Considering all MBBs raised salaries in the US, will this also impact Europe/Germany?

Hi there,

Q: Just read the Financial Times article that McKinsey, Bain and BCG all raised their salaries in the United States. Historically, did this also lead to salary adjustments in other countries?

I don’t have data on that, so I will just try to structure a logical answer (if someone has data I would be very interested as well).

Rationally, MBB will have an incentive to increase salary only if they risk losing talent or need to increase the talent acquisition above the current acquisition rate (eg due to above-average growth).

This could happen mainly if in the relevant geographic market (most likely nationally or anyway in Europe):

• An MBB competitor (another MBB, Tier 2, any company that could represent alternative in another sector) raises salaries and the others decide to follow. The first mover will probably do so to hire more employees compared to the past, while the others may follow to avoid to lose talent
• Current employees decide to stop to work in the corporate world at an above-average rate (eg to become self-employed) unless an increase in salary is offered

Theoretically, this could also happen if there was an “arbitrage” opportunity between US and Germany (meaning people could easily switch between countries). Given this is unlikely, this factor is probably not particularly relevant.

Overall, given even within Europe itself there has been historically a huge gap in salaries (eg between Italy and Germany), I would not expect an increase in US salaries to lead to one in Germany. As Pedro correctly noticed though, some factors that may have led to the increase in the US may appear in Germany as well.

Best,

Francesco

Agree with Ian.  Beyond MBA hiring where they level the pay so offices are equal, each office takes an independent view on salaries.  Due to the inherent difference in the local job market, the US offices will pay more to attract and retain talent. 

There is correlation, but not causality. Meaning that some of the same factors (inflation, talent shortage, high coinsulting demand) that lead the US to increase salaries may apply to Germany, and therefore lead to a salary increase as well.

Although in practice market conditions in one office can have some impact in other offices (i.e. high demand in the US may be partially addressed by resorting to consultants coming from Germany) that is usually a minor effect, particularly if we are talking across continents. As such, the US salary increase does not cause a salary increase in Germany, although that increase may happen anyway.

Hi there,

Try not to bet on this…

1) This is MBA hire salaries

2) This is the US which is a very different market

If you'd like more clarity, talk to people at your office - generally the office rumours will hold more water than anything outside of the walls!

Hi there, 

One can hope. 

Top firms revise their salaries on a regular basis, so if there's a change in one geography, it tends to follow through in other areas as well. 

However, it difficult to take a decision solely based on this. Don't only consider the salary, but the compensation package as a whole (bonus, other benefits), as well as the pace of promotion (which can accelerate your overall net worth faster than a high starting salary).

Best,

Cristian

Hello!

I can confirm that salaries were raised in the US out of the blue literally, but no idea of whether this will spill over to Europe… and I don't think anyone will be able to tell you with certainty. Fingers crossed tough!

Cheers, 

Clara