Consulting Pay: What New Hires Earned In 2023

Soft. Flat. Tighten.

Not exactly words that inspire confidence in Economics 101. And you might even feel suspicious when words like steady, normalize, and inertia are tossed into the mix. Fact is, the 2024 Consulting Salaries Report, released Tuesday by Management Consulted, doesn’t mince words. 2023 was a disappointing year for consulting pay and benefits, with the report riddled with terms like decline, fewer, and less.

The silver lining? It could’ve been worse.

“Overall, even amid declining growth, margins held steady due to layoffs, reduced hiring, and flatlining salaries,” according to the report.

CATCHING UP TO AMERICAN PAY

Alas, consultants endured the brunt of industry fluctuations – pay-wise, at least. Management Consulted notes that labor has exceeded work, resulting in hiring freezes and layoffs. In many cases, consulting firms weren’t shy about curbing bonuses and benefits too. After all, they held all the leverage.

“While firms kept base compensation flat, many went further – decreasing the total earning power of new consultants by decreasing the maximum performance bonuses they could earn,” the report notes. “In addition, after recent updates to top-down compensation structures, raises this year were also lower. This tells us two things: first, many firms are using depressed raises as a tool to increase attrition, which has been lower than historical averages over the last year. Second, with slowdowns in traditional exit sectors (e.g., corporate strategy, PE), firms aren’t worried about too much talent leaving at once.”

This gave a decided advantage to larger, incumbent firms. While their pay may have stagnated, they still set the industry pace. Even more, these firms boast the versatility, resources, connections, training, and prestige that bring value beyond a paycheck. Still, the economic downturn dogging consulting did fuel one shift impacting firms big-and-small.

“This year’s compensation inertia took place at both the pre-MBA and post-MBA entry levels and was most pronounced in the U.S. market,” the report adds. “We did see salary growth in markets outside of the U.S., as many markets (e.g., Europe) begin to catch up to U.S. salaries, which have far outpaced global peers in recent years. Still, while many firms aim to achieve parity in purchasing power for employees across geographies, this isn’t often achieved, and the purchasing power of U.S. consultants is still stronger in 2024.”

Consulting Meeting

BREAKING THE BOUTIQUES

These trends – along with a firm-by-firm listing of bases, bonuses, and benefits – stem from the data collected by Management Consulted. For nearly two decades, the organization has collected compensation data from current and aspiring consultants through a variety of sources. These include verified website visitors, along with users of its interview prep and resume prep services. In some cases, Management Consulted receives data directly from the consulting firms themselves. Other times, pay data originates from written pay offers shared with Management Consulted.

As a whole, Management Consulted maintains a community of three million readers. Its annual Consulting Salaries Report features data from over 115 consulting firms, including data specific to both bachelor’s degree holders and MBAs (along with master’s degree holders and PhDs). Best of all, the data is made up of 2023 responses; it isn’t averaged against previous years’ data (with all figures converted to U.S. dollars). Bottom line: the data is current, reliable, and consistent according to Management Consulted – not “outdated or arbitrarily averaged” like salary data supplied by Glassdoor, PayScale, or Indeed.

The biggest takeaway from the 2024 report: Last year didn’t conform to the previous pay growth enjoyed by consultants. In fact, Management Consulted reports it was only the 2nd year – out of 16 – where starting pay didn’t increase for new hires. Compare that to the previous three years, where growth spiked at roughly 10% year-over-year. That said, the pain wasn’t doled out equally in 2023, as boutiques continued to struggle against increasingly fierce headwinds according to Management Consulted.

“Established consulting firms drive a lion’s share of the overall industry growth through organic and inorganic means. This in turn allows them to dramatically outpace the competition in terms of the max compensation they offer (e.g., through performance bonuses and profit sharing), as well as extend lifestyle perks like unlimited PTO and limited travel. At the same time, boutique firms were hit harder by last year’s declining demand for services, and the proliferation of in-house strategy groups at large corporations continues to limit the growth of a fragmented market of boutique players.”

“At Bain, we really do try to make everyone better for having worked with us.” _ Keith Bevans

BAIN VS. MCKINSEY VS. BCG

Another trend, Management Consulted observes, is who and where consulting firms are hiring. In particular, they are increasingly gravitating towards technical specialists and candidates from smaller name programs. For example, Management Consulted cites McKinsey & Company, which has extended its net to 370 schools, with fewer than 20% of hires coming from the MBA ranks. That doesn’t mean McKinsey MBAs – or peers at Bain & Consulting and the Consulting Group – aren’t raking in big paychecks early on.

Technically, McKinsey paid the lowest of the ‘Big Three’ in total starting compensation for MBAs and PhDs. The $267K figure reported by Management Consulted matched the 2023 average – though lower than $250K and $230K numbers from 2022 and 2021 reports respectively. Among the MBB, Bain & Company led the pack in MBA first year total compensation at $285K, the same total as 2023 (and a $49K leap over the 2021 report). In between, you’ll find the Boston Consulting Group (BCG), where MBAs pulled in $270K total according to Management Consulted’s 2024 report. Again, this mirrored the 2023 report, with BCG first year hires reporting $236K two years earlier.

How do MBB firms compare in various measures? Bain & Company offers higher starting bases at $192K, $2K more than their MBB counterparts. That said, Bain MBA hires can collect up to $63K in first year performance bonus, much higher than either BCG (up to $50K) or McKinsey (up to $40K) according to Management Consulted. While sign-on bonus remains $30K across the three firms, each offers distinct perks. Bain includes 25 PTO days in their first-year package, higher than either McKinsey (19) or BCG (15). In terms of relocation, Bain covers $8K for moves under 600 miles from the university and $16K above that mark. McKinsey budgets up to $10K for relocation, while BCG includes an interest-free loan for relocation. When it comes to 401K, Bain and BCG contribute $8K and nearly $11K respectively –numbers lower than McKinsey, where there is a 7.5% match (which comes to over $14K in base pay alone). Near term, McKinsey also provides a 50% tuition reimbursement to returning interns. Long term, Bain opens up profit sharing after three years.

Since base pay and sign-on bonuses are rarely negotiable, firms dangle unique perks to distinguish themselves among MBA or PhD graduate. Want unlimited PTO? Check out Ernst & Young and EY Parthenon (with KPMG and Maine Pointe holding their own with 30 and 29 days of PTO respectively). Looking for your second-year of tuition to be covered? ZS Associates and Deloitte’s Strategy and Analytics practice covers that for returning interns. Got debts and need cash right away? Accenture Strategy offers a $35K bonus supplemented by a $17,500 early sign-on bonus. Alix Partners and XY Parthenon does that same at $35K and $10K and $30K and $10K respectively, while Analysis G plops down a lump $45K sign-on sum. If you plan to bet on yourself, Kearney goes as high as $65,000 on performance bonus, while Galt & Company maintains an uncapped performance bonus that is “at least $60,000.” At the same time, L.E.K. Consulting includes up to $42K in profit-sharing to start, while Stax includes an equity award after a team’s manager is promoted.

Next Page: Undergraduate Pay, Intern Pay, Lifetime Pay, and More…

Questions about this article? Email us or leave a comment below.