How much do you earn?
That used to be an easy question to answer. A generation ago, you earned a lump sum that was (hopefully) supplemented by a year-end bonus. And the lucky ones could also redeem their remaining PTO. True pay is difficult to calculate these days. There are tools ranging from 401K and profit sharing to expense accounts and tuition reimbursements. There are also sign-on bonuses and performance bonuses for many business administration graduates.
Let’s not forget the COVID dividend: when you work from home, you pay less for gas, parking and restaurants. For some, intangibles like time can be as valuable as cash.
LATEST COMPENSATION DATA
For aspiring Consultants, compensation can reflect their short- and long-term goals. That means knowing which companies are offering what – and what room for negotiation they have. The industry turns to Management Consulted for this.
In January, Management Consulted publishes its annual Management Consulting Salary Survey. This compilation, according to the company, “may be the only first-hand report in the industry to include up-to-date figures pulled directly from offer letters for a McKinsey entry-level salary, a salary from the Boston Consulting Group and statistics from over 60 other consulting firms. Salary and benefits data is sourced from Management Consulted’s interview and resume preparation services (along with verified website visitors and data provided by consulting firms). Best of all, the data comes from responses from 2021, making it far more up-to-date than payment data from Indeed or PayScale, according to Management Consulted.
Each year, Management Consulted divides its data into three sections. The first is compensation for incoming full-time MBA and PhD hires (which are traditionally paid the same). The company does the same for new hires who have a bachelor’s or master’s degree. You can also find summer internship allowances for the MBA-PhD and undergraduate-masters segments. In addition, Management Consulted provides potential career merit based on promotions and experience.
THE BEST OF TIMES
What can MBAs expect at the beginning? At MBB, the data is fairly consistent – with little room for negotiation, according to Management Consulted. MBAs averaged $175,000 starting at McKinsey, Bain, and the Boston Consulting Group. The same was true for signing bonuses, each capped at $30,000. Overall, total compensation ranged from $216,000 to $220,000. A key difference between the companies: Bain offers 25 days PTO right off the bat compared to BCG (18) and McKinsey (15). In contrast, McKinsey boasted slightly higher relocation reimbursements, not to mention 50% tuition reimbursements for returning sophomores. When it comes to retirement, BCG injects $10,930 into the 401,000 accounts of new hires, according to Management Consulted, compared to up to $8,000 at Bain (and a 7.5% share at McKinsey).
The MBB followed a similar pattern at the undergraduate and masters levels. The starting salary and signing bonus were significantly lower at $100,000 and $5,000, respectively. Again, McKinsey surpassed its rivals in total rewards, but the margin was small. Like the MBA package, Bain offered more PTO (20 days) while McKinsey offered better relocation reimbursement. In BCG’s case, new hires enjoyed both 401,000 and profit-sharing (in addition to performance bonuses, which were available to select candidates at all three companies).
Do you want to go up in pay? Consulting is the right place for MBAs and business majors. Over the past 14 years, Management Consulted reports, base salaries of consultants have increased in 13 years. Over the past year, consultant salaries have grown nearly 10%, more than double the usual growth rate of 2% to 4%. This signals both a “tightening of the labor market and increased demand,” observes Management Consulted.
In terms of demand, Management Consulted notes that consulting firms are seeing “record sales” and “double-digit industry growth.” This has led to increased M&A activity, with larger companies such as McKinsey and AlixPartners acquiring boutique companies or service providers in areas such as digital, supply chain and sustainability. Despite the optimistic numbers, Management Consulted also wonders whether a correction – if not an outright settlement – is on the horizon.
“Future margins are at risk as companies continue to raise salaries without a corresponding increase in project rates. Traditionally, margins have been protected by reducing operational costs (ie smaller office space, less travel). Still, there’s only a limited amount companies can cut. The possible outcome? Without the traditional increase in pricing power that industry consolidation brings, we may see companies begin to downsize project teams or prioritize hiring cheaper pre-MBA talent over the next decade.”
Meanwhile, a tight job market, coupled with increased demand for consulting services, means more lavish perks for prospective consultants in 2022.
“Companies are improving the uncompensated, ‘intangible’ services they provide,” Namaan Mian, Management Consulted’s COO, said in a January interview with P&Q. “Most notable is the increase in PTO. Firms like EY, Grant Thornton, and Huron have adopted unlimited PTO, although the cynic in me has to point out that it reduces termination costs for those firms too. Studies also show that employees with unlimited PTO take less time off than those with a defined number of paid days off. Additionally, companies are introducing more permissive 401k matching policies. For example, Strategy& offers an automatic allocation of 4% and then matches 25% to the first 6% of an employee’s contribution in a separate account.”
INVEST IN PEOPLE
For MBAs, Mian clicked on several differentiators companies use to attract graduates. “They’re not entirely new, but there are financial incentives that are becoming more pervasive in the industry:
- Caps for higher performance rewards (e.g. up to 35% of your base at AlixPartners)
- More generous profit-sharing (e.g. up to $40,000/year at LEK)
- Year 2 tuition reimbursement (offered to returning interns at firms such as Deloitte S&O, ZS Associates, LEK and Accenture Strategy)
- Higher joining bonuses for interns who accept full-time offers immediately (ex: Accenture Strategy offers an early joining bonus of $17,500 in addition to the standard $35,000)
- Cost of living adjustment (eg: ZS Associates offers a maximum COLA of $17,400).”
This is just a start. Oliver Wyman is offering signing bonuses of up to $45,000. That number is $35,000 at Accenture… plus another $17,500 for returning interns. In contrast, AlixPartners and Alvarez & Marshall pay performance bonuses of up to $60,000 and $50,000 respectively – higher than the MBB. KPMG offers 30 days PTO, Kynteo starts at 28 days. And Health Advances carves out three paid community service days. At the same time, base pay can still be a hot ticket. Accenture Strategy MBAs start at $175,000, not unlike the MBB — with total compensation rising to a potential $230,000. And Accenture Strategy is hardly an outlier. EY Parthenon and Strategy& have similar compensation structures.
In a “rising tide lifts all boats” landscape, consultants with a bachelor’s or master’s degree also reap the benefits. Deloitte Consulting, for example, starts at $90,000 with these hires, not counting signing awards of $12,500 (undergrad) and $15,000 (master) — with the latter having the potential to add another $26,250 in performance awards to get hold of. LEK Consulting is offering up to $16,000 in profit sharing, while Accenture is offering a 15% discount on its shares. In addition to a $10,000 signing bonus, EY will grant Parthenon a $60,000 retention bonus after three years. Gartner grants its new hires up to 22 days PTO, while Cornstone Research covers 100% of relocation costs. When it comes to total compensation, Alvarez & Marshall can earn up to $155,000 in the first year, including a $105,000 base.
Next page: Internship and Career Compensation.