McKinsey is rethinking its pay structure because clients are no longer paying for hours, but…

McKinsey is overhauling how it pays its partners, shifting a bigger slice of their take-home from cash to equity in a revamp internally codenamed Project Acorn, the Financial Times reported. The move is designed to shore up the firm's capital, simplify a tangled multi-year payout system, and brace partners for a consulting business that no longer runs on hourly billing.The trigger is straightforward. Clients are increasingly tying consulting fees to actual savings or performance gains they can point to, meaning McKinsey often does not get paid in full for years and earns less if agreed targets are missed. AI is speeding that shift up, with firms across the industry now under pressure to show their advice actually pays off for clients.According to the FT, the proportion of a partner's "additional award"—their share of annual profits, which runs into millions of dollars for the most senior partners—diverted into equity could rise by roughly 3 to 5 percentage points. A partner who previously took home about 95 percent of that award in cash might now receive 90 percent, with the rest locked into equity. The figure will move year to year depending on the firm's capital needs.The plan took more than two years to finalise after intense internal debate. An earlier draft, called Project Oak, would have demanded more capital from the most senior partners. Acorn caps how much of their pay can be diverted into equity, and pulls forward some payouts that younger partners would otherwise have waited years to receive. The new system replaces a multi-year payout structure that many partners had come to see as unwieldy.The AI question runs through all of this. The technology is doing the kind of grunt work junior consultants used to bill by the hour, and clients have noticed. McKinsey CEO Bob Sternfels has said the firm now has 60,000 employees—25,000 of them AI agents. The new structure also gives management more flexibility to invest in technology, and McKinsey, which has historically preferred alliances with AI companies over building its own tools, may now reconsider that approach.McKinsey told the FT it does not discuss partner compensation publicly, but "continues to evolve" how it attracts and retains talent.