When it comes to pay, consulting firms are the odd ones out. But if you’ve only ever been a consultant, you might not realise what a strange breed of firm they are in regards to comp. That can put you at a disadvantage when it comes to leaving consulting and the inevitable need to negotiate salary, including progression, that goes with that. If you’ve already left consulting, this article is still relevant to you too! And there are other articles you might find interesting on this blog.
Let me explain…
Why are consulting firms odd?
Consultancies are extremely transparent about pay. You join at a certain level and are confident that everyone at your level has the same package. Bonuses may well vary on performance. But that’s transparent too – there’s normally a pretty well thought out and understood system.
And if you stand back and stare up the pyramid, you know exactly when to expect to get promoted (providing you are performing well) and, when you get promoted, what you’ll get paid. If you are an Analyst, you know what the Consultants/Associates are on. And they – and you too most likely – know the same for Managers. And so on and so forth.
Packages tend to be pretty simple too. Salary + bonus. The other bits of a salary package (life insurance, health) vary between firms, but generally not within firms at the same level. You get what you’re given (and that tends to be pretty good).
So why’s this a bad thing?
In itself, it’s not. It’s a great thing. Pay jumps up pretty steeply with progression. And you can plan financially well into the future (cue the big mortgage and the fast car stereotypes).
The issue is that almost every other company does not work like that. So you can go into a negotiation blind-sided as to what you should be/can be negotiating into your compensation package. I’ve written another blog post which goes through all elements of package and you can find that here. The important point I wanted to make in this post is that …
Salary progression is almost always overlooked as something to discuss before joining a company.
I’ve spoken to a great number of people recently who feel fobbed off by mediocre pay rises despite great performance. There’s always some excuse as to why they haven’t been given what they expected and what they know their market worth to be. Which is why it’s helpful to be able to reference a clear discussion on salary progression, had before joining the organisation. Not only is this useful for you (for financial planning) but it’s a concrete reference point year on year after joining. Ideally, you’d get something in writing.
Remember, when a company has offered you a job but you are yet to accept, you have maximum good will and bargaining power. Suddenly, they are trying to convince you to join (the inverse of the early interview process). This power diminishes as soon as you join, which is why so many organisations only change pay when someone has a competing offer on the table.
Objectively, this doesn’t make sense as a good way to retain your best talent. But the reality of the situation, more often than not, is that a company doesn’t wake up to your true value until you’re a definite flight risk.
A pre-joining conversation is by no means a silver bullet. But it’s better than nothing and it’s not an unreasonable question to ask, in the context of needing to be able to plan financially (mortgage, child care, etc). Also, the financial gain of better progression generally far outweighs the starting salary number – which is what most people focus on in these conversations.
In the same conversation, you can also discuss other elements you’d want in your starting package and how these will progress too. Remember, ~90% of CEO pay is non salary. You might also ask what bonus % is generally awarded for different levels of performance so you have a concrete reference point for that too.
– by Rich
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