While consulting firms are bracing for layoffs due to Covid 19 the good news for undergrads and MBAs is that pay is going up.
The 2020 salary report from industry coaching firm Management Consulted shows that salaries at the top three firms – McKinsey, Bain and Boston Consulting Group (BCG) – known collectively as MBB, have risen as they increasingly look to compete with tech firms for talent.
“In the middle of 2019, MBB increased MBA & PhD base salaries to $165,000, and other firms have now increased MBA & PhD salaries to follow suit. This not only reflects increased intensity in the war for talent within management consulting, but the war for talent the industry is waging more broadly versus tech,” said Management Consulted.
Management Consulted compiles the salary data from 60 firms across the industry and relies on input from its four million readers and thousands of private interview clients who anonymously share their written offer letters and written submissions.
When it comes to consulting there’s MBB, and then there’s everyone else. But outside the big three, the picture is equally rosy. “At both the pre-MBA and post-MBA entry levels, the war for top talent in a tight U.S. job market continues unabated. This has resulted in another sizable YoY jump in consulting compensation packages across offices and practice areas, especially at the post-MBA level,” the report said.
Compared with 2019, consulting firms have chosen to focus on increasing compensation in one of two ways: raising guaranteed salaries (base, signing) or raising the caps on performance bonuses.
Now it’s important to note that this data was compiled before the Covid-19 pandemic, some consulting firms are looking to lay off staff, while pay could go down or vary as companies navigate their way through the crisis.
But the data should give you a clear idea of what you can expect at the undergraduate and MBA levels when applying to one or more of the big three.
Among the MBB firms, Bain increased its base salary last year by $5K to $90K to bring it on a par with BCG. McKinsey remains the laggard on $87,000 despite increasing base pay by $2K. Each of the big three offer new undergrad hires a $5k signing bonus.
There is some variation when it comes to relocation. Bain offers $5k, while BCG and McKinsey offer a range depending on the cost of the move. For BCG, that’s between $500 and $8k, while McKinsey offers from $2k to $10k.
For retirement, McKinsey contributes $7,500, Bain offers 4.5% of base + bonus for a 401k plan, and BCG deposits a share of profits into a new undergrad employee’s 401k. In 2019, the share was capped at $4,400, but it is not disclosed in the 2020 report.
Bain offers the most overall, with a $90k basic salary along with performance and signing on bonuses amounting to a total cash package of $117,500. BCG offers $113k, including bonuses while McKinsey’s total comp package comes in at $107k
For MBA and PhD hires, McKinsey has upped its signing on bonus by $5K to $30k, bringing it in line with Bain and BCG. This followed a big jump in signing bonuses in 2019, when consulting firms upped their signing-on bonuses in order to compete with tech and finance companies.
Bain and BCG both offer a total cash compensation packages including performance and signing on bonuses of around $236k, split between a basic of $165,000 and a performance bonus of up to $41,500, compared with McKinsey, which also offers a basic of $165,000 but caps the performance bonus at $35,000.
McKinsey is a bit more generous with retirement assistance, setting aside 7.5% of salary for an employee's 401k. This year BCG has increased its retirement contribution to $10,312, up from $8k in 2019 – while Bain has kept its contribution steady at $8k.
There is also some variance over the size of relocation packages, with Bain being the most generous. It offers $8,000 for relocation distances of less than 400 miles, and $16,000 thereafter. BCG offers between $2k and $8k, while McKinsey offers between $2k and $9k.
Working at the growing crop of boutique firms can also be lucrative. Outside of MBB, SSA & Company comes out top in terms of undergraduate pay – offering a total cash package of $103,500, comprising a $90K basis and a bonus of up to $13,500.
The consultancy arms of the Big 4 audit firms – Deloitte, EY, KPMG and PwC, have also increased their salaries for undergrads by varying amounts. Deloitte has increased undergraduate salaries to $97K from $90K a year ago, while PwC has boosted pay to $102K from $94K. EY comp remained static at $80K while KPMG’s jumped to $91K from $88K in 2019.
But if you want to work in the top three, then there’s not much in it. Move quickly while pay remains attractive.
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