Salaries Report: Entry Level Management Consulting Salaries Rising

In general, firms are either offering increased variable compensation (higher performance bonus caps, increased profit sharing), or more attractive lifestyle perks (unlimited PTO). The type of perks a firm offers reveals an interesting insight into the type of candidate it hopes to attract, as well as its own market position.

The 2022 recruiting cycle also reignited the war for talent between consulting, Wall Street, and Silicon Valley. Big banks made the first move by increasing starting comp early in the cycle, and consulting firms had no choice but to follow suit soon after. Overall, as the risk of high fixed-cost salaries decreased across each sector (consulting, finance, and tech), salary growth for entry-level hires rebounded.

Following predictions from last year, the compensation growth began at the post-MBA level in the U.S. before trickling down to the pre-MBA level. While there was salary growth in markets outside of the U.S., an outsized portion of global salary growth took place in the U.S. Why? The strong U.S. demand for consulting services in conjunction with the competitive U.S. labor market.

Looking towards 2023, Management Consulted predicts that compensation growth will pick up in non-U.S. markets. Salary growth has traditionally been on a flatter curve in these markets, and the rebound should follow this same pattern. In addition, despite industry consolidation, it is expected that firms will begin to hit the upper limits of their pricing power within the next decade as the competition between established players grows ever fiercer.

This, in addition to max utilization rates, may spur firms to begin to prioritize cheaper, pre-MBA hires as opposed to more expensive post-MBA ones. The industry also saw the disruption of a different kind this past year – it was a record year for M&A activity across the management consulting landscape.

Two patterns were identified in the flurry: first, large firms acquired boutique strategy houses instead of organically building their own strategy practices (ex: AlixPartners acquiring Galt & Co.). Second, traditional strategy firms acquired specialist players across cloud services, supply chain, sustainability, and other sectors (ex: McKinsey acquiring Material Economics).

This should continue over the next year. The management consulting industry has never been stronger. As global economies roared back to life, the industry posted double-digit growth, driven largely by increased technology, S&O, and supply chain work. However, this growth was driven by a small core of established players. While the number of market entrants increased in 2021 compared to 2020, M&A activity and the shuttering of some boutique firms in 2020 mean that there is less overall competition in the market than there was five years ago.

Overall, management consulting remains an "essential" service for big business. Over the past year, consulting firms were called upon to help companies drive top-line growth, digitize operations, mitigate supply chain issues, and more. In addition, governments around the world continued to rely on consulting firms to develop economic development and vaccine distribution plans.

Due to these factors and more, the outlook remains as bullish as ever on the industry at large, and expect continued strong growth this upcoming year.

Read the full 2022 Consulting Salaries Report (with full facts and figures) here.

SOURCE: Management Consulted