The good times can only last so long. B-school grads are seeing rising MBA pay in consulting, along with enticing perks, and increased opportunities. In consulting, organizations are still racking up record revenue. On the horizon, a reckoning is coming – a disruption that may favor undergraduates and specialists and leave MBAs behind and that may well impact MBA pay in consulting.
That was one finding from the annual 2023 Management Consulting Salaries Overview from Management Consulted. Covering consulting pay for 15 years, Management Consulted describes itself as the “only originally sourced data available in the industry.” In essence, the firm collects pay and benefit data through its interview prep and resume prep services (along with verified website visitors and data furnished by consulting firms). In many cases, the data is derived from written job offers.
Most important: the data on MBA pay in consulting is current– derived from 2022 responses that aren’t averaged against past responses.
Management Consulted also stays close to the industry through services to consulting firms and higher education institutions, along with directories and research guides. Through their sources, Management Consulted can confidently say that the industry is healthy. In its overview of 2022 results, Management Consulted notes that MBA pay in consulting is soaring and travel is down. Couple that with increased investment in professional training and lucrative exit opportunities and you could say consulting is operating in a golden era. Problem is, the demand fueling consulting’s growth may also contribute to an industry correction.
Bain & Company. Bain photo
CHANGES ARE COMING TO MBA PAY IN CONSULTING
“This led to record revenue for many consulting firms and a continued wave of M&A activity, leading to double-digit industry growth,” Management Consulted explains. “However, this growth is not without potential peril. Future margins are at risk as firms continue to raise salaries without a commensurate rise in project rates. So far, margins have been protected by a decrease in operational costs (i.e., smaller office space, less travel). Still, there is only so much that firms can cut, and salaries keep rising.”
In its analysis, Management Consulted believes that the next wave of cuts will involve either shrinking project team sizes or opting to hire less expensive non-MBA talent. At the same time, Management Consulted anticipates the continuation of M&A consolidation that has enhanced the capabilities of the large players, citing examples such as Bain & Company acquiring Proxima to bolster its supply chain portfolio. The result, they explain, is “a fragmented market of boutique players” – who will struggle to compete against the in-house groups that enjoy greater resources from their parent firms. Even more, as Management Consulted observes, industry hiring is expected to catch up to client demand.
“As the last two years of frenetic hiring catches up with the demand for services, overall consultant utilization has plateaued…Decreased utilization and a loosening labor market will lead to less open roles and slower salary growth this year. Why? 2021 and 2022 saw an unprecedented wave of exits from the industry – these exits should stabilize as utilization comes back to historical norms. Combine this with the fact that consulting’s biggest competitors for talent – Wall Street and Silicon Valley – are conducting layoffs and slowing hiring because of the rising cost of capital, and these factors will put downward pressure on salary raises headed into the 2024 cycle. With more eager candidates than ever before chasing the prestige, pay, and relative stability of a consulting job, the consulting job market will be even more competitive this year.”
MBB IS KIND TO MBAs
It may be more competitive, but that doesn’t mean it won’t be any less lucrative. That’s why Management Consulted also provides firm-by-firm breakdowns of MBA pay in consulting. That starts with compensation – base pay and benefits – for MBA and PhD full-time new hires (who are traditionally paid the same). By the same token, Management Consulted does the same for new hires who hold bachelor’s and master’s degrees (who, again, are historically paid the same). In addition, you’ll find 2022 internship pay data and potential career earnings for both segments over time.
How do recent graduates fare when it comes to pay? Let’s start with the MBB…for MBAs. In terms of base pay, Bain and McKinsey both start at $192K, with the Boston Consulting Group (BCG) trailing close behind at $190K. That’s a near 10% increase over last year, where MBB bases averaged $175K. For sign-on bonus, new MBA hires collect $30K at each firm. That reflects a long-time trend at these firms according to Management Consulted.
“At McKinsey, Bain, and BCG, management consulting salaries are relatively flat across all offices within a country. This has two important implications. First, there is often little room for salary negotiation unless you are an experienced hire. Second, you can increase your take-home income by choosing an office location where the cost of living is lower (e.g. choosing Atlanta over San Francisco).”
When it comes to perks, McKinsey and Bain stand out in several areas. As a first-year at Bain, new hires enjoy 25 days of PTO, compared to McKinsey (19) and BCG (15). McKinsey also offers a 50% reimbursement to second years according to Management Consulted, while Bain includes profit sharing. For MBAs and PhDs seeking to relocate, Bain and McKinsey reimburse anywhere from $8,000 to $16,000 in expenses, while BCG provides an interest-free loan. In terms of retirement, McKinsey matches 7.5% of base – or nearly double Bain’s contribution.
A GOOD START FOR BACHELOR’S AND MASTER’S GRADS
You’ll see a similar pattern with compensation for the bachelor’s and master’s segment with the MBB. Bain and McKinsey pay $112K in base, followed closely by BCG at $110K. That’s roughly 58% of MBB and PhD starting pay. Each MBB firm also furnishes a $5K signing bonus. Beyond that, you’ll find major differences. McKinsey tops its peers in this segment with a $30K sign on bonus (compared to $25K at BCG and $22.5K at Bain). Bainies receive the most PTO at 20 days, in contrast to McKinsey (19) and BCG (15). In a reversal of the MBA segment, McKinsey pays more than Bain for relocation for new hires in the bachelor’s and master’s set, while Bain is the only MBB firm offering a housing allowance. In terms of retirement, McKinsey deposits 7.5% of pay into a 401K, while BCG pledges $4,400.
You’ll also find standouts beyond the MBB for the bachelor’s and master’s degree holders who entered consulting in 2022. Deloitte and Strategy& hires generally start around $100K. At Alvarez & Marsal, new hires can make up to $129K in base and up to $100K in bonus. Between base and bonus, EY Parthenon hires collect $122K to start. Cornerstone Research, Kearney, and Avencore sign their first-years to $15,000 bonuses, better than either Deloitte or Accenture. In terms of vacation, Arthur D. Little provides unlimited time off. KPMG starts at 30 vacation days, with 27 days being the norm at CEL Management Consultants. Another four firms offer 25 days of PTO.
Those aren’t the only perks for consultants who haven’t yet pursued an MBA or PhD. At Cornerstone Research, they handle 100% of moving expenses, including broker fees and even lodging (for four days). Kearney covers profit sharing up to $8,500, with Accenture’s package includes a 15% discount on stock. At Kepler Associates, they match 8% of base pay, while Investor Group Services promises that its hires will enjoy a $15K rise in base after the first year.
Next Page: Internship Pay and Compensation Over 10 Years
BOUTIQUES OPEN THEIR WALLETS FOR MBA GRADS
The pay and benefits are equally enticing outside the MBB for MBAs and PhDs. Just look at the top firms. When you add base and potential bonus, EY Parthenon hires can pull in $227,500. That doesn’t include the firm’s unlimited vacation – on top of an extra $10K bonus (tacked on to a $30K bonus) for early signing. Ernst & Young’s $175K starting base is closer to the MBB than most firms, while the 30 and 25 vacation days dangled by KPMG and Deloitte respectively are equally competitive. At PwC, MBA and PhD hires can collect $30K on their first day. Some firms even compete directly with the MBB. At Strategy&, first-years can make up to $250K or more, when you factor in a $190K base, a $30K sign-on bonus, and up to $60K in performance bonus. Accenture Strategy dangles a similar package, one that also covers up to $80K in tuition reimbursement.
The boutique firms are equally competitive for MBAs and PhDs in some spots. At Alvarez & Marsal, grads can make up to $262,500 in their first year between pay, sign-on bonus, and performance incentive. Those totals are $260K at OC&C Strategy Consultants and $253,800 at Kearney. For returning interns, ZS Associates reimburses second-year tuition. The Analysis Group ups the ante on sigh-on bonuses by paying out $45K, while Oliver Wyman tacks a $15K early signing bonus to the $30K it already bonuses new hires. AlixPartners matches that total in its hiring package: a $35K sign on bonus supplemented by a $10K payout for returning interns. At the same time, AlixPartners offers an uncapped performance bonus that reaches $60K or higher – a bonus structure that is also employed by Galt & Associates. If you’re looking for extra time, Maine Pointe accommodates employees with 29 paid vacation days. And similar vacation time is baked into offers from Charles River Associates, IQVIA, Putnam, Vizient, and Xynteo.
Of course, these numbers come with strings attached. Take performance bonuses. Just 5%-10% of consultants, company-wide, max their bonus. The rest receive a check somewhere in the middle. In some cases, signing bonuses are paid out across the first year rather than deposited in a lump sum. In most firms, relocation bonuses are based on the distance between a company office and the university – not the home residence.
Bain consultants in the New York City home office. Courtesy photo
INTERNSHIP PAY IN CONSULTING
Another form of MBA pay in consulting: summer internships. Lasting 8-12 weeks, the experience – resources, networking, access, training, and impact – really differentiate consulting firms. However, it is hard to argue that some firms perform better here than others.
At the undergraduate level, you could safely say consulting internships pay students way more than their campus jobs. Among the MBB, summer internship pay ranges from $21,154 (BCG) to $22,500 (Bain). Over 10 weeks, Accenture Strategy pays $32 an hour – or $12,800. In contrast, Deloitte and PwC kick in $41 an hour – which equates to $16,400 over the same period. Strategy& boasts the highest pay at $48 an hour, with Ernst & Young being the runner up on hourly compensation at $45 per hour according to Management Consulted. Overall, the biggest spender is Oliver Wyman, where bachelor’s and master’s degree holders collect $19,038 over just nine weeks, just ahead of Kearney interns at $19,230. And this segment doesn’t reap weekly paychecks. In total, there were 11 firms divvying out sign-on bonuses, topped by PwC paying $3,000.
Not surprisingly, the numbers are even gaudier for MBAs and PhDs. True to form, the MBB follow each other closely on MBA pay: led by McKinsey ($36,923). Those numbers are closely followed by Kearney ($36,153), Ernst & Young ($35,000), and EY Parthenon ($35,000). In terms of signing bonus, Accenture Strategy, Ernst & Young, ZS Associates each paid their summer interns $5K to join. Accenture Strategy even doled out $5K for internship relocation, while KPMG offered $99 an hour for overtime.
BCGers have enjoyed getting back together this summer through fun office, case team, and diversity affinity network events
A LOOK AT 10 YEARS OF MBA PAY IN CONSULTING
In announcing its findings for the 2023 Management Consulting Salaries, Management Consulted noted that this year represented the 14th year where pay increased for consultants – with just one year reporting lower compensation that the previous year since 2008. To provide historical context, Management Consulted points to a 10% pay increase over the past year – a far cry from the usual growth rate, which spans 2%-4%. Those percentages only get bigger as consultants build their career. Over years of collecting data, Management Consulted has found that consultants can expect their base and performance bonuses to increase by 10% to 20% annually. Using average pay growth, they are able to plot out compensation from associate to senior partner using numbers from an MBB firm.
Here, a first-year will likely net a $190K base along with a performance bonus up to $60K. Within two years, that base should rise to $220K-$240K once an MBA or PhD transitions from associate to manager (with a performance bonus that nearly doubles). By the time an MBA makes associate principle or senior project leader, the base and bonus climb to $275K-$305K and $150K-$250K respectively. Within eight years of starting, high-performing MBB consultants should be reaching the rarified air of partners and principles, where bases range from $375K-$450K – and performance bonuses start at $500K. When they reach the pinnacle of senior partner and director – a decade or more after they start – MBAs should be averaging, at minimum, $500K in both bas and bonus.
That’s a big difference from bachelor’s and master’s degree holders in the first year. At the MBB level, they earn $80K less than MBAs in base, not counting half the performance bonus and a seventh of the signing bonus. This trajectory also reflects the importance of landing the biggest base to start. While the gap is smaller at the MBA level, the difference grows increasingly pronounced.
Just compare an MBB ($190K) to start against a Big 4 firm ($175K). After three years, with an average pay increase of 10% each, the pay difference is $628,000 vs. $579,000 – or $49,000. That’s not overly troubling…until you look at average performance bonus. That comes in at $60K in year 1 and $100K-$120K in years 2-3 at the MBB level and roughly $40K in year 1 $67K-$81K over years 2-3 for the Big 4 (assuming Big 4 firms continue to bonus out at two-thirds of the MBB). If the MBB and Big 4 consultants each attain a 90% of their performance bonus in this scenario (at the top end) over three years, the MBB consultant will more than double their Big 4 counterpart ($365,110 vs. $181,000).
McKinsey at ROMBA 2019
STILL THE ONE
These dual gaps only widen over time in consulting – though time and patience can be in short supply here. “Most full-time hires will not make it to Partner” Management Consulted admits. “Many consulting firms have an “up-or-out” promotion structure – and many consultants choose to leave. Those who perform exceptionally are given the chance to be promoted, while poor performers are encouraged to seek employment elsewhere. Because of the up-or-out structure and the attractive exit opportunities, only a small percentage of consulting recruits make it all the way to Senior Partner.”
Sounds cruel, but don’t shed too many tears for consultants, adds Management Consulted. “You typically receive a pay increase when leaving, as well as a bump in lifestyle. In the U.S., the average consultant who accepts an industry position receives a 12-20% increase in pay and a better work-life balance.”
Indeed, generalists face a trying time in consulting. As Management Consulted observes, firms are increasingly turning to specialists – with MBAs making up less than 20% of McKinsey’s latest hiring batch. While consulting may contract in the coming years, it is still faring better than its competitors in finance and technology. With finance, the benefits of compensation – up to 30% higher than consulting – is offset by long hours and heavier demands that undermine work-life balance. In technology, hires endure longer promotion cycles and more “siloed” assignments. Hence, consulting remains the industry to join for forward-thinking business school talent.
“Outside of finance, post-MBA compensation packages are the highest in consulting out of any industry,” Management Consulting adds. “Not only are finance and tech slowing hiring, but consulting continues to offer faster promotion cycles, broader industry exposure, and a better path to business leadership.”
To read the full Management Consulting salary report, with details on compensation packages for over 100 firms, click here.