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In late October, Management Consulted announced that top consulting firms increased entry-level salaries for the first time since 2022. After four years of stagnant salaries, these firms have increased compensation in order to attract top talent. Here’s everything you need to know about this news and what it means for students.
New Base Salaries
The article reports that the top firms that made this compensation change are McKinsey, BCG, and Bain. All three firms adjusted base pay for first-year employees to $120,000 for those without an MBA, and $200,000 for those with an MBA. The previous base salaries ranged from $110,000 to $112,000 for undergrads and $190,000 to $192,000 for MBA graduates, depending on the firm.
Reasons Behind the Raise
Management Consulted explains a few reasons for this raise, with the top being competition between firms and competition with tech roles. Namaan Mian told Financial Review that concerns around losing top talent to the tech industry weren’t as prominent in the past year when companies were laying off employees and downsizing instead of adding new roles. But now, The Pragmatic Engineer explains that hiring for software engineers is up about 20 percent compared to last year. This uptick in hiring means consulting firms are ready to fight for the top talent coming out of undergrad and grad schools.
With this change, Big Tech still has higher base pay for employees without an MBA, but lower base pay for those with an MBA. According to JobRise, base pay for undergrads in Big Tech ranges from $130,000 to $160,000, while MIT Sloan reports base pay for Big Tech MBA grads ranges from $150,000 to $190,000. While compensation isn’t everything when searching for a future employer, these consulting firms are making students think twice before accepting a role in tech.
What This Means for Students
With this fight for top talent, undergrads and MBA grads need to decide how much compensation matters to them. If base pay matters most, the numbers point them in different directions: Big Tech for undergrads and consulting for MBA grads. However, these decisions aren’t usually that black and white. That is why the Vault Consulting Rankings highlight employment factors relevant to job seekers, such as work/life balance, firm culture, and promotion policies. Compensation is just one piece of the puzzle, but one that consulting firms are clearly emphasizing.
For students who choose consulting over tech, the next question is which firm is best. Only three of the top firms have made this salary change as of early November, so students have to decide whether to go with top-paying firms or smaller firms with lower base pay. Even if students interview with other firms that haven’t increased salaries, this change still gives them power to negotiate. The market standard has changed, so they can enter salary negotiations with these new numbers in mind. They may not get exactly the same amount, but they could get close.
With the competition for talent so high, these firms are willing to invest in and pay for the best talent. Students have to truly understand what they want from an employer when making the decision of what company to work for after completing their education.
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