Trends and tricks
Consulting is known for offering competitive salaries to attract top talent from diverse educational backgrounds and majors. Consulting firms typically recruit individuals who have studied business, engineering, economics, mathematics, computer science, natural sciences, and liberal arts. Most importantly, they are looking for candidates with strong analytical and problem-solving skills, as well as the ability to communicate effectively with clients and team members. While it is commonly known that consulting offers some of the most competitive salaries, we will take a closer look at what you can expect when it comes to consulting salaries in this blog.
First of all, it is important to understand all of the elements that make up a compensation package. In addition to base salary it is important to consider other elements offered by potential employers such as, performance based bonuses, sign on bonuses, relocation bonuses, health insurance, contributions to retirement plans, and paid time off. Additionally, other non-financial incentives may be important to you, such as remote working arrangements and professional development opportunities. Sign on bonuses are typically paid once you sign your contract, however they may be paid at your start date or or even distributed over a few years.
Given that your second and third year salary will be based on an increase to your starting salary, one should weigh starting salary more heavily than your sign on bonus. For example, all else being equal, an offer for $100,000 with a $5,000 signing bonus is more attractive than an offer for $95,000 with a $10,000 signing bonus because if you earn an 10% salary increase after your first year, you will earn $110,000 vs $104,500 in your second year as your base. After 2 years of 10% increases this gap will widen to $121,000 vs $114,950. Over 5 years, that 5% difference will total $30,526 - so why not earn more? Relocation bonuses are usually calculated based on the distance from either your home address or college to your starting city and due to the calculation do not offer much room for negotiation.
Finance or tech may offer a more competitive starting salary, however typically the salary growth in management consulting outpaces other industries. For this reason, even if you start with an initially lower base pay in consulting, your income after a few years can far exceed those in other industries. In top consulting firms, typical increases are 10-20% per year for salary and performance bonuses each year. When promoted to the next level (usually after 2-3 years), the increase can be much more substantial, sometimes even doubling your salary. However it is important to note that consulting is known for it’s up or out promotion strategy, meaning that only exceptional performers are promoted “up” and many are encouraged “out” to seek employment elsewhere. Even if you opt “out” you can typically expect to see a 10-30% increase in salary if you choose another position in industry.
Saving for your retirement is an important consideration as you start out in your career. It may not seem so at first, since it seems so far off in the future, but believe me, your future self will thank you. If you start saving early in your career, you have the benefit of time on your side which can have an huge impact given compounding interest. Thus, an important element of your overall compensation package to consider is your employer’s contributions to your 401k. Since it allows you to contribute a portion of your pre-tax income into a special retirement account, where the funds can grow tax-free until they are withdrawn in retirement, maximizing your contribution should be something you seriously consider. Paying close attention what the company will match is important in evaluating your overall compensation as this can vary widely across firms.
Another important factor to consider is the cost of living in the city of your employment, assuming you will live there. While some firms do offer different salaries based on location, salaries typically do not very much domestically within the US. Given this, your salary, even though lower in a less expensive city, may stretch further when it comes to your discretionary spending on your lifestyle.
Understanding that there are a lot of factors to consider is important. Hopefully this dive into exploring different aspects of compensation packages has better prepared you to make informed decisions. Below we provide some data on internship salaries and entry level salaries at some top firms. Information has been sourced from managementconsulted.com, check their website for an even more comprehensive list of consulting salaries.
Internships are a standard 10 weeks in the United States. Internship compensation for some top consulting firms are listed below. Firms often use their internship programs to identify talent for entry level offers. Given this, applying for internships is one of the most important things you can do while still in college to advance your career.
The entry level consultant salaries below are for candidates with undergraduate or masters degrees.
*Data sourced from managementconsulted.com