charles aris strategy consulting compensation … strategy consulting compensation study january 30,...

This information is confidential and was prepared by Charles Aris, Inc solely for the use of our client; it is not to be utilized by any third party without our prior consent

Compensation Data Key Facts

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All compensation data points for this study were collected between January 1, 2014 andDecember 31, 2014. It’s important to note that most firms raise base salaries for theirconsultants 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. Inaddition, 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 datapoints throughout the year, only a small percentage of data points that reflect this specialincrease will be incorporated in this study.

Most firms pay year-end bonuses in the December-January timeframe as well. The targetbonus percentages indicated at the top of each bar in slide four reflect what consultantsexpected 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 anyother means. While this implies that consultants have the opportunity to be less thanhonest about their compensation, we feel extremely confident that the data are accurategiven the consistency in responses we received across consultants and firms.

We eliminated a small percentage (less than 5%) of outlier data points that would haveadversely skewed the data. We also excluded Partner compensation data points from thisstudy. During the course of 2014 we spoke with many Partners with MBA graduation datesin the range of our study, but their higher compensation dramatically skewed the data to apoint where it would no longer be useful for our clients.

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:

Copyright 2015 Charles Aris, Incorporated. All rights reserved. Not to be utilized by any third party without the prior consent of Charles Aris, Incorporated.


Input Data by Consulting Firm

3

0%

25%

50%

75%

100%

McKinsey & Company

Parthenon-EY^

621 Total Data Points

Input Data By Consulting Firm

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.

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.

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-MBA consultants and 242 come from pre-MBA/undergraduate consultants.


Bain & Company

Strategy&*

Oliver WymanA.T. Kearney

L.E.K. Consulting

The Boston Consulting Group

Monitor Deloitte

*Formerly Booz & Co., now owned by PwC^Formerly The Parthenon Group, now owned by EY


Average Compensation by Graduation Year

4

Average 2014 Compensation* for Strategy Consultants by Graduation Year


$300,000

$50,000

$100,000

$150,000

$200,000

$250,000

2011Undergrad

2012MBA

2011MBA

2010MBA

2009MBA

2008MBA

N = 22 137 61 22 40 107 75 63 40 28 26Std Dev.** = $4.9k $16.5k $31.9k $46.1k $13.0k $30.5k $26.9k $40.2k $59.2k $47.2k $45.4kMedian** = $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%

2012Undergrad

2013Undergrad

$02013MBA

$173,974

$138,518Salary

$35,456Bonus

$193,791

$150,658Salary

$43,133Bonus

$214,640

$163,024Salary

$51,616Bonus

$233,755

$169,157Salary

$64,599Bonus

$259,606

$184,150Salary

$75,456Bonus

$270,443

$190,252Salary

$80,192Bonus

$305,287

$207,042Salary

$98,245Bonus

$85,670

$74,182Salary

$95,500

$82,660Salary

$117,147

$97,697Salary

$140,960

$112,182Salary

2010Undergrad

2007MBA

$28,778Bonus

$19,450$12,840

$11,488

*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.

† †


Average Increase in Annual Compensation

5Copyright 2015 Charles Aris, Incorporated. All rights reserved. Not to be utilized by any third party without the prior consent of Charles Aris, Incorporated.

2011 2012 2013 2014

18.0%

10.4% 9.2%13.1%

0%

15%

20%

25%

30%

2011 2012 2013 2014

17.9%

24.1% 23.9% 24.1%

Post-MBAAverage Increase in Annual Compensation

Across All Post-MBA Graduation Years

Pre-MBAAverage Increase in Annual Compensation

Across All Pre-MBA/Undergraduate Graduation Years

10%

5%

0%

15%

20%

25%

30%

10%

5%

The average post-MBA 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-MBA/Undergraduate consultant compensation grew by over twenty percent for the third year in a row.

The available supply of pre-MBA consultants is less than post-MBAs, as pre-MBAs have a wider set of opportunities, including attending MBA school.

Corporations and private equity firms often provide pre-MBA candidates with a double digit raise upon recruiting them, and therefore the consultantancies need to do the same to retain these individuals.


Trends in Compensation Expectations

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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).


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 2015.

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.

The continuation of multiple factors are behind this trend:

*Source: Charles Aris, Inc. anecdotal data.

Consultant compensation expectations when joining Corporate America*

2009 2010 2011 2012 2013 2014

10-20%LESSthan

consulting

BREAKEVENwith

consulting

10-20%MOREthan

consulting

5-10%MOREthan

consulting

5-10%MOREthan

consulting

10-20%MOREthan

consulting


7

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 + Bonus%) Industry Offer* Offer Title Company

Description

B.S. 2013 Top 9 $80k + 8% $90k+14% Strategy Manager Corporation

B.S. 2012 Top 9 $83k + 40% $100k+10%+$10kS Senior Analyst Corporation

B.S. 2012 Big 3 $90k + 35% $100k+100% Associate Private Equity

B.S. 2011 Big 3 $97k + 29% $135k+41% Strategy Analyst Hedge Fund

MBA 2012 Big 3 $145k + 30% $160k+20%+$20kE Sr. Manager Corporation

MBA 2012 Big 3 $145k + 20% $150k+20%+$20kS+$20kE Sr. Manager Corporation

MBA 2012 Big 3 $140k + 30% $155k+25%+$20kS Associate Corporation

MBA 2012 Top 9 $165k + 40% $165k+30%+$10kS+$50kE Director Corporation

MBA 2011 Top 9 $140k + 7% $155k+25%+$16kS Associate Corporation

MBA 2010 Top 9 $180k + 35% $200k+23%+$35kE Director Corporation

MBA 2009 Top 9 $160k + 45% $170k+35% AVP Corporation

MBA 2009 Big 3 $210k + 40% $200k+75% Director Hedge Fund

MBA 2008 Top 9 $150k + 17% $175k+20%+$20kS Sr. Manager Corporation

MBA 2008 Top 9 $210k+5%+$13kE $190k+25%+$30kS+$57kE Director Corporation

MBA 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=Annual Equity Grant. Does not include other cash equivalents.EXAMPLE: “$160k+25%+$15kS+$40kE “= Base Salary of $160k, Target Annual Bonus of 25%, Sign-On of $15k, Annual Equity Grant of $40k

PostMBA

PreMBA

2014 Sample Industry Offers



2014 Offer Ranges by MBA Year


Below you will find 2014 corporate offer ranges*, at the 25th, 50th and 75th percentiles, for each Post-MBAgraduation year.

2012 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Associate Manager Sr Manager

$135,000 $150,000 $165,000

10% 20% 30%

$0 $0 $20,000

$148,500 $180,000 $234,500

2011 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Manager Sr Manager Director

$150,000 $165,000 $180,000

15% 25% 35%

$0 $20,000 $40,000

$172,500 $226,250 $283,000

2010 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Sr Manager Director Sr Director

$160,000 $175,000 $190,000

20% 30% 35%

$20,000 $35,000 $50,000

$212,000 $262,500 $306,500

2009 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Director Sr Director V.P.

$175,000 $185,000 $195,000

25% 30% 35%

$30,000 $45,000 $60,000

$248,750 $285,500 $323,250

2008 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Director Sr Director V.P.

$180,000 $190,000 $200,000

30% 35% 40%

$35,000 $55,000 $75,000

$269,000 $311,500 $355,000

2007 MBATitle

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Sr Director V.P. V.P.

$190,000 $205,000 $220,000

35% 45% 55%

$50,000 $75,000 $100,000

$306,500 $372,250 $441,000



2014 Offer Ranges by Undergraduate Year


Below you will find 2014 corporate offer ranges*, at the 25th, 50th and 75th percentiles, for each Pre-MBA/ Undergraduate graduation year.

2012 Pre-MBA

Title

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Analyst Analyst Sr Analyst

$80,000 $90,000 $100,000

5% 10% 15%

$0 $0 $0

$84,000 $99,000 $115,000

2011 Pre-MBA

Title

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Analyst Sr Analyst Associate

$90,000 $100,000 $110,000

10% 15% 20%

$0 $0 $0

$99,000 $115,000 $132,000

2010 Pre-MBA

Title

Base Salary

Annual Bonus

Annual Equity

Total Package

25th 50th 75th

Sr Analyst Associate Sr Associate

$100,000 $110,000 $120,000

15% 20% 25%

$0 $0 $15,000

$115,000 $132,000 $165,000



Consultant Competencies

10

The matrix below defines the expected competencies for consultants at each level for the 2014 recruiting year.

Breakdown of Consultant Competencies by Position

Years of Experience

1-3 yrsPre-MBA

1-2 yrsPost-MBA

3-4 yrsPost-MBA

5-7 yrsPost-MBA

8+ yrsPost-MBA

CurrentEducation

2011-2013 undergraduate

degree

2013-2014 MBA

2011-2012 MBA

2008-2010 MBA

2007 and earlier MBA

25%

50%

75%

100%

(Consultant Competencies defined on next slide)

Project Mgmt.

Case Cracking

Analytics/ Slide Building

Analyst Manager

Influencing/Leading

Case Cracking

Project Mgmt.

Analytics/SlidesPrincipal

Selling/ Influencing/

Leading

Case Cracking

Project Mgmt.

Partner


Leading

Case Cracking

Project Mgmt.

Associate


Project Mgmt.

Case Cracking

Influence/Lead

Analyst Associate Manager Principal PartnerTitle at

Consulting Firm*

*Note that titles differ significantly by firm. These are meant to serve as generic titles that work across all firms.



Consultant Competency Definitions

11


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.


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.

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.

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.

SeniorLevel

Competencies

JuniorLevel

Competencies



Charles Aris, Inc. Strategy Practice

12

Jody KaravanicSenior Practice Leader336-378-1818 ext. [email protected]

Caroline WilsonSenior Practice Leader336-378-1818 ext. [email protected]


Steven StewartSenior Practice Leader336-378-1818 ext. [email protected]

Jillian JitimaProject Manager336-378-1818 ext. [email protected]

Chad OakleyPresident336-378-1818 ext. [email protected]

Charles Aris, Inc. is a national executive search firm that was founded in 1969. The Strategy & Business Development division at Charles Aris is led by Chad Oakley, a former Bain & Company consultant and Wharton MBA.

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 www.charlesaris.com.

charles aris strategy consulting compensation … strategy consulting compensation study january 30,...

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