A Young Consultant's Guide to Compensation

It seems every business-minded graduate with good grades and some analytical bona fides has a resume out somewhere in the consulting sector. The industry has always competed for high-potential talent, and as a result, there is a whole lot of elbowing going on for a limited number of entry-level consulting positions.

What is all this clamoring for? There is first, of course, the money. Call it tacky, but seeking a well-compensated job straight out of university (or after completing an advanced degree) is often less about pursuing a lifestyle than it is about paying down debt incurred by tuition. Money talks, for sure, but it does so in a variety of ways.

Considering this, AMCF has researched compensation in the consulting sector, especially among entry level consultant and analyst jobs, seeking to answer questions like: How much should one expect to make in an entry level consulting position? Do the strategy brand names pay significantly more than others?

Vault’s Top 50 Consulting Firms provided a working list of firms. The Vault rankings weigh equally 1) a firm’s prestige based on cross-industry surveys and 2) employee reports on what it’s like to actually work at the firm. To fill in the relevant compensation levels, AMCF turned to Glassdoor.com, which has a searchable database of compensation surveys submitted voluntarily by employees at consulting firms. Glassdoor verifies that the submitters of all incoming salary surveys actually work for the firm they say they do. However, base salary is the only information required; other factors can be included as opt-ins.

As can be seen above, the survey data from Glassdoor omits information on bonuses—a significant part of compensation at every step in the consulting career ladder. Therefore we have included average percent bonuses at each position from the 2011 AMCF Operating Ratios Benchmarking report:

Average Base Salary + Bonus in Aggregate by Position for Young Consultants:

With bonus information now included, the data provides a guide to what a new consultant can reasonably expect in terms of compensation.

About 79% of firms on the list who have analyst positions pay between $58K and $65K base salary. But a generous (and hopefully well-deserved) performance bonus can bring in about another $5K–$10K.

Recent grads along with those who have a few more years of schooling might be interested to know, furthermore, not just what the current standards for compensation are, but how they are trending. Again, the AMCF Annual Operating Ratios Report provides the data:

Although there are as many definitions of these hierarchical levels as there are consulting firms, in general the first 3 levels can be seen as pre-MBA/Masters categories and the "Management Consulting" designation reflects what a consultant just out of a master's program (esp. MBA) would receive in compensation, particularly if he or she has a consulting or industry background.

The above table shows that Research Associates (e.g. Analysts) and Entry Level Consultants went through erratic swings in average salary in the period of 2005-2007 but have enjoyed stable growth in pay from 2008 to 2010—that is, during the global recession. What this tells us is that, while Research Associates and Entry Level Consultants are subject to market conditions, they are not the first to receive pay cuts in a squeeze. It’s true that some firms eliminate positions when demand shrivels up which reduces would-be consultants’ chances of landing a job, but this does not appear to be the prevailing trend. More often, consulting firms’ leaders, when faced with a sagging market, cut senior level pay in order to preserve their firms’ operating capacity. Thus, the young consultant’s salary, while by no means guaranteed, is more likely to continue on its course of gradual growth from year to year.