For US MBA graduates, McKinsey, Bain and the Boston Consulting Group announced significant pay raises for new hires citing inflation, booming demand for advice and a tight job market are forcing the trio of consulting firms to compete harder for talent.
According to the Financial Times (FT), the annual salary for U.S. MBA graduates increases from $175,000 to approximately $190,000. Top performers are estimated to earn over $250,000 in their first year with performance-related bonuses included.
According to Fiona Czerniavska, executive director of Source Global Research, “the last time the consulting industry had this level of wage inflation was during the dot-com boom of 1999-2000…wage increases remain the most immediate and effective lever that any professional services firm can use if it wants to attract and retain highly skilled people.” The wage inflation comes as consultants have taken advantage of a surge in corporate demand for digital transformation and M&A advice as companies reshape their businesses after the coronavirus crisis. Increased pressure on companies to reduce their environmental impact has also been a boon for management consultants. A study by Source Global estimates that one in five firms had to give up work because they did not have enough employees with the right skills.
The three most prestigious consulting firms are not alone in offering significant wage increases. They are joined by several major Wall Street banks, including JPMorgan Chase and Citigroup, as well as corporate law firms who are all competing for talent. Keith Bevans, partner and head of consultant recruiting at Bain, notes “the competition we face is greater than ever…we meet people on campus who are interested in big tech, who are interested in other consulting firms, who are thinking about starting their own companies or search funds, or who are thinking about going into private equity.” The FT reports that McKinsey received about a million applications for 10,000 jobs last year. Finally, also according to the FT, recruits who complete a bachelor’s or master’s degree but do not have an MBA will start with a base salary of $112,000 at both Bain and McKinsey.
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