MBB firms raise pay as talent war rages
The world’s most prominent strategy consultancies are stepping up their efforts to attract top talent, amid record inflation and booming demand for advice in a turbulent economy. McKinsey & Company, Bain & Company, and Boston Consulting Group have each beefed up their pay scales in recent months – as they hope to onboard top advisers from smaller firms.
As many employers ignore calls to raise wages amid the cost-of-living crisis, firms risk seeing an exodus of talent in the coming months. A study from KPMG earlier in 2022 suggested that a third of workers in Britain alone were set to look for a new career elsewhere, in the hope of landing an inflation-proof salary.
This presents a major opportunity to the largest professional services firms in the world, who – on top of offering up diverse, impactful and interesting work to new joiners – have generalist entry requirements, and can offer higher rates of pay than mid-market competitors. As a result, the three largest strategy firms in the world – McKinsey & Company, Bain & Company and Boston Consulting Group (BCG) – are looking to cash in on the opportunity, by unveiling one of the biggest rounds of pay rises for new hires in more than two decades.
While the firms are private companies, and do not release salary scales, sources close to the story told the Financial Times that the annual base salaries of MBA graduates in the US have risen drastically. The business newspaper stated this had seen a raise from $175,000 to between $190,000 and $192,000 – as the MBB trio looks to recruit graduate candidates by insulating them from the impacts of inflation.
At the same time, the firms are moving to ensure that inflation does not lead to an exodus of their own staff, looking for better deals elsewhere. The Financial Times reported that top performers will be “in line to receive more than $250,000 in their first year when performance-related and signing bonuses are included” – in a move which will boost retention among the company’s up-and-coming professionals.
War for talent
Speaking to the newspaper about the apparent pay increases, Partner and Head of Consultant Recruiting at Bain, Keith Bevans, noted that consultancies were generally looking to boost pay and benefits, amid a “very hot talent market”. Bevans added that due to the consulting industry’s rapid growth in recent years, the competition Bain faces “is broader than it’s ever been,” and that during recruitment events on universities, the firm meets possible recruits who are also interested in a number of other sectors, “thinking of starting their own companies… or they’re looking at going right into private equity.”
That is not to say pay is the only basis in which the MBB is looking to up the ante, however. Workplace culture, ESG policies and reputational blots also play a role, and the firms are looking to address them too. While McKinsey usually receives a million applications for 10,000 jobs each year, its role in the sales of addictive opioids in the US has deterred some from joining the company. In response, it is looking to do more to show it will provide a positive environment for new talent.
Speaking to the Financial Times, the firm stated, “While compensation remains important, our research shows that to attract, retain and develop talented colleagues, considerations such as clear career growth opportunities, flexibility and purpose matter just as much.”
Reportedly, the scramble for talent has seen base salaries for graduates joining Bain and McKinsey in the US will hit $112,000 a year – a 12% rise – according to sources close to the story. At the same time, BCG is offering around $110,000, according to a person who had seen a job offer from the firm, who spoke to the Financial Times.
