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Sign-on bonus, golden handcuffs, equity/share options, company stock, share save schemes, basic salary, bonus, car allowance, pension, benefits, relocation, carry and leadership cohort.
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 could be open to negotiation?
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 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 and 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.
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.
Particularly relevant if you’re joining a growing 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.
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.
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.
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.
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 the top of your band.
Larger companies can offer quite generous pension contributions. It can be hard or event impossible to negotiate an improved contribution but the range could be from:
- the 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;
- the company will double match your contribution to a certain cap (i.e, if you contribute 4% of your salary, they will put in the equivalent of 8% of your salary);
- the 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.
There are 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.
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 trips to your home 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 (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 or even all of your living costs abroad (e.g, utility bills).
This is particular to private equity and is effective equity in a portfolio company vesting on sale.
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 or conferences. 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.
Like our advice? Hear even more at one of our events:
Of the UK’s students, around one-fifth is interested in pursuing a job in the consultancy industry. What makes consulting so popular among students?
More & more professionals feel they want to do something worthwhile with their career, but are not sure about how to make the shift. Find out at this event.
At our 1st boutique consulting event with Hunch, CIL, 2020 & Advancy, we heard exclusive perspectives on the unique features of boutiques – read them here