2015 Strategy Consulting Compensation Study January 30, 2015

Transcription

1 2015 Strategy Consulting Compensation Study January 30, 2015 Charles Aris, Inc. Wells Fargo Tower 300 N. Greene Street Suite 1800 Greensboro, NC

2 Compensation Data Key Facts Charles Aris, Inc. is pleased to present our 2015 Strategy Consulting Compensation Study. Key facts about the data compiled for the study are as follows: All compensation data points for this study were collected between January 1, 2014 and December 31, It s important to note that most firms raise base salaries for their consultants in the December/January timeframe, and the most recent set of raises (i.e. those that took place approximately one month ago) will not be reflected in this study. In addition, one Big 3 firm provided an additional one-time special raise in October of 2014, which effectively resulted in two raises during the calendar year. Given that we collect data points throughout the year, only a small percentage of data points that reflect this special increase will be incorporated in this study. Most firms pay year-end bonuses in the December-Januarytimeframeaswell. Thetarget bonus percentages indicated at the top of each bar in slide four reflect what consultants expected to receive at year-end and are not verified after the fact. Compensation data points are self-reported by consultants and are not verified through any other means. While this implies that consultants have the opportunity to be less than honest about their compensation, we feel extremely confident that the data are accurate given the consistency in responses we received across consultants and firms. We eliminated a small percentage (less than 5%) of outlier data points that would have adversely skewed the data. We also excluded Partner compensation data points from this study. During the course of 2014 we spoke with many Partners with graduation dates in the range of our study, but their higher compensation dramatically skewed the data to a point where it would no longer be useful for our clients. 2

3 Input Data by Consulting Firm 100% 621 Total Data Points Parthenon-EY^ L.E.K. Consulting Oliver Wyman During the course of 2014, Charles Aris recruiters spoke with over 3,500 strategy candidates, of which over 99% were actively employed with industry leading consulting firms, corporations and private equity firms. 75% 50% A.T. Kearney Strategy&* Monitor Deloitte Bain & Company Detailed discussions around compensation happen only on an as needed basis (once a candidate expresses interest in moving forward with an opportunity). For the purpose of this study we have distilled only those compensation data points from candidates that were actively employed by leading consulting firms. 25% 0% The Boston Consulting Group McKinsey & Company Input Data By Consulting Firm *Formerly Booz & Co., now owned by PwC ^Formerly The Parthenon Group, now owned by EY Our 2015 Strategy Consulting Compensation Study is driven by 621 data points from consultants across nine firms. 63.3% of the data points come from The Big Three firms: McKinsey & Company, The Boston Consulting Group and Bain & Company. Of the 621 total data points, 379 come from post- consultants and 242 come from pre-/undergraduate consultants. 3

4 Average Compensation by Graduation Year Average 2014 Compensation* for Strategy Consultants by Graduation Year $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $85,670 $11,488 $74,182 $95,500 $12,840 $82,660 $117,147 $19,450 $97,697 $140,960 $28,778 $112,182 $173,974 $35,456 $138,518 $193,791 $43,133 $150,658 $214,640 $51,616 $163,024 $233,755 $64,599 $169,157 $259,606 $75,456 $184,150 $270,443 $80,192 $190,252 $305,287 $98,245 $207,042 $ Undergrad 2012 Undergrad 2011 Undergrad 2010 Undergrad N = Std Dev.** = $4.9k $16.5k $31.9k $46.1k $13.0k $30.5k $26.9k $40.2k $59.2k $47.2k $45.4k Median** = $85.9k $91.8k $110.2k $137.4k $170.2k $185.6k $212.9k $229.5k $256.8k $275.3k $300.5k % Change1yr^ = N/A 17.6% 30.5% 23.8% N/A N/A 19.0% 15.1% 14.7% 5.2% 14.0% % Change2yr^^ = N/A N/A 58.5% 55.9% N/A N/A N/A 28.3% 28.9% 13.7% 16.7% *Base salary plus target annual bonus only. Does not include retirement contribution, profit sharing, sign-on, car allowance or other such cash equivalents. **Standard Deviation and Median numbers are calculated for base salary plus target annual bonus, i.e. the number at the top of each column Pre-Partner data points only, i.e. we excluded compensation data points from anyone at Partner level or equivalent as it skewed the data significantly. ^% Change1yr equals the percentage change in total annual compensation (base salary plus target annual bonus only), from 2013 to 2014, for that graduation year. ^^% Change2Yr equals the percentage change in total annual compensation (base salary plus target annual bonus only), from 2012 to 2014, for that graduation year. 4

5 Average Increase in Annual Compensation 30% 25% 20% 15% 10% 5% 0% Post- Average Increase in Annual Compensation Across All Post- Graduation Years 18.0% 10.4% 9.2% 13.1% The average post- strategy consultant experienced a 13.1% increase in compensation in 2014, a noticeable increase over the previous two years. The stronger percentage increase relative to previous years was driven by consulting firm retention efforts, which was driven by an increase in demand for strategy talent from corporations, private equity firms and other professional services firms. Pre-/Undergraduate consultant compensation grew by over twenty percent for the third year in a row. The available supply of pre- consultants is less than post-s, as pre-s have a wider set of opportunities, including attending school. Corporations and private equity firms often provide pre- candidates with a double digit raise upon recruiting them, and therefore the consultantancies need to do the same to retain these individuals. 30% 25% 20% 15% 10% 5% 0% Pre- Average Increase in Annual Compensation Across All Pre-/Undergraduate Graduation Years 17.9% 24.1% 23.9% 24.1%

6 Trends in Compensation Expectations During the course of 2014 Charles Aris, Inc. noticed the continuation of a trend in the marketplace: consultants are expecting more in total compensation from Corporate America than what they are currently making in consulting (and even more than what we saw in 2012 and 2013). Consultant compensation expectations when joining Corporate America* % LESS than consulting BREAKEVEN with consulting 10-20% MORE than consulting 5-10% MORE than consulting 5-10% MORE than consulting 10-20% MORE than consulting The continuation of multiple factors are behind this trend: Most consulting firms remain effectively at capacity and therefore are paying strong salaries and bonuses to retain talent. Consulting firms that acquired a peer firm instituted retention bonuses, some of which will pay out in 2015 and beyond, and consultants at those firms expect corporations to pay more to offset those future payouts. One Big 3 firm provided a one-time mid-year raise in 2014, which effectively resulted in two raises during the calendar year, and at least one other firm has announced plans to follow suit in Knowing that they are stepping off the steep compensation curve that consulting provides, consultants strive to get out ahead of the curve so as not to lose their strong compensation position after only one year of service in Corporate America. With so many Corporate America opportunities competing for their services, consultants believe that they have the luxury of saying no to any one opportunity with the expectation that another, higher paying opportunity is right around the corner. *Source: Charles Aris, Inc. anecdotal data. 6

7 2014 Sample Industry Offers Below you will find a subset of 2014 offers that were accepted by Charles Aris candidates from Tier 1 Strategy Firms. Education Consulting Firm Consulting $$ (Base + %) Industry Offer* Offer Company Description B.S Top 9 $80k + 8% $90k+14% Strategy Manager Corporation B.S Top 9 $83k + 40% $100k+10%+$10kS Senior Analyst Corporation Pre Post B.S Big 3 $90k + 35% $100k+100% Associate Private Equity B.S Big 3 $97k + 29% $135k+41% Strategy Analyst Hedge Fund 2012 Big 3 $145k + 30% $160k+20%+$20kE Sr. Manager Corporation 2012 Big 3 $145k + 20% $150k+20%+$20kS+$20kE Sr. Manager Corporation 2012 Big 3 $140k + 30% $155k+25%+$20kS Associate Corporation 2012 Top 9 $165k + 40% $165k+30%+$10kS+$50kE Director Corporation 2011 Top 9 $140k + 7% $155k+25%+$16kS Associate Corporation 2010 Top 9 $180k + 35% $200k+23%+$35kE Director Corporation 2009 Top 9 $160k + 45% $170k+35% AVP Corporation 2009 Big 3 $210k + 40% $200k+75% Director Hedge Fund 2008 Top 9 $150k + 17% $175k+20%+$20kS Sr. Manager Corporation 2008 Top 9 $210k+5%+$13kE $190k+25%+$30kS+$57kE Director Corporation 2007 Big 3 $180k + 60% $205k+35%+$40kS+$75kE Sr. Director Corporation *First two numbers equal base salary plus target annual bonus (%). S=Sign-On bonus. E= Grant. Does not include other cash equivalents. EXAMPLE: $160k+25%+$15kS+$40kE = Base of $160k, Target of 25%, Sign-On of $15k, Grant of $40k 7

8 2014 Offer Ranges by Year Below you will find 2014 corporate offer ranges*, at the 25 th, 50 th and 75 th percentiles, for each Post- graduation year Associate Manager Sr Manager Director Sr Director V.P. Base $135,000 $150,000 $165,000 Base $175,000 $185,000 $195,000 10% 20% 30% 25% 30% 35% $0 $0 $20,000 $30,000 $45,000 $60,000 $148,500 $180,000 $234,500 $248,750 $285,500 $323, Manager Sr Manager Director Director Sr Director V.P. Base $150,000 $165,000 $180,000 Base $180,000 $190,000 $200,000 15% 25% 35% 30% 35% 40% $0 $20,000 $40,000 $35,000 $55,000 $75,000 $172,500 $226,250 $283,000 $269,000 $311,500 $355, Sr Manager Director Sr Director Sr Director V.P. V.P. Base $160,000 $175,000 $190,000 Base $190,000 $205,000 $220,000 20% 30% 35% 35% 45% 55% $20,000 $35,000 $50,000 $50,000 $75,000 $100,000 $212,000 $262,500 $306,500 $306,500 $372,250 $441,000 *Source: Charles Aris, Inc. anecdotal data. 8

9 2014 Offer Ranges by Undergraduate Year Below you will find 2014 corporate offer ranges*, at the 25 th, 50 th and 75 th percentiles, for each Pre-/ Undergraduate graduation year Pre- Base Analyst Analyst Sr Analyst $80,000 $90,000 $100,000 5% 10% 15% $0 $0 $0 $84,000 $99,000 $115, Pre- Base Analyst Sr Analyst Associate $90,000 $100,000 $110,000 10% 15% 20% $0 $0 $0 $99,000 $115,000 $132, Pre- Base Sr Analyst Associate Sr Associate $100,000 $110,000 $120,000 15% 20% 25% $0 $0 $15,000 $115,000 $132,000 $165,000 *Source: Charles Aris, Inc. anecdotal data. 9

10 Consultant Competencies The matrix below defines the expected competencies for consultants at each level for the 2014 recruiting year. at Consulting Firm* Analyst Associate Manager Principal Partner Years of Experience 1-3 yrs Pre- 1-2 yrs Post- 3-4 yrs Post- 5-7 yrs Post- 8+ yrs Post- Current Education undergraduate degree and earlier Breakdown of Consultant Competencies by Position (Consultant Competencies defined on next slide) 100% 75% 50% Case Cracking Project Mgmt. Influence/Lead Case Cracking Project Mgmt. Influencing/ Leading Case Cracking Selling/ Influencing/ Leading Selling/ Influencing/ Leading 25% Analytics/ Slide Building Analytics/ Slide Building Project Mgmt. Case Cracking Case Cracking Analytics/Slides Project Mgmt. Project Mgmt. Analyst Associate Manager Principal Partner *Note that titles differ significantly by firm. These are meant to serve as generic titles that work across all firms. 10

11 Consultant Competency Definitions Senior Level Competencies Selling/ Influencing/ Leading Generate revenue by selling consulting services. Establish vision, frame key issues and set high level strategy. Influence key executives and stakeholders to support significant change. Case Cracking Understand the problem at a more granular level and establish a hypothesis driven approach through which a solution can be derived. Effectively, solve the problem. Write the storyline. Project Management Understand strategic direction as set by the hypothesis driven approach, set milestones, scope analysis, assign resources, manage execution and report findings. Serve as quality control lead. Junior Level Competencies Analytics/ Slide Building Conduct quantitative analyses in a defect-free manner. Possess mastery of Microsoft Excel. Leverage Microsoft PowerPoint to create impactful, concise, and defect-free slide loops. 11

12 Charles Aris, Inc. Strategy Practice Charles Aris, Inc. is a national executive search firm that was founded in The Strategy & Business Development division at Charles Aris is led by Chad Oakley, a former Bain & Company consultant and Wharton. Since its inception in 2003 the Strategy & Business Development division has placed over three-hundred candidates, at multiple levels, including Vice President, Director, Manager and Analyst. The division's client base falls into three categories: the Corporate Strategy teams of industry leading Fortune 500 companies, the investment and portfolio management teams of leading Private Equity firms, and professional services firms, including consultancies and the like. The candidates that we place typically work for top tier strategy consulting firms and possess undergraduate and graduate degrees from the world's leading educational institutions. For more information, please contact any of our team members as shown on this page or visit Chad Oakley President ext chad.oakley@charlesaris.com Jody Karavanic Senior Practice Leader ext jody.karavanic@charlesaris.com Steven Stewart Senior Practice Leader ext steven.stewart@charlesaris.com Caroline Wilson Senior Practice Leader ext caroline.wilson@charlesaris.com Jillian Jitima Project Manager ext jillian.jitima@charlesaris.com 12