasts of spending millions on training programs that help in developing consultants and leaders of the McKinsey type.  Furthermore, in order to deliver the best results and performance, McKinsey focuses on continuous learning rather than short-term training sessions.  These continuous learning practices actually help the employees develop skills and expertise that can not only be used at McKinsey & Co but also after their tenure with the company.  McKinsey adopts unique problem-solving techniques to resolve issues brought forward by its employees, based on logic, root cause analysis, and fair judgment.  However, employees are expected to adopt high integrity, honesty, and commitment once associated with the company at all costs; in case of any exceptions, they are free to move on or are forced to move out.

VII. Reward & Pay

1. Reward Management:

Being employed by McKinsey is a reward in itself considering its high working standards and lifestyle besides other rewards that come in the form of salary and incentives including various types of employee benefits that are hard to match by competitors.  McKinsey’s reward and remuneration packages vary distinctly for employees at all levels and in different geographic locations; however, these packages are certainly most competitive in their field and location.  Standard remuneration appraisals are based on accurate and systematic evaluation processes across all locations. According to WetFeet reports, McKinsey rewards its undergraduate analysts by giving them frequent salary raises as a part of their employee motivation program in order to motivate the analysts to learn more on the job (40).  Besides this, other rewards also include profit-sharing schemes for all its employees.  

2. Pay model & Pay Scheme

In the consulting business, Meckies earn the highest salaries, as reported by Cheng, one of the former consultants at McKinsey.  The compensation at each level at McKinsey, as reported by Cheng (see Appendix 1), is certainly very high compared to its competitors.   The pay package includes a salary component and a performance-based bonus.  The bonus is paid to employees based on the performance level and the total compensation including salary and bonus that the individual with a specific performance level deserves is paid out.  McKinsey also follows the salary benchmarking process in order to ensure employees at a certain level and with specific skills will eventually earn as per the company standards.  This process minimizes variances in the pay package, thereby keeping the employees motivated and committed for a longer time.  According to Cheng, no single McKinsey employee is ever dissatisfied with the salary offered and that their standardization and benchmarking policies help in achieving such satisfaction.

3. Benefits

Employees are provided with every possible care and support at McKinsey as it believes that employee benefits, in fact, improve profitability by maintaining high employee motivation and commitment.  Besides the heavy pay package, McKinsey & Co is known for its liberal benefits such as free food and drinks for its employees, free cell phones, luxurious weekend holidays, etc.  Moreover, employees get a very good relocation allowance for new employees as well as their families.  McKinsey provides good pension and savings plans.