The most well-known consulting firms in the world have decided to freeze their starting salaries for new graduates in the United States, as the fierce competition for jobs replaces the earlier trend of salary increases following the pandemic.
- According to sources, McKinsey and BCG are among the firms that will keep salaries at 2023 levels for undergraduate and MBA students starting next year.
- This marks a significant departure from the situation a year ago when these firms raised salaries by the largest margin in over two decades. However, the persistence of historically high inflation means that the real value of a new consulting job will significantly decrease next year.
Hangover After The Party
Fiona Czerniawska, the CEO of Source Global Research, a consulting sector analyst, described this situation as a "hangover after the party." Consulting firms are facing declining customer demand in some areas of their business and pricing pressures across the board. To bolster profits, they are now adopting a strategy of curbing hiring and keeping salaries in check. Czerniawska also mentioned concerns that the market, which had softened over the last 18 to 24 months, might further weaken before recovering.
- Firms aim to retain their partners by maintaining high profits, and one way to achieve this is by slowing down salary inflation and preventing starting salaries from spiraling upward as they did in the past year or two.
- For example, McKinsey's base salary for a new recruit from business school is $192,000, while a candidate with an undergraduate degree receives $112,000, according to Management Consulted, a company that assists students with consulting firm interviews and tracks pay through offer letters.
- Bain & Co offers the same base salary, and BCG's base salary is $2,000 less. Signing and performance bonuses can potentially increase year-one pay to over $267,000 for MBAs and over $140,000 for undergraduate hires, though these figures are not publicly disclosed by the firms.
Toughest Job Market
Namaan Mian, the COO of Management Consulted, noted that he has not observed any firms increasing their base salaries. He described the current job market as the toughest and most competitive he has seen in the past decade, with fewer open positions this year and more applicants, driven in part by individuals shifting from investment banking and the tech industry to the consulting sector.
- Additionally, some firms have asked their 2023 hires to postpone their start dates until 2024, further reducing the need for additional hiring on college campuses this year.
- An insider familiar with McKinsey's recruiting mentioned that it's not unprecedented for the firm to keep starting salaries flat, and they have done so in approximately 10 of the past 20 years.
Similarly, an insider familiar with BCG's practices described this as a "plateau year," suggesting that the firm tends to have periods of significant salary increases followed by relatively stable periods.
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