Talent trends across the top-tier strategy consulting firms - 2022 and beyond
Written by Dominic Moore
As Australia emerged from the pandemic in 2022, it experienced a strong bounce of economic recovery and growth.
As markets re-opened and consumer confidence returned, leading to a substantial increase in demand for consulting advice from companies across topics such as growth strategy, M&A, digital transformation and sustainability.
At the same time, the reduced migration of international talent, as a consequence of COVID border closures, meant a seriously diminished talent pool, plus existing consulting talent was being lured to scaling technology companies, Private Equity, Venture Capital and Corporate roles.
This confluence of events made 2022 the greatest war for consulting talent we have seen in a decade, with the hiring appetite across Australia's seven largest strategy consulting firms (McKinsey, Bain, Boston Consulting Group, L.E.K., Kearney, Strategy& and Partners in Performance) reaching record levels.
These factors made talent attraction and retention major focus areas for consulting firms and internal talent teams in 2022. To attract people, there was the return of significant sign-on and guaranteed year-end bonuses, together with a focus on hiring the ‘boomerang consultant’ - bringing someone back to the firm who had previously left. To retain people, generous salary increases of 8-10% on base salaries, together with significant increases in bonuses and benefits, were paid.
Despite these attempts to keep people, there was still high attrition across the MBB (McKinsey, Bain and Boston Consulting Group) firms in 2022, with rates of 19% at McKinsey, 17% at BCG and 11% at Bain. In fact, these MBB firms saw more than 250 staff depart. Across the other four firms, more than 140 staff departed, with attrition rates ranging from 22% at Strategy& to 13% at L.E.K. Whilst many departures from these four firms moved for roles outside consulting, a large number were hired by MBB firms, offering individuals the opportunity to step up and, at the same time, get paid more.
With such large staff losses, there was the need to hire to replace those who had left. Plus, with increased demand for consulting services, the need to hire beyond this too. As a result, the MBB firms hired more than 400 staff (hiring at least 100 new people each), and the other four firms nearly 200 staff, in 2022.
By the end of the year, the combined seven firms had a total headcount of just over 2,400, a net increase of 220 people from 2021, with increases of 11% across the MBB firms and 6% across the other four firms.
Looking into 2023, we see things returning to pre-pandemic “normal” levels, but with an added caution indicating a slowing demand for consulting firm services. As with any cycle, there will likely be an increase in cost reduction, performance improvement and transformation work - but whether this makes up the gap, only time will tell. With the salary increases of 2022 inflating cost bases, and less attrition given fewer opportunities outside of consulting, we expect the war for consulting talent to ease. Consequently, we expect consulting firm salaries and headcount to, most likely, remain static in 2023.