a decade-long streak of consulting salary increases abruptly ground to a halt, according to leading consulting industry news source Management Consulted (MC). However, while some salaries cratered, the industry as a whole continued to grow rapidly.
The 10th edition of MC’s annual Consulting Salary Report showcases the first time the firm has ever recorded a decrease in starting consulting salaries.
“COVID-19 has strengthened the power of top firms,” says Jennifer Le Roux, MC Managing Director. “Decreased competition from internal strategy houses and Wall Street allowed firms to lower or freeze starting salaries without missing out on top talent.”
COVID Brings Ancillary Benefits In Lieu of Salary Increases
While many firms and practice areas implemented (temporary) job cuts and hiring freezes last year, most maintained and a handful reduced their starting salary offers. To make up for lackluster salary gains, firms began offering additional perks such as unlimited PTO, profit sharing, and one-time work-from-home bonuses.
In general, firms are either offering increased variable compensation (higher performance bonus caps, increased profit sharing), or more attractive lifestyle perks (unlimited PTO). This reveals an interesting insight into the type of candidate different consultancies hope to attract, as well as their own market positions.
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The post-COVID future of Consulting Salaries
As Management Consulted looks towards the future (2022 and beyond), their anticipation is that compensation growth will first take place at the post-MBA level in the U.S., while slowly trickling down to the pre-MBA level and international markets a year or two later. Salary growth has traditionally been on a flatter curve in non-U.S. markets, and the eventual rebound should follow this same pattern.
Management Consulting and COVID
Overall, management consulting remains an “essential” service for big business, even in an economic downturn. Consulting firms were called upon to help companies protect cash flow, reduce cash burn, reorient supply chains, digitize operations, and more.
In addition, governments around the world relied on consulting firms to develop COVID mitigation and economic reopening plans. Due to these factors and more, Management Consulted remains bullish on the industry at large, and expects strong growth in 2021 as well.
All of this points to a competitive labor market, where the winners are consulting firms who can add value beyond pure compensation – and the talent who can navigate competitive recruiting processes.