Consulting firms tend to have pretty simple compensation packages – especially at below Partner level. So if you’re leaving consulting for ‘industry’ what elements of package could be available to you? Or, what could you negotiate into your pay package?
Consulting firms pay a basic salary and a bonus. Typically at the more junior levels bonuses range from 10-20% perhaps up to 30% for a high performer in a good year for the company. Some of the larger companies have benefits like health care and company pension contributions. Many of the smaller firms don’t even have that. So when one comes to leave consulting, one can be pretty naive as to what other companies may / could offer. Here are some elements for you to think about and you’ll see that there are plenty of building blocks to consider. The more senior the role you’re taking, the more of these elements are likely to be available / open to negotiation.
Sign-on bonus / golden hello: not hugely common but no unheard of particularly if you’re leaving your current company at a time such that you’re sacrificing a bonus that’s only a few months away.
Golden handcuffs: this can take the form of a cash lump sum or stock. The idea is that you only receive it if you stay working for the company for X number of years. Options & company stock (see immediately below) have similar commitment tie ins.
Equity / share options: particularly relevant if you’re joining a growth start-up in a relatively senior position. These generally have vesting periods i.e, you will need to stay with the company for a certain period of time in order for the equity / options to become yours.
Company stock: like options but for larger corporates. The company will give you X number of shares per year (generally X is a multiple of your basic salary). Again, these shares have a vesting period – generally 2 or 3 years – before they are yours and can be sold (or held). In that way they are commonly referred to as Long Term Incentive Programmes (LTIPs). For very senior positions – like FTSE100 CEOs – the vast majority of annual compensation will be in stock.
Share-save schemes: these allow you to buy company stock – often at a discount to market value.
Basic salary: does what it says on the tin! Often open to negotiation as companies generally have salary bands for roles dependent on the seniority categorisation (e.g, this Growth Manager role is a level 5 and the basic salary band for level 5 is £72-90k per year). Often, a company’s opening offer will be towards the bottom of a salary band which leaves them room to move – and room for you to negotiate – while keeping the seniority categorisation the same. Companies will be reluctant to bring you in on a salary right at the top of the band as it gives them no room to give you a pay rise without changing your seniority. So be wary of the knock-on effects of pushing too hard.
Bonus: tends to be related to individual and company performance. However, some companies will set a cap in your contract at a certain % of basic salary. You may be able to negotiate the cap upwards. And this cap can often be far higher than the 10 or 20% you’re used to, particularly in a company realising aggressive growth targets.
Car allowance: in the UK, most larger firms will be able to pay car allowances. This can often be taken as cash (and can therefore be treated as basic salary). Like basic salary, car allowances are often set in bands relating to seniority so you may be able to request an allowance towards / at the top of your band.
Pension: larger companies can offer quite generous pension contributions. It can be hard / impossible to negotiate an improved contribution but the range could be from: company makes all of the pension contribution (generally a % of your basic salary) and you have the option to contribute also but don’t have to; company will double match your contribution to a certain cap (i.e, if you contribute 4% of your salary, they will but in equivalent of 8% of your salary); company will match your contribution (i.e, 4%, 4%). Remember that pension contributions in the UK come out of your salary before tax so will reduce the earnings that you are taxed on.
Benefits: there’s all sorts of other things that a company can offer you. Some of these will be taxable benefits (i.e, count as something you have to pay tax on) and others not. The list includes: life assurance, critical illness cover, private healthcare cover (for you and often for your family), dental care cover, commuter cost loan, season ticket loan, gym membership, cycle to work.
Relocation: if you’re being asked to take a job abroad, these are some of the costs that a company may cover: your accommodation abroad, travel to your new place of work, shipping your stuff to your new place of work, return travel to your home country / city (i.e, x number of trips per year), private school fees for any children, daily per diem on top of your salary to recognise the potential inconvenience of having to relocate / work away from home (often the per diem amount is negotiable and also relates to an assessment of the risk / comfort of the country you’re relocating to), some / all of your living costs abroad (e.g, utility bills, travel).
Carry: this is particular to private equity and is effective equity in a portfolio company vesting on sale.
Leadership cohort: although this is not a monetary benefit, it can help your career trajectory. Lots of companies have a “top 100 leaders” or “top 250 leaders” cohort. These cohorts tend to meet once a year or so for group training / networking / a conference. If you’re entering into a manager position you may be eligible for such a cohort and might want to discuss it after an offer has been made.
I hope that’s helpful and prepares you well as you enter into package consideration / negotiation for a new role. It’s probably not an exhaustive list but does provide a good starting summary. If you’re still looking for your next opportunity be sure to join movemeon or login if you’re already a member. And if you found this article helpful you may wish to read how to negotiate your salary.
– by Rich
Ever wondered how much you are worth?
Payspective delivers your real-time salary ranking. Fast. Free. Confidential.