Before we go into detail about how much money consultants make, let’s have a look at how the salary of a management consultant is structured.
A management consultant compensation package includes:
- Base salary
- Annual performance bonus
- Signing bonus (one-time)
- Relocation payment (one-time) – depending on the company policy and circumstances
The base salary is the most important component of your entire management consultant salary. This will determine the salary of your first year(s) at the firm. So, even if you get offered a higher signing bonus at another firm, we recommend you have a look at the base salary first, as this will be your continuous flow of income.
In addition to a base salary, management consultants get offered a substantial performance bonus. This bonus can be based on one or multiple of the following factors which you can or cannot control directly:
- Your own personal performance
- The profitability of the firm
- The number of projects sold
- Peer feedback
Some of these factors you can directly control (e.g. your own performance), some of the factors are not directly in your control. The profitability of the firm or the number of projects sold can depend on external factors such as industry demand or economic/health crisis (as we have seen during the COVID pandemic).
Because of this, it is important that you ask about the performance bonus and what could potentially affect it. To get some statistics, we recommend asking how many people actually receive that top tier of the performance bonus structure and what the rest of the staff receives. Typically, average performers receive bonuses closer to half of the maximum amount. 65% performance bonus sounds great but what are your chances of actually getting the bonus?
It is also interesting to know when you will be eligible for performance bonuses – if it is at the end of the calendar year or fiscal year. Depending on when you start your job and if you will just miss this payout, this could make a substantial difference in your salary. And it could be a great opportunity to negotiate a signing bonus.
A lot of consulting firms offer an attractive signing bonus for new and high-potential hires. While it is not common to negotiate base salary in management consulting, some firms are more flexible with the signing bonus. If you have another offer, you could potentially leverage this to negotiate a higher signing bonus. It can be the case that even consulting interns get paid signing bonuses.
Some consultancies have payback policies on their signing bonuses in order to motivate their consultants to stay with them long enough. Depending on when you leave the company, you might have to pay back a percentage of that bonus or even the full amount. Please note that it doesn’t make a good impression to ask directly about the payback policy because it makes it seem as if you don’t plan to stay long in the company. Simply read the terms and conditions of your offer letter.
Some firms offer relocation bonuses even to interns. This bonus depends on your and your office’s location. The further you live away from the office, for example, if you live in a distant city, state, or country, the larger your relocation bonus will be. If you have to move cross-country and are not getting a relocation bonus, you can use this opportunity to negotiate a higher signing bonus.
Relocation bonuses and signing bonuses are usually paid out soon after you sign your contract. Sometimes they are paid out only after your start date or even in increments over several years. The payment method varies among companies.
Besides the previously mentioned salary components, a lot of consulting firms offer additional benefits to their employees. This could be for example:
- Health insurance
- Paid time off
- Technical equipment: company laptop, smartphone, video conferencing software, etc.
- Mobility benefits: Company car, local transport ticket, travel allowances
- Continuing education opportunities: Language course, training, certificates
- Additional benefits: Pension plan, childcare
- Well-being benefits: Canteen meals, meal allowance, fruit and drinks in the office, gym discounts
- Special benefits: Hotel chain discounts, discounts at selected retailers
These could be important factors to consider when deciding between different offers or jobs, as these benefits can have an additional effect on your health and happiness.
Furthermore, some firms sponsor undergraduate hires, who perform well on their job, their MBA at a business school, or another degree. Please note that in most cases consultants have to work for the firm for a specific amount of time after completing their studies – or pay back the cost of the degree.
A management consultant's salary is typically non-negotiable at the base salary level. Most firms, especially top strategy firms, want to keep equal salaries for incoming consultants. This does not mean that there is no room to negotiate whatsoever. Most commonly, the signing bonuses give candidates the most room when negotiating. Since this is a one-time payment, firms tend to be more flexible with the signing bonus.
Especially, if you have other offers on the table with a higher base salary, you can leverage this to negotiate a higher signing bonus. In case you missed the fiscal year and will not get a performance bonus, you can use this in your negotiation, as well. The same applies to the case if you have to move cross-country and do not receive a relocation bonus.