Management consultancy salaries are comparable with some of the best paid jobs in the country. Find out what you could earn at each stage of your career, how salaries vary across sectors and specialisms, and what employers expect in return.
The consultancy industry has grown significantly since the financial crisis of 2008, and as we enter a sustained period of economic growth this will continue. Management consultancies find themselves busier than at any time in recent years. The increased demand for consulting services means a corresponding increase in the number of consultants, particularly at entry level. Competition amongst the firms to recruit the best graduates is fierce, and this is reflected in the financial rewards offered by the industry.
The effect on salaries
Consultancies know that the main competition for attracting the best graduates has traditionally been the investment banking sector. Although that sector has scaled back campus recruiting, there are other desirable career paths – setting up your own business not the least of them. Yet more and more graduates are choosing consultancy as their preferred career. Whilst the demand for places far outstrips the supply of openings, the consultancies have to offer enticing salaries to attract the best graduates from the pool of talent. Hence the improvement in packages recorded over the last few years.
At undergraduate level, the consulting arms of the ‘Big Four’ (Deloitte, EY, KPMG and PwC) are all competing with each other and the top tier strategy houses (McKinsey, BCG, Bain) for top ranking students. Moreover, there has also been demand for new and recent graduates from fast growing medium sized consulting firms and emerging digital consultancies. If you are already out of university and in employment elsewhere, firms will usually pay a small premium over your current salary if they want to secure you.
Salary structures and benefits
We take a look at some of the salaries which can be achieved whilst working within management consultancy. These figures are drawn from employed consultants (no self-employed consultants are surveyed) who work in firms of all sizes, sectors and functional areas. The common thread is that they are working in or around London, the nexus of the consulting industry in the UK. Salaries in the rest of the country are 6–12% lower.
These are roles for new graduates, or those with up to two years’ postgraduate work experience. At larger firms, the competition to hire has led to ‘little extras’ such as: sign-on bonuses of £2,500 or interest-free loans, iPhones and iPads, gym memberships, help with accommodation and personal development study support.
Consultants at this grade typically have around three years’ experience in consulting, or are fresh recruits into consulting but with a recently obtained professional qualification or comparable level of competence, e.g. ACA, CIPD, a blue-chip company’s two/three year training programme graduate.
Senior Consultant: £65,000
At this level the backgrounds of consultants start to diverge. These can include mid-tier strategy house/boutique consultants with 2–3 years’ experience; average performers with 4–6 years’ experience at a systems integrator or a full-service consultancy and some work stream responsibility; or newly-minted MBAs entering consulting for the first time.
Here consultants could be: more experienced (5–7 years’ experience) delivery consultants; fast-track, straight from industry candidates; and top business school MBAs joining strategy houses. At manager level and with sales/business development responsibilities, the range extends to £100,000.
Principal/Assistant Director: £100,000
These tend to be consultants with eight plus years’ experience in the full-service consultancies, or engagement managers/project leaders in boutiques. The majority of consultants working at this level have some responsibility for business winning.
Again, this salary band includes consultants as different as strategy consultants with 5–7 years’ experience and old hands with 10–15 years at a more traditional consultancy, or those with senior project management/programme management responsibilities.
Equity Director/Salaried Partner: £250,000+
These experienced consultants range from those with seven plus years at a boutique to 15 plus years in general consulting.
Few firms provide a car below manager grades. All offer a cash alternative to a vehicle, typically worth £6,000–£10,000 per annum. The bigger consultancies offer comprehensive benefits packages, with ‘cafeteria’ or ‘pick ‘n’ mix’ benefits policies (choosing between a higher salary or a longer list of benefits) common. Smaller independent firms do not tend to offer much beyond health schemes and life assurance. Personal pension schemes predominate. The overall package offered should be scrutinised carefully, as comparisons based on salary alone can be misleading.
At the large operational consultancies bonuses and profit shares tend to be less generous (7–15%) than those offered by the strategy and boutique firms (25–40%). Signing-on bonuses are still rare. The large partnerships are secretive about partner earnings but press reports indicate that senior partners enjoy packages in excess of £1 million.
Partner/Director packages in niche firms vary enormously, with some earning the equivalent of an average footballer in the lower divisions of the League, and others who would be better off as Senior Managers or Principals in larger firms. These niche firms traditionally find it hardest to retain their experienced consultants and so bonuses can be as high as 50% of salary.
Salary differences explained
Salaries are banded and the bands overlap to take account of the level of remuneration necessary to attract and retain the high fliers on their way up, and the experienced specialists who are approaching the summit of their careers. ‘Up or out’ promotion policies which are common in strategy houses are less so in other firms, although periodic clear-outs of less profitable directors and partners in these firms are not unusual, even in buoyant economic times. Firms may claim to recruit only potential Partner/Director material, but the reality is that there are many consultants who see a 3–5 year spell as a means to widening their business exposure, and would seek to move on thereafter. It is these consultants who straddle the mid-range of the salary bands at all levels up to Manager.
The industry sector background of consultants, or their functional specialisation, also has a bearing on salary. This is commonly seen at the large operational firms and independents, rather less so at strategy firms or niche operations. Industry sectors that offer high levels of remuneration – pharmaceuticals, financial services and media – are serviced by consultants who have themselves usually worked in those sectors. Consequently, consultants hired from these industries can command a premium over their consultant peer group. Those at the lower end of the salary bands tend to have come from the public sector, manufacturing, or retail.
Salaries are also influenced by billings. Consultants are expected to bill fees of around 3–5 times their annual salaries. Therefore, consultants who work in sectors where high profits can support high fees fare rather better than their colleagues who work in areas where fees reflect the lower profits of their sector.
The relationship between salary and billings becomes increasingly important the further up the ladder consultants rise. At Manager level and above, the ability to win work is crucial. More and more time (typically 25–40%) is spent cultivating clients, writing proposals and participating in beauty parades (where a client chooses a consulting firm after seeing a number of presentations). It is very difficult to rise beyond this level if such business skills are lacking.
No one should be attracted to consultancy purely for the financial rewards. Although remuneration at Partner/Director level is comparable with the very best in other professions, there are many downsides. Job security has become poorer in recent years. Despite more attention being paid to the work/life balance, consultants still work long hours and not just Monday to Friday. As much of the work is carried out at client sites, frequent travel is common and a willingness to stay away from home for at least half the year is essential. Some firms ask new joiners to commit to 100% travel.
Yet consultants who choose this lifestyle do so because they enjoy the variety of work on offer, the opportunities to continue personal and professional development and the range of career openings available when they wish to leave. Those who hold a post with a well-established consulting organisation and those who choose to enter the profession over the next few years can still look forward to a well-remunerated future.
Find out the other Top Reasons to Become a Consultant.