Negotiating a job offer is always a tricky task. You don’t want to ask for too much and ruin your reputation before Day 1. Yet, at the same time, you don’t want to be compensated less than what you are worth.
If you find yourself in a position to negotiate a consulting offer, there are a few options you can consider. However, the extent to what you can ask for depends on your previous experiences and situation.
Coming From Undergrad
You may be coming out of your undergraduate or business school years and heading straight into consulting. The short answer is that you will not have any negotiating power.
Let’s face it, you’re at the bottom of the totem pole. Regardless of how great of a candidate you are, there are thousands of other candidates willing to take your place for the same pay. You have very little room to negotiate. Even if you have an offer from McKinsey, Bain, and BCG, you may not be able to leverage your other offers to negotiate for an increase in compensation at another top firm.
There is good news, however! Receiving a job offer in consulting means your compensation will be extremely competitive and on the higher end when compared to most of your peers. Management consulting is an extremely challenging industry to break into, so we suggest not focusing on pay and instead on your accomplishment of receiving an offer and your forthcoming professional development. You have the rest of your career ahead of you to think about making more money!
When coming into consulting with experience, you have some leverage depending on your background. As an overarching rule, the more senior your starting position is, the more room you have to negotiate. Below are four main options to consider when negotiating a job offer:
1. Ask for a Higher Position
Top consulting firms like McKinsey, Bain, and BCG all have well-established salary structures. These entrenched structures are rather inflexible before the partner level to ensure equitable compensation. This makes each firm a well-oiled machine with less complications. There will be a limited salary range for the level at which you’re coming into the firm.
As a result, one option is to negotiate for a higher starting position. You can only pursue this path if you feel that your previous experiences make you overqualified for your offer in hand. For instance, you can negotiate an offer to Project Leader instead of Senior Consultant if you feel your experience warrants it. You should consider pursuing this type of conversation before you have your final offer, however.
Of course, with a higher position comes additional expectations, so ensure that you have done your homework to understand what you are asking for.
2. Push for Faster Acceleration
If you received an offer during off-cycle recruiting, are making a lateral move within consulting, or are joining a firm as an experienced hire, you may be able to negotiate for a faster acceleration to your next position.
At consulting firms, most promotions occur at set times during the year. Do your research by speaking with consultants at the firm to determine these cycles and negotiate for faster acceleration to the next promotion. For instance, with an offer to be an Associate at McKinsey you could ask to be considered as a Senior Associate (i.e., higher tenure) and therefore closer to an Engagement Manager promotion. To make this work, you’ll need the background and experience to move through the full tenure of your starting role faster.
3. Ask for More Upfront Money
There are two main ways to negotiate for higher upfront compensation.
If you are moving cities for your job, it’s reasonable to ask for a relocation bonus (or one that’s higher than the one already offered). Be prepared to provide solid reasons for the costs incurred while moving to back up your request.
Though signing bonuses are usually set and standard, you can ask for an increase if you feel you are being underpaid. If you have had previous jobs or other current offers, leverage these data points to ask for a higher signing bonus.
4. Ask for More Base / Bonus
The most common thought that comes to mind when negotiating a job offer is asking for an increase in your base salary or future bonus. As previously stated, since consulting firms have established hierarchies and compensation structures, this is usually difficult to achieve without either asking for a higher position or pushing for faster acceleration. And future bonuses are usually based on merit and performance and will not be committed to ahead of time.
However, if you happen to be taking a pay-cut to join the firm, you can leverage your previous compensation data as you ask for an increase in your base or bonus comp structure. Make sure your ask is reasonable and that you do your research before you start the negotiating process.
Negotiating A Consulting Job Offer- YouTube Video
Negotiating A Consulting Job Offer – YouTube Transcription
How to negotiate a job offer. I’ve been waiting for ages to do a video like this because whether you are new to consulting, just finding it for the first time, or you have an offer in hand, this is one of the most common questions that we get, and there is so much misinformation around it. Now, negotiating a job offer in general you should do in every situation. Ask for more: ask for more base, ask for more bonus, ask for more position, ask for more of all things. In fact, many firms bake in a negotiation around your initial offer when they make an offer to you. However, in consulting, the playing field is a little bit different, so I’m going to walk through different positions and how in each position you should handle negotiations for consulting salaries. I’m Jenny Rae Le Roux, the Managing Director of Management Consulted, and if you want to work one-on-one with somebody to prepare a negotiation, we would love to work with you. We offer coaching here, or you can also just shoot us an email at [email protected].
How Consulting Firms Negotiate
So let’s walk through some of the different information where we’re going to talk about how you negotiate a job offer in consulting. First of all, as an undergrad or an undergrad intern, you have absolutely no way to negotiate for 95% of your comp package. What that means is that the base that they are going to pay you is non negotiable. And you basically have no other options. If you’re going to investment banking versus consulting, they’re going to say have a great time. You’re going to hate it there, we are going to love our life here, you’re going to end up in a good place, but don’t worry about it. They are not even comparable. If you try to compete firms against one another, they will say this is our firm, this is who we are and this is what we pay. So at the consulting firm level, there is no gender gap disparity based on who negotiates and who doesn’t. There is really no issue with how you negotiate because the focus is just here is the offer letter, here is how it’s going.
What You Can Negotiate
The 5% that you can negotiate for is just what the non-tangibles are. So, for example, if you are thinking about a start date, usually if you accept early, they are going to give you the first choice of start dates. But if you have a project that you want to do, or some travel that you want to go through, you can often negotiate your start date. You might be able to negotiate whether or not something historically factored in, if you’re going in as an experienced hire. So let’s say you worked for two years in the Peace Corps, and they are saying that counts for zero. Maybe you get it to count for six months. All that it means is that you are on a different promotion cycle, but not different comp process. So overall, really, basically nothing that you can do at the intern and undergraduate level.
Be Sure And Negotiate This
At an MBA level, it becomes a little bit different because as a summer intern, you have additional things, like your office location that might really matter to you, and at the MBA or the postgrad level, you’ll find more people that have a significant other that they are working around, and consulting firms can help with that a little bit. You’ll also find some people that are working at an international location and they want to change offices post internship. So our recommendation is that you take an offer that is in a place that you would want to work only if you are really happy to work there. You cannot try to negotiate it later, so if you want to ask for the intangibles at the MBA level, you need to do that on the early side of the conditions.
Can MBAs Negotiate?
When you go through the MBA full-time process, or MBA internships, there is no comp discussion. Again, the base comp is the base comp, and they are like look, you may have had this many years of previous experience, and this many years of this, but we are hiring you out of an MBA program and everybody gets paid the same. We are transparent about it. This is a team environment. So the firms are very strong about that. But, signing bonuses can have timing tiers to them. The earlier that you sign, the more you get to keep out of the signing bonus. You might also have performance compensations. But honestly, in the core, other than the same things like your start date and also the office location, you don’t have a lot to negotiate on when you are at the MBA level.
Experienced Hire Negotiations
When it becomes super interesting is when you are an experienced hire. Because there, the firms don’t have anybody to keep you equal with. Now, they are still finding an importance in transparency and in making sure that that the team is the team, and there is no hotshot who’s coming in from the outside who’s making twice as much as anybody else. There are basically four levels at a consulting firm, and inside those levels there is the number of years that you’ve been there. And basically, everyone is on the same pathway. So the major thing that you can negotiate for at the experienced hire level is how many years down the pathway you should get counted, and that will affect your base comp, your bonus target, and even potentially 401k match and other pieces of the comp package.
Consulting Negotiations – Or Lack Thereof
Overall, in consulting the things that you can always negotiate are those intangibles, the things that are not directly related to the numbers of the comp, and then only when you are an experienced hire can you do a lot for the negotiations. If you’ve got questions, we’ve got lots more data on both how much firms are paying to make sure you’re getting a fair deal, and also making sure that you’ve got all of the information that you need to appropriately negotiate a salary without breaking down relationships. If you’ve got questions about negotiations, or you have salaries that you are trying to benchmark that are not published in our salary report, please reach out to us, or come visit us at managementconsulted.com.