McKinsey, Bain and BCG are the three market leading consulting firms globally. To attract top talent from universities and industries they also pay some of the highest salaries available, second only to investment banking.
The base salaries of each firm depend on two factors; grade and location. Firms follow a typical pyramid structure with those at the top of the pyramid earning more than those at the bottom. There is also significant variation between geographical location both within countries and between countries.
All three firms pay bonuses on top of the base salaries offered and aim to reward their highest performers, encouraging a level of internal competition between employees.
The biggest variation of salary in firms is between grades. Somewhat confusingly each firm has different names for their grades but all have six layers in their organisational pyramid. The equivalent grades are shown in the figure below.
[Insert grade equivalents]
The difference between grades is significant and for top performers that move through the grades quickly, it is possible to be earning a six figure salary at all three firms within a couple of years in some countries.
For entry-level positions at McKinsey, Bain and BCG, consultants can expect to earn a base salary of between $53,000 and $100,000 depending on the location.
In the United Kingdom the starting salary of a McKinsey consultant is around $68,000 and it is highest in the United States with a starting salary of $99,000 on offer.
The UK pays the lowest starting salaries to consultants and it is BCG that pays the lowest annual remuneration to any entry-level consultants across all geographies we have analysed (UK, US, Germany and the Middle East) with a starting base salary of $66,000 and average first year bonus of $7,000.
Experienced hires and MBA students are hired at middle management level at these firms as well as promote the majority (but not all) of their junior consultants.
To qualify as an experienced hire candidates are normally required to have at least the same number of years experience as their junior consultants (2 years) in an equivalent consulting position or in a commercial / management industry position.
The first big jump in salary is from junior consultants to middle management. In the United States middle management salaries start at $150,000 and go up to $200,000, an increase of approximately 50% from entry level salaries.
Bonuses at middle management level jump significantly and US-based consultants in this bracket can expect to earn anywhere between $50,000 and $70,000 in additional income every year through their bonus.
Partners and Directors
The highest earners in the consulting industry sit at the top of the pyramid. These senior consultants are considered to be experts in their industry and as consultants. They are responsible for winning work and are the salesforce of the firm.
The partnership structure of the firms means that partner and director remuneration is heavily tied to the revenue they generate, just like most sales teams. The more revenue they generate, the more income they take home at the end of the year.
The average remuneration per partner at McKinsey, Bain and BCG is also dependent on tenure. Making partner is not the top of the pyramid and partner remuneration increases the longer the tenure of the consultant and service to the firm.
The average annual remuneration of partners at McKinsey, Bain and BCG is a base salary of approximately $250,000 and a profit distribution of $400,000.
All three of these firms are global and each country has its own pay rate. Analysis shows that there are significant differences between salaries between countries and Germany is the country where consultants earn the most annual income.
Looking across the United Kingdom, United States, Germany and the Middle East there is distinct differences in salaries paid. On average consultants in the United States earn the highest salaries, followed by Germany and then the Middle East with the United Kingdom paying the lowest average salaries of the four geographies.
Whilst it is clear that the highest gross salaries are paid in Germany, when looking at take home salaries post tax deductions the highest salaries are being paid in the Middle East.
The firms are similar in many ways which is not surprising considering that a McKinsey partner founded BCG and a BCG partner founded Bain.
They compete for similar work, at similar prices and with similar resources so the remuneration packages at each is understandably similar.
For entry-level salary, BCG pay the highest across the globe and so for undergraduate students applying for consulting jobs it is the most lucrative option available.
Pension contributions are largest at McKinsey and there is an option to have your pension managed by the internal hedge fund management team that have a track record of superior returns than those of traditional pension funds.
Bain is likely to have the highest salary over time as they reward their top performers with rapid progression up the pyramid and so the increase in pay arrives earlier.