McKinsey, Bain and Boston Consulting Group unveiled one of the biggest pay hikes for new hires in more than two decades, as inflation, booming demand for consultants and a tightening labor market force a trio of quarters. The problem of having to compete more fiercely to find talent.
According to people familiar with the matter, companies that don’t publicize their salary scale will increase the base annual salary for MBA graduates in the US from $175,000 to between $190,000 and $192,000.
Top performers will receive over $250,000 in their first year when performance and signing bonuses are included.
“The last time the consulting industry had this level of wage inflation was around the time of the dot.com boom in 2015, said Fiona Czerniawska, chief executive officer of Source Global Research, a consulting sector analyst. 1999-2000.
“Wage increases remain the most immediate and effective lever any professional services firm can pull if it wants to attract and retain high-caliber people,” she added.
Since the brief downturn at the start of the pandemic in 2020, consultants have benefit from an increase in business demand for advice on digital transformation and M&A as companies reshape their businesses in the wake of the coronavirus crisis.
The growing pressure on companies to reduce their environmental impact is also a boon for management consulting organizations, which have rapidly built businesses to provide advice and strategy.
According to research by Source Global, one in five companies has to quit because there are not enough employees with the right skills.
The decision to raise wages by three of the most prestigious consulting firms underlines the pressure the financial services industry faces in attracting new hires. Last year, several major Wall Street banks, including JPMorgan Chase and Citigroup, raised salaries for junior bankers. Corporate law firms have also been locked in a fierce pay war.
Keith Bevans, partner and head of recruitment consulting at Bain, says consultants are improving salaries and other benefits in response to increasing competition in “a very competitive talent market” hot”.
“The competition we are up against is broader than ever,” Bevans said. “We’re meeting with people on campus who are interested in big tech, they’re interested in other consulting firms, they’re thinking about starting their own company or a search fund, or they’re looking to start a new venture. consider investing in private equity right away.”
Companies have also improved benefits such as paternity leave.
“While compensation is still important, our research shows that to attract, retain and develop talented colleagues, factors such as clear career growth opportunities, flexibility and purpose is just as important,” McKinsey said in a statement to the Financial Times.
The company received about a million apps for 10,000 jobs in the past year despite criticism for its role in “accelerating” drug sales in the US.
Namaan Mian, chief executive officer of Management Consulted, said candidates are now more interested in other benefits but salary is “certainly the biggest factor” in attracting hires. This year, the pay rise for starters at McKinsey, Bain and BCG is the second-biggest increase over the past decade, he said.
Czerniawska said it took consulting firms about four years to repair their margins after wages rose dramatically earlier this century.
Despite the “changing economic waters,” Mian said, companies continue to hire long-term because if they “shut down during a recession” it’s difficult to recruit consultants fast enough when everything is improved.
Those who have completed an undergraduate or master’s degree but do not yet have an MBA will also receive a six-figure salary package. Base salaries for graduates joining Bain and McKinsey in the US will increase 12% to $112,000 a year, according to people familiar with the pay increase.
One person who received a job offer from the company said their partners in BCG in the US were offered $110,000. BCG, Bain and McKinsey declined to comment on their salary figures.
Wages at companies vary by region and are significantly lower in most countries outside of the United States. The companies do not disclose their profits but many partners are paid 7 figures annually.