For a job that even elite business school graduates can have difficulty explaining, top-tier management consultants can make ridiculously high salaries.
Recent college graduates who get offers from some of the biggest and top firms, can be offered compensation close to, or exceed, $US90,000 in their first year. Some top business school graduates who enter or return to firms make well over six figures in base salary. That alone is incredible money and that’s before their bonuses are taken into consideration.
Firms start the recruitment process early, too. MBA consulting internships, where firms try to lock down good quality prospects, pay a median salary of $US10,500 a month to summer interns at top schools. It’s plenty of incentive for students to make sure their marks reflect their ability, and intern experiences count.
Why do these graduates make so much? It’s actually pretty simple. A lot of it is about prestige. The other factor is convincing corporate executives to trust their business strategy and private data with people decades their junior.
At the end of the day, junior consultants with somewhere between zero and five years of experience do much of the work that companies pay big dollars for.
So it should come as no surprise that consulting firms, especially, want to hire the best and brightest graduates, since the pedigree of their employees is a top selling point. Firms such as McKinsey, Bain, and BCG are pretty particular about only hiring top performers from highly prestigious and competitive schools. And it appears to pay off.
McKinsey, for example, is by far the largest single hirer of MBAs, and typically hires its consultants from top-tier schools like INSEAD, Harvard, and Wharton.
High salaries have become the norm for consultants because they function as a signalling mechanism for companies. What does that mean exactly? These may be young people that are being hired, but they’re the most intelligent ones out there.
Are consulting firms comfortable with paying this type of money for young people with limited experience?
Well, in a way, the consulting firms created this cycle themselves. Before McKinsey started proactively and aggressively hiring young consultants who had graduated from Harvard Business School, getting an MBA and going into consulting wasn’t all that prestigious. Now, sparked purely by the consulting industry’s demand, the MBA is among the most popular and lucrative degrees out there. And with salaries as high as they are, interest and enrolments in courses reflect that.
The other part of this is that firms need people who can actually get the work done. Top schools and MBA programs teach a great deal, but the real benefit is an education that provides graduates with confidence and strong presentation skills. Both of which are essential for a job that basically sells knowledge and advice.
Additionally, these firms have a very specific way of approaching problems that’s been developed over decades. They want people they can further educate, mould and transition to that way of thinking. They want workers who are not going to challenge a framework that’s worked exceptionally well. Instead they want consultants who will adapt, and become great ambassadors for their tried and tested framework.
In Duff McDonald’s book on McKinsey, “The Firm,” he describes these young consultants as being thrown in the deep end and expected to excel.
Perhaps another reason the pay is so attractive. With a lot of expectation and tradition weighing on the new recruits.
For all of the benefits of consulting — the obvious prestige we’ve mentioned, the broad-ranging and diverse experience, the well-travelled path to senior positions at other companies, and the vast and powerful alumni networks of top firms — there are some drawbacks. Depending on how you look at these, and your own expectations some might be daunting, and not for you, while others will take these onboard, but persevere with their careers nonetheless.
The job, like with many other occupations, requires extremely long hours. Ease of access to technology and people out-of-hours has played a part in that.
But it’s also worth noting that there’s not much opportunity for advancement, and there’s a risk of being pegged as a generalist. So it would be sensible to forge a niche in the market, in turn making your role and skills unique and a great bargaining tool for other roles and salary increases.
It is also worth noting that bonuses, while attractive and in some cases quite high, they aren’t near the level of those in the financial industry.
As expensive as this talent is, it actually ends up being more cost efficient for the firms.
There are relatively few upper-level consultants, in part because most people only stay for three or four years in these roles. It would be more costly to a firm to keep people on at a senior level and to hire them away from banks and large corporations.
One last thing for management consultants to be aware of is the risks they face when working with clients. One small mistake or error could lead to big financial loss and health hazards. Getting insurance for management consultants is important as well. Find out more about consultant insurance on Bizinsure website.