1. Introduction
Of all the anniversaries currently being celebrated, particularly the 250th anniversary of the US declaration of independence this year, perhaps lesser known is the centenary of management consultancy giant McKinsey & Partners. ‘The Firm’ as it is sometimes called, has a powerful reputation, as ‘masters of the universe’, the ‘world’s leadership factory’, plus wider influence though its thought leadership outlet the McKinsey Global Institute, its magazine McKinsey Quarterly and many conference, media and podcast features. The firm’s centenary volume A Century of Plenty highlights McKinsey’s aspirations to ‘a story of progress for generations to come’.
The firm has also faced well-known challenges. For example, the recent Purdue Pharma case and South African bribery cases. As its Global Managing Partner Bob Sternfells recently reported, its business model is under scrutiny and may be changing from fees-for-advisory to fees-for-results. More generally, in the West, at times consultancy firms have faced concerted attack by unlikely alliances of academics and policymakers, who often agree on little else. In addition, in recent years Western consultancy firms have also faced serious headwinds reflecting geopolitical shifts in, for example, China, the Middle East, and Russia.
Moreover, it can be a surprise to learn quite how many consultancy firms there are: McKinsey is simply one of the oldest, biggest, and best known, not least due to maintaining its original name. TReaders may also be unfamiliar with the sheer size of the consultancy sector (roughly $1 trillion globally, over £77bn in the UK), usually selling business-to-business, with one estimate claiming that there were around 245,700 management consultants in the UK alone in 2026. One recent academic study indicated that consulting engagements were associated with a 3.6 per cent increase in labour productivity over five years, modest employment reductions, stable or growing revenues, a 2.7 per cent rise in average wages and no decline in labour’s share of value added for the firms involved.
Numbers tell part of the story though not the qualitative aspect. The ethics of consultancy are in fact increasingly-debated, including by professional associations, regulatory bodies, civil servants, academics and activists. It is a live issue: for example, in the UK, the Management Consultancies Association (MCA), which represents over 100 consultancy companies, are reportedly ‘committed to the highest standards of [MCA] Ethical Behaviour, Client Service & Value and Professional Development’ through its ongoing Consulting Excellence initiative.
The history of ethical concerns about management consultancies has not yet been charted and is the principal focus here. Drawing on secondary research from business history, public policy, and hitherto-unstudied primary research sources, we examine ethical concerns about the sector today. We then examine ethical concerns about the sector over the past century, to reveal that specific ethical considerations change but what remains common is that ethics are usually considered only after problems have already occurred. We then make the case for more proactively including ethics and history in consultancy codes of conduct, management training, and executive education.
2. Management consultancy today
Who are the key stakeholders?
Ethical analysis of any industry begins with identifying whose interests are at stake. In consulting, there are three principal groups: clients, whether private companies or public bodies; employees and partners within consulting firms; and governments and citizens in the territories where consultants operate.
Obligations to clients
Which clients to serve?
The most important ethical decision in consulting is often made before a project starts: whether to serve a client at all. This has always been contested – tobacco companies were once among the sector’s most lucrative clients – but the question has become more acute as firms operate globally across very different political and legal contexts. Recent controversies illustrate three different kinds of client-selection risk.
The first is the risk of helping a client pursue a harmful commercial objective more effectively. In December 2024, McKinsey agreed to pay $650 million to settle US federal charges relating to its work for Purdue Pharma, including advice connected to the sale of OxyContin during the US opioid crisis. This case shows that the ethical question is not only whether the advice is technically competent, but whether the objective being advanced is itself defensible.
The second is the risk of corruption in winning or delivering public-sector work. In the same month, McKinsey’s South African subsidiary agreed to pay more than $122 million to resolve charges connected to bribery of officials at two state-owned enterprises, Transnet and Eskom, between 2012 and 2016. The case points to a different ethical failure: when the problem is not simply the substance of the advice, but the means by which access, influence and contracts are obtained.
The third is the risk of becoming involved in politically extreme or humanitarian contexts where technical modelling can acquire moral and geopolitical significance. In 2025, Boston Consulting Group faced scrutiny after reports that its consultants had developed financial models for a post-war redevelopment plan for Gaza that included costings for the mass relocation of Palestinians. Four consultants reportedly left the project at an early stage, citing ethical and reputational concerns; BCG later dismissed two senior partners and disavowed the work. The episode shows how quickly “neutral” modelling can become implicated in questions of displacement, sovereignty and human rights.
The cases also illustrate a structural problem. The partnership model that governs most large consulting firms – in which senior partners exercise considerable autonomy over client development – creates conditions in which individual or team-level decisions can expose the whole firm to serious ethical and legal risk. The governance challenge is not simply one of compliance. It is about how firms create cultures in which the obligation to dissent – the explicit expectation that even the most junior consultant must question assumptions and speak up against flawed strategies – is genuinely exercised.
The lesson is not that consultancies should only work for uncontroversial clients. There may be public value in advising a troubled company, a fragile state, or a fossil-fuel business attempting to decarbonise. The ethical question is more precise: what is the client trying to achieve, who may be harmed, what safeguards exist, and can the firm credibly walk away if the work crosses a line?
A further boundary is becoming more important: national security and geopolitical alignment. The older consulting assumption was that management knowledge was largely neutral and globally transferable. That assumption is harder to sustain in a world of sanctions, export controls, strategic technologies and geopolitical competition. Consulting firms must now ask whether serving a client could be seen by some stakeholders as undermining public trust or national security.
Consulting firms therefore need client-acceptance systems that are more than reputational risk committees. These systems should include explicit public-interest tests, clear categories of prohibited work, escalation routes for politically sensitive projects, and a right for individual consultants to opt out of work that conflicts with their values. That right is also an early-warning mechanism.
Which problems to address, and how to define success?
Even when the client is legitimate, the problem may not be. In each case, the technical question – can we solve the problem? – is inseparable from the ethical question – should we accept this problem as framed?
This may reflect the nature of the problem. A pharmaceutical company can ask for help improving patient safety, supply-chain resilience or compliance. It can also ask for help increasing sales of a product whose social harms are already visible. This is where the familiar phrase ‘do no harm’ is too weak. The better test is whether the engagement improves the client’s capacity to act responsibly after the consultants leave. Fees-at-risk – compensation contingent on meeting specific targets – may help align incentives, especially if the measures of success capture public value rather than narrow cost reduction.
AI is also changing how clients expect to pay for advice: billable hours are less useful because consultants themselves can use AI for tasks such as data analysis and diagnosis.
A 2026 Financial Times Lex article reported that consultancies were under pressure from clients to tie fees to outcomes such as lower costs, higher profits or increased market share. Outcome-based pricing can improve accountability, but it also creates risks. Outcomes are affected by regulation, competitors, client execution and internal resistance, not only by consultants’ advice. Poorly designed success fees may also encourage consultants to prioritise measurable financial targets over less visible public or organisational value. The ethical response is not to reject outcome-based pricing, but to define outcomes more carefully, with key stakeholders in mind.
Which conflicts of interest to prevent?
Consulting firms have long used internal barriers to manage work for competing clients. That remains necessary, but it is no longer sufficient. The modern conflict problem also includes links between consulting and investment activities and the movement of senior consultants into client, government or investor roles.
In 2026 McKinsey agreed to transfer control of a large part of assets from MIO Partners – its in-house investment arm – to Neuberger Berman after years of concern about possible conflicts between investment activity and consulting work.
The Big Four face a related problem in the relationship between audit and consulting. Combining the two under one global brand may produce efficiencies, but it also creates questions about whether commercial incentives weaken professional judgement. The EY-Shell audit independence case shows how technical independence rules can have major commercial and reputational consequences.
The policy implication is straightforward. Consulting firms should disclose, at least to clients and in public-sector procurement processes, the categories of conflict they have considered: competing clients, investment exposure, data access, etc. It would allow them to move from ‘trust us’ to demonstrable governance.
Obligations to employees
The leadership-factory model
Consulting firms sell the judgment of their people while training those people through intense apprenticeship. Consultants learn by working in teams, receiving feedback, observing senior colleagues and acquiring the confidence to dissent. This intense environment has historically served as a launchpad for executive careers, with firms maintaining a powerful pipeline of alumni in senior corporate roles.
However, the structural integrity of this apprenticeship model has been weakened by external shocks. The pandemic reduced in-person apprenticeship. The boom-and-bust hiring cycle of the early 2020s exposed younger consultants to rapid shifts in demand, utilisation pressure and redundancies. Generative AI now adds a deeper challenge: the temptation to do more with fewer junior staff.
The better evidence on AI and consulting work is more nuanced than simple automation. The Harvard Business School and BCG field experiment found that consultants using GPT-4 completed 12.2 per cent more tasks and worked 25.1 per cent faster on tasks within the AI frontier. But for a complex managerial task outside that frontier, AI users were 19 per cent less likely to produce correct solutions. BCG’s later work also emphasises that AI can expand capabilities, not merely speed up existing work. However, if junior consultants are used less, trained less and given fewer chances to develop judgement, firms may damage the talent pipeline that made them influential in the first place.
If the apprenticeship model is being eroded – whether by AI, remote working, or cyclical waves of hiring and redundancy – firms need to be transparent about what they are offering and invest in new forms of professional development for an AI-augmented working environment.
Obligations to governments and society
Governments are among the most important buyers of consulting and among the most important regulators of its effects.
In November 2025, the UK National Audit Office (NAO) published a report on the government’s use of external consultants, finding that central government had spent an estimated £1.36 billion on consultants in 2022-23 and that it lacked consistent data even to know whether that figure was accurate. The report recognises that consultants can add value, especially where specialist expertise is needed, but warns that they can be expensive and may lack the organisational knowledge of permanent staff. It stresses that government should use consultants when they are genuinely optimal, not as a substitute for capabilities that should exist inside the civil service. The current government has committed to halving consultancy spending, though the NAO warned that without better data it would struggle to monitor its own progress.
Across the Atlantic, the Trump administration took a more combative stance. In April 2025, US Defense Secretary Pete Hegseth described consulting and IT contracts as ‘nonessential spending on third-party consultants’ for work that could be carried out by the Department of Defense’s own staff.
Recent debates about public-sector expertise make this sharper. In the United States, one Financial Times analysis reported that more than 10,000 workers with PhDs in science, technology, engineering, mathematics and health left the federal workforce in one year, with a net exodus of more than 4,000 highly trained workers across 14 agencies. The relevance for consulting is clear. A state that loses scientific, technical and managerial memory becomes a weaker buyer of advice. It is less able to challenge consultants, assess evidence or implement recommendations.
For public-sector consulting, this implies a simple rule: major public-sector consulting contracts should include capability transfer as a requirement. On the government side, the better approach is to become a more capable client. Public bodies should know what they spend on consultants, why they use them, what internal capability is missing, and what value has been created after the engagement ends.
3. Historical insights on consulting
Over the last century, certain behaviours in relation to consultancies that used to be considered rare, exceptional, even emergency, have become normalised. Plus ethical concerns have also changed over time. From the opening of the twentieth century until after World War Two, consultancies had little shared language, organisational structure, representative organisations, or sense of their own history. This is perhaps not surprising, given the sector’s emphasis on the novelty of their offering and their lionised claims of tenacious bulldozing in the face of organisational resistance (incidentally, not always true).
Moreover, from a historical research perspective, consultancy firms tend to leave limited footprints in their assignments’ locality, plus very limited archives are available for consultancy firms, large or small, whether still extant or otherwise. However, with the sheer growth in business education and research since the 1980s, strong efforts have increasingly been made to chart and analyse the sector’s history. Indeed, it would be reasonable to say there have been distinct types and phases of consultancies, each with their own ethical concerns.
Historical chronology and ideal types:
While exterior experts and contractors have existed for a very long time, advising governments and businesses, it was really in the twentieth century that consultancy formed as a sector, though still not yet a profession akin to law or medicine. Outlining four ideal types give a sense of shape to how the sector has developed and grown across the past century or so.
- A. The unwelcome visitor
Individual consultants and small firms started to emerge before World War One, often called ‘consulting engineers’, brought in to address specific workflow, costing, forecasting and payment incentive issues. They were not always welcome and indeed the idea of an exterior efficiency consultant seemed to be specifically an American concept, in the UK at least. In the wake of F.W. Taylor’s Principles of Scientific Management (1911), British employers started to dabble with such scientific management interventions. One, at the famous Port Sunlight plant near Liverpool, then owned by Lever Bros. (now Unilever), prompted mass meetings against an ‘American organiser’ of the ‘Taylor plan, which is one of the last stages of lunacy’. The local Amalgamated Society of Engineers branch recorded that ‘The organiser has gone’, old conditions restored, and
On both sides of the Atlantic, the war production emergency of mid-World War One raised the profile of ‘scientific management’ consultants, also essentially boosting the legitimacy of consultancy. In an emergency, as the Garton Foundation reported, the exterior ‘efficiency expert’ could have a positive role, though highlighted the ‘worker’s instinctive aversion to becoming a mindless automaton’ and recommended open discussions about the potential risks and benefits, plus ‘transforming the whole constitution of the works in such a way that the men themselves may have an interest in the new system and some share of control over the working of it’.
The consultancy sector took off considerably in the interwar years, perhaps most famously with the founding of James O. McKinsey’s eponymous firm in Chicago in 1926. Ethical concerns remained, for example about how consultants should deal with trade unions, but also the ethical concept of consultancy generally. As Dr C.H. Northcott, top labour manager at the Rowntree Cocoa Works in York remarked in Unity magazine in 1932, the British worker ‘cordially detests outsiders brought in as experts, and upon them lavishes his scorn and irony’. Based on his experience at the proudly ethical Quaker firm, he added in the British Management Review that exterior managers ‘brought in from outside’, ‘are therefore without intimate contact and knowledge of the workers, that they cannot easily enter into the mind of their employees’.
Direct relations between consultancies and unions, or lack thereof, took an important turn, in the UK at least. One case from Mander’s of Wolverhampton, a paint factory, deserves specific attention. From 1932 the Bedaux consultancy, examined below, worked with management to introduce its B work measurement system: timing workers and establishing B ratings, workloads and bonus rates.
Then, with the B trial in place, the matter was handed over for management-union negotiations. As reported in the firm’s newspaper The Green Can, the large Transport & General Workers Union (TGWU) was represented by its head, Ernest Bevin, and agreed with Mander’s that ‘work shall be timed and controlled by a system known as “Work Units”.’ TGWU representatives also negotiated wage rates, working hours and the role of unions in timing tasks. As The Daily Herald reported on the landmark agreement, ‘This is the rational way of going about not merely a Wolverhampton but a national problem, and it deserves to have national influence’. Unreported was the fact that the consultancy and the union appear to have had no direct contact – which would also develop into a standard practice for decades to come.
- B. The rogue agent
The consultancy sector has long struggled to reconcile what it, and maybe even its clients, agree on what counts as success compared to the expectations of other stakeholders, such as regulators and broader public opinion. Sometimes a consultant might be successful in business terms but fail the media litmus test.
Indeed, there is likely no better example of the damage a ‘rogue agent’ consultant can do to their company’s reputation, even that of the entire sector, than Charles E. Bedaux (1886-1944). Described by Patricia Tisdall in her book Agents of change (1982) as possessing ‘personal flamboyance combined with blockbusting business tactics’, Bedaux’s meteoric rise and suspicious death led to him being ‘something of a skeleton in management consulting cupboards’ for many years.
A French immigrant to the United States, turned naturalised American citizen, Bedaux rode the scientific management wave, eventually establishing a series of consultancy companies, first across North America, then Europe and beyond. A pioneer in the sectoral sense, Bedaux also foreshadowed the later, and now highly salient, practice of boosting his personal brand to publicly advertise his businesses. As such, across the interwar period, Bedaux named his companies and product, the Bedaux Unit of Human Power Measurement or B, after himself, worked personally with numerous governments, and embarked on grandiose expeditions across Africa and North America. In an orchestrated publicity coup, he also hosted the wedding of the former Edward VIII and Wallis Simpson at his French château in 1937. Bedaux’s initial fall from grace was in organising their honeymoon across central Europe, including the Windsors’ infamous meeting with Adolf Hitler, after which Bedaux was expelled from his British and American companies.
A driven, egotistical man convinced of his pivotal importance to war-torn Europe, against official US advice Bedaux worked with the Vichy government and to a lesser extent Nazi Germany until he was captured by the Americans in North Africa in 1943. He was held without charge for a year before dying, in suspicious circumstances, in FBI custody in Miami, Florida, while awaiting trial for treason. As Chris McKenna, author of The World’s Newest Profession notes, ‘in 1945, in the newsreels and in the New Yorker, Bedaux served as an exemplar of all that was wrong with consultants’.
- C. Masters of the Universe
The fiery thirties and devastating forties gave way to a more deliberately sober period. As military uniforms declined, civilian suits flourished, and businesses, and even politics, adopted a more sedate and stable tone. Personal branding largely disappeared from the British sector, with the ‘Big Four’ British consultancies all adopting simple acronyms: AIC, PA, P-E and UOP. Management consultants, now a recognised term, were in demand, for example helping to implement the Marshall Plan in Western Europe and further afield. In Britain, the American-ness of the big firms still attracted prestige, for example with McKinsey gaining contracts at British Rail, the BBC, the Bank of England, and the NHS.
A critical mass of reportedly 1,700 UK consultants by the early sixties, plus ensuing controversies such as a reputation for advising layoffs, gave rise to important questions about conduct and oversight over the management consultancy sector. As with other sectors, the private sector aimed to regulate itself through professional associations rather than submit to state oversight.
The sector institutionalised considerably in the postwar period. In the USA, the Association of Management Consulting Engineers (ACME) had been founded in 1929, which in turn founded the Institute of Management consultants in 1968. In the UK, the British Institute of Management (BIM) was formed in 1948, which issued a register of ‘approved’ consultants, along with a code of conduct, and the ‘Big Four’ UK consultancies founded the Management Consultancies Association (MCA) in 1956.
As the British economy shifted away from manufacturing and into services, so too did the work of its ‘Big Four’ consultancies. As historian Antonio Weiss charts in Management Consultancy and the British State, there was an increasing use of, and partnership with, consultants, in the civil service across the 1960s, 70s and 80s. Sometimes the ‘Big Four’ British firms supplied the civil service with technical expertise, partnered with ambitious civil servants to drive through changes, and planned reorganisation of public services, for example for the National Economic Development Office. As Weiss argues, it was around this time, with a core government focus on planning, that the critical mass of consultancies used by the civil service arguably led to a ‘path dependency’, that is, ‘the use of consultancy services largely begets further use’.
A key organisational innovation in this respect was the creation of central government delivery units, for example the Efficiency Unit under Margaret Thatcher and John Major, and the related Prime Minister’s Delivery Unit under Tony Blair after New Labour’s victory in 1997. These units created a channel not just for commissioning consultancy services at the highest level, but also employing former consultants and other private sector specialists in top decision-making and defining strategy.
The consultancies of the Cold War period largely operated within Western zones of influence, including extending into South America, the Caribbean, and Africa, to limited extents. This growth of international engagements led to the founding of the International Council of Management Consulting Institutes in 1987.Broader efforts followed to expand certification, international standards, and ‘Promote the ethical and moral practices of Certified Management Consultants and the management consulting profession’.
They also started to expand internationally, including in unlikely locations, such as Chile under both Allende then Pinochet, and, perhaps most surprisingly, communist Poland, where the British firm Urwick, Orr & Partners (UOP) extensively reorganised a state vehicles company, Ursus.Indeed, the subsequent fall of the USSR and South African regimes, and globalisation generally, brought new opportunities to the consultancy sector. Moreover, in the West, as the 1990s wore on, consultancies and their current, and former, staff, became increasingly involved in establishing influential consultancy think tanks and ‘Third Way’ initiative
- D. The fallen idol
An iconic moment in consulting was the Enron scandal and subsequent bankruptcy of 2001, a story which Chris McKenna records as captivating ‘the public in a way that no other corporate bankruptcy had’. Ultimately, investigation into Enron, one of America’s largest energy companies, revealed corporate malfeasance through conflict of interest: that advisory firm Arthur Andersen had earned $27 million in management consulting fees and $25 million in consultancy fees, both through Enron.
This led to substantial changes in the consulting industry. The impact was crucial for firms that had a clear conflict of interest due to selling auditing and consulting services to the same companies. Enron accelerated the separation of auditing from consulting, a process that had already been underway before the scandal. In 2002, Arthur Anderson went out of business, convicted of shredding documents to hide fraud at Enron, which it had audited. But Anderson Consulting had already split from Enron, and later it became Accenture. Similarly, EY, KPMG, and Deloitte either sold or spun off their consulting arms. The impact on stand-alone management consulting firms was more diffused and led to stronger internal conflict checks, greater attention to reputational risk, and clearer confidentiality rules.
In an echo of the corporate governance issues which had spawned management consultancy’s origins earlier in the century, the irony of Enron’s collapse, publicly entangled with consultancies, was that it boosted the consultancy sector in general. As McKenna put it, ‘Thus, having failed to prevent the corporate governance crisis, management consultants were nevertheless once again touted as the best solution to rising corporate liability’.
4. Ethical frameworks change over time
Primary sources from across the period indicate a shift in the focus of consulting, reflecting the sector’s broader context and moral economy. Transformations in codes of conduct reflect some of these long term shifts in ethical concerns about consultancies. But they also reveal ethical discussions and concerns within consultancies and consultants themselves – a less studied area.
From an early stage, consultancies and related organisations attempted to manage the sector’s reputation and behaviours. For example, in 1952, as reported in The Statist, the British Institute of Management (now Chartered Management Institute (CMI) sought to develop a consultant register with accompanying code of conduct. The code included: ‘no advertising for clients, no commissions paid to outsiders for introducing business, no financial interest in the client’s business and, of course, no disclosures of the client’s confidential affairs’.
By the 1970s, formal consultancy associations had been formed and started to issue broader ethical guidance. One from ACME expanded in 1973 to include two broader areas: first, to the profession, presumably to ensure that one consultancy’s conduct didn’t damage the reputation of the sector generally, and, secondly, perhaps linked to rising contemporary interest in Corporate Social Responsibility (CSR) initiatives, the public.
Into the twenty-first century, and again reflecting the shifting business and political context, the stakeholder imagination had changed again. Then, as highlighted in The McKinsey Way (1999), when consultants were asked to consider their obligations, there was clearly a more global picture in mind. As in the fifties and seventies, clients were top of the list. Next, were internal stakeholders: employees and consultancy partners. Finally, reflecting the now-global operations of the larger firms, ‘Governments in the territory of operation’.
5. Conclusion
Management consulting has never been more powerful, or more contested. Consultants can add real value, but the conditions under which they do so matter greatly. In other words, consulting is a powerful form of organisational intervention. That power explains why consulting ethics has become a public issue. Consultants no longer appear only as temporary experts. They help design digital transformation programmes, public-sector reforms, corporate restructurings, drug-commercialisation strategies, energy-transition plans, defence and security programmes, post-conflict reconstruction proposals and national industrial strategies. The consultant may still describe the work as advice, but the practical effect can be much larger: advice becomes infrastructure.
This creates a new version of old ethical problems. The largest firms operate across borders, sectors and political systems. They move information, methods and people between governments, corporations, investors and regulators. Their ethical obligations cannot be reduced to serving the paying client well.
In examining four historical ‘ideal types’, we aim to highlight that the history of consulting suggests that ethical scrutiny usually follows scandal. That is too late. If consulting is now part of the infrastructure through which companies and states make decisions, its ethics must be built into ordinary governance, not rediscovered after each crisis.
