Aktuelle InSights

By: Irina Kvirikadze – Senior Manager Data Integrity

The gender pay gap, i.e. the disparity in pay between people of different genders, rightly counts among the leading topics in today’s business world, even more so in Western European countries. In this context, the consulting industry is usually expected to be at the forefront of efforts to ensure greater equality. But what does the data actually say?

In this article we take a closer look at the consulting industry in Western Europe, and explore the issues with and implications of gender-based pay in more detail.

What the data says

According to Eurostat[1], gender pay equity in European countries varies significantly. When examining some of the major Western European countries, the unadjusted pay gap level in France is over 15%, in Germany almost 18%, and in Italy only 5%. According to the government’s 2022 Equality Act publication[2], in the United Kingdom the median pay gap is close to 10%. According to the same report, the gap is much higher in the private sector (which would include the consulting industry).

Overall, the consulting industry is notable for its high salaries and competitive work environment. Moreover, consulting firms working in North American and in Western European countries are often regarded as leading advocates for gender equality and greater diversity. Most of these firms have already implemented numerous initiatives in favour of equal pay across the industry[3].

Nevertheless, according to Vencon Research survey data, which includes both the largest full-service firms across Europe, as well as Europe’s significant boutique firms, women with the same level of education, experience or responsibilities, continue to face salary pay gaps when compared to their male counterparts. Furthermore, there are notable differences between countries in terms of the prevalence of a gender-based pay gap. For instance (as shown in table 1 below) France shows a pay-gap of 18%, the UK of 23% and Germany of 27%. Italy shows the smallest gap of the four countries but remains significant at 9%.

Furthermore, pay gap inequalities appear to be even more significant when comparing the managerial levels and less prominent at non-managerial positions, meaning, as one moves up the consulting career path, the pay gap begins to widen.

In France, for example (as shown in table 2 below), the pay gap at non-managerial levels is 5%, whereas at higher rank positions it is 30%. A similar situation can be found in other countries too, with the UK showing a pay-gap of 12% at non-managerial levels and 33% at higher rank positions, and Germany having the highest pay gap discrepancy at non-managerial as well as at senior consulting levels, 14% and 39% respectively.

Italy again has the lowest pay gap out of the four countries, in managerial positions men earn more than women by 23%. In non-managerial positions however, it seems women earn more than their male counterparts. This ‘negative’ pay gap may be driven by the fact that we have found that women in consulting in Italy tend to have a longer tenure in non-senior roles than their male counterparts.

What are some of the drivers of this issue?

There have been a number of studies that examine underlying factors that contribute to the gender pay gap. As previously mentioned, one reason may be that despite the introduction of antidiscrimination policies, gender biases may still be ‘unconsciously’ applied, meaning women may be overlooked for leadership roles, remaining relegated to lower ranking positions and thus do not have the same access to the more lucrative senior roles with better advancement opportunities.  

Male versus female representation at senior career levels

Vencon Research’s survey data seems to support the notion that women may be staying longer in certain positions. In fact, male consultants typically reach partner level faster than their female counterparts, who tend to take more time off due to family related reasons and may return to work as part-time employees[4]. This, on the other hand, decelerates their promotion to management levels and may also negatively impact their earning capability.

As shown in table 3 below, the number of female professionals in all four countries in this comparison starts to decrease as one moves to the more senior or managerial levels. This on the other hand, highlights the fact that a significant gender imbalance at the higher-ranking positions remains and that female consultants at senior levels are still underrepresented.

Addressing this issue is also essential as studies show that diverse teams achieve greater success[5].  Moreover, in comparison to their male colleagues at the same level, female leaders seem to achieve a greater level of “employee well-being”, which in turn increases retention rates and employee satisfaction[6].

What can consulting firms do to address the gender pay gap?

There are several steps consulting firms can implement in order to narrow or ideally close the gender pay gap in particular at managerial levels.

The first step is to regularly audit and identify within the firm any pay disparities between male and female colleagues. This will help to ensure fair pay as well as increase transparency around salaries.

In order to support women to balance work and family responsibilities, companies can implement more flexible work arrangements such as flexible schedules, instead of a clock-in-clock-out system and offer remote work options[7]. This can help retain talented female employees and on the other hand, ensure that they are not penalised for taking time off for family related reasons.

Furthermore, it is clear that this complex issue requires a multifaceted approach not only from businesses, but society as a whole. However, firms can and should do more to address gender-based unconscious biases in the workplace, through training and educational programmes, raise awareness and promote a more inclusive work culture. Being pro-active in this matter will help managers recognise and correct their own biases and allow them to make promotion or hiring decisions that do not overlook women for leadership positions. It will also help to increase the number of female consultants at managerial positions and thus reduce the gender-based representation disbalance.

Concluding thoughts

Management consulting firms in Western European countries are at the forefront of efforts to promote gender equality measures, however, they still face significant problems in closing the gender pay gap. There are notable differences among countries, but the general trend is the same, at the non-managerial positions pay disparity between men and women is narrower (or even negative) and female consultants are more represented, while at managerial positions the salary gap is significantly wider and women remain underrepresented.

In conclusion, much work remains to be done to ensure that women are paid fairly and equitably and that they are not only relegated to lower ranking positions. By continuing to implement equal-pay initiatives, such as pay audits, flexible or remote work arrangements and unconscious bias training, consulting companies can help close gender pay disparities, balance gender representation at managerial levels and create a more inclusive work place for all employees.  

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Sources:

[1]https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Gender_pay_gap_statistics#Gender_pay_gap_levels_vary_significantly_across_EU

[2]https://www.gov.uk/government/publications/dit-gender-pay-gap-report-and-data-2021-to-2022

[3]https://www.ft.com/content/c8118e14-143e-11e9-a168-d45595ad076d

[4]https://managementconsulted.com/gender-pay-gap-consulting/

[5]https://www.cipd.co.uk/knowledge/fundamentals/relations/diversity/managing-multicultural-teams

[6]https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace

[7]https://consultport.com/for-consultants/how-do-we-get-more-women-into-consulting/

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By Miklos Bodnar - Business Development Senior Manager

Internal consulting practices (ICPs) have become a more common feature of the global consulting and professional services sector and present their own set of challenges and opportunities for Human Resources leaders at traditional consulting firms as they compete with ICPs for talent acquisition.

Internal Consulting Practices (ICPs)

An internal consulting practice is an in-house group established by an existing firm to provide support and assistance with making critical strategy and operational decisions. The primary impetus in creating such practices is to reduce the reliance on traditional, external consulting firms, such as McKinsey, Bain, BCG, Kearney, Big 4, Accenture, etc., as well as associated costs, while also hoping to increase the efficiency and availability of consulting services. The advantages of an in-house consulting group include a more comprehensive understanding of a firm's structure, greater availability and responsiveness for problem-solving, involvement in both strategy and implementation, and greater alignment with the client.

Some examples of major firms with internal consulting practices are: Airbus, AMEX, Disney, Google, Siemens, Ford, General Motors.

How should human resource leaders anticipate and prepare for competition with ICPs?

The most obvious challenge presented to HR leaders at traditional consulting firms is the competition for top level consulting talent, especially in a recruitment market that is already under external pressures from non-consulting industries.

While ICPs do expand the number of competitors for talent, traditional consulting companies still generally hold an advantage in many areas of employment attractiveness, and should play to these strengths. Some key factors to consider are:

ICPs may offer different/less advantageous career advancement: ICPs can be limited in their ability to expand their service offering and client base, thus capping the needed for increased staffing and partners. This inherently smaller structure could constrain career advancement and thus attractiveness.

Opportunity for travel (when desirable): As ICPs are most likely co-located with the parent firm and primarily work only for the single “client” on-site, no additional travel outside of the consultant’s primary home base is required. While some may appreciate not having to travel, there are also consultants who consider frequent travel opportunities to be an advantage associated with the sector.

ICPs may offer less exposure to different industries and projects: Consulting with an ICP may provide an extremely focused work environment, where the consultant-client interaction is far more comprehensive and the consultant has access to the parent company on a daily basis. However, this very focus can also lead to a lack of variety in the consulting work carried out. And while specialization may be a key driver in a consultant’s career, this in turn may be limited, as the consulting opportunities and problem solving will only be within the parent company’s specific industry and business focus.

Open market opportunities could be less “competitive” as a consultant has only worked for a specific client and industry: The potential limitations outlined above also play out for candidates who may consider how to maximise their future employability. A lack of exposure to different industries and types of consulting work could diminish their competitiveness vis-à-vis peers who have experience at traditional consulting firms.

The case for ICPs

As businesses become more complex and competitive, there is a growing need for customized and specialized consulting solutions that internal consulting teams are well-positioned to deliver. Working for an ICP can offer consultants greater job security, the opportunity to build long-term relationships with stakeholders, and the ability to make a more significant impact on the organization. Internal consulting practices may also be perceived to offer more work-life balance and a more predictable schedule compared to traditional consulting companies, making them an attractive option for consultants looking for a more stable career path.

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What can Vencon Research do for you?

Vencon Research has recognized the growing and impactful presence of Internal Consulting Practices in the larger consulting industry and has integrated these firms into our compensation benchmarking analysis and services. Should your firm require assistance identifying the appropriate strategies to ensure your own rewards and recruitment attraction fully takes this aspect of the consulting market into account, we are available to provide you with the solutions to succeed.

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By Cara Solorzano

Our latest article addresses professionals and decision-makers in the consulting industry involved in shaping the global expansion strategy of their firms. It delves into Location Responsibility models—Local, Regional, or Global and offers insights into strategic planning, effective management, and balancing global consistency with local nuances.

The Global Landscape of the Consulting Industry

In an era marked by rapid technological advancements, evolving business landscapes, and an increasing demand for specialized expertise, the consulting industry has witnessed a remarkable global expansion. The traditional role of consultants as problem solvers has transcended geographical boundaries, and consulting firms now find themselves navigating the complexities of a world interconnected by digital networks and international markets.

The Location Responsibility Dilemma: Local, Regional, or Global?

As consulting firms strive to navigate this dynamic landscape, the crucial question emerges: What Location Responsibility model best serves your firm's vision - Local, Regional, or Global?

Regionalizing Offices for Global Competitiveness

Many consulting firms that have a significant global presence organize their country markets by regions, such as APAC (Asia Pacific), or LATAM (Latin America). Regionalizing offices empowers consulting firms to navigate the intricacies of diverse markets, respond rapidly to client needs, and leverage local talent, ultimately strengthening their overall competitiveness in the global consulting arena.

Strategic Planning for Successful Regional Expansion

While regionalizing offices has its advantages, consulting firms must carefully weigh these against the potential downsides, such as increased operational complexity, challenges in maintaining consistency, and any potential impacts on company culture and financial performance. Through Vencon Research’s years of data collection, we have observed that strategic planning and effective management are crucial factors in mitigating the aforementioned risks. Ensuring successful regional expansion can be resolved by assigning one country market to be responsible for the entire global standardization and operations of company acculturation.

Centralized Global Oversight: Enhancing Consistency and Collaboration

Global oversight of consulting firms, where a centralized management structure governs operations across various regions, presents several advantages.

Establishing Consistent Standards

One significant advantage is the ability to maintain consistent standards based on the philosophy of the company. With a centralized approach to oversight, consulting firms can establish and enforce standardized methodologies, best practices, and service quality benchmarks that apply uniformly across all offices worldwide.

Fostering Collaboration and Synergy

This consistency enhances the firm's reputation, instils client confidence, and fosters a sense of reliability in the delivery of consulting services. Centralized management enables efficient sharing of information, resources, and expertise across different regions. This interconnectivity allows for a more collaborative and synergetic approach to problem-solving, leveraging the diverse skills and perspectives available within the global consulting firm.

Drawbacks of Global Oversight

While a model predicated on global oversight provides uniformity in strategies and operations, this method of management also has some disadvantages.

Overlooking Local Nuances and Cultural Differences

One potentially significant drawback is the risk of overlooking the nuances inherent within local cultural differences. A centralized management structure may struggle to fully understand and address the unique challenges and business environments in specific regions. This lack of localized insight can result in strategies that are less effective or may not resonate well with clients in certain markets.

Communication Challenges and Team Detachment

Cultural and communication barriers may also arise in a globally overseen consulting firm. Effective communication becomes more challenging as the organization spans different languages, time zones, and cultural contexts. Furthermore, global oversight may lead to a sense of detachment among local teams. Employees in regional offices may feel less connected to the overarching vision and decision-making processes of the firm, potentially affecting morale, engagement, and retention.

Striking the Right Balance: Considerations for Success

While global firm oversight offers benefits in terms of consistency and efficiency, consulting firms must carefully consider and address the potential downsides, including the risk of overlooking local nuances, reduced agility, and communication challenges.

Balancing Global Oversight with Regional Specifics

Balancing global oversight with mechanisms to understand and address regional specifics is essential for success in a diverse and dynamic consulting industry. It ensures that your firm can adapt to local nuances while maintaining global consistency, fostering resilience in the face of evolving market dynamics. This equilibrium is the cornerstone of sustainable growth and competitiveness in the global consulting arena.

Tailored Collaboration for Success

Vencon Research is your collaborative partner in navigating the complexities of global expansion. Our bespoke recommendations are crafted with your unique needs in mind, ensuring local relevance and global consistency. Contact Vencon Research today to discover the ideal Location Responsibility model for your company's success in the global consulting arena.

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Key HR indicators for the consulting industry

This collection of market statistics briefs highlights key consulting market statistics across six countries in the Asia-Pacific (APAC) region: Australia, China, India, Japan, Singapore, and South Korea. It offers insights into various key factors, such as the highest paying lines of businesses, market growth, starting salaries, career progression, and market pay level.

Notable highlights across APAC countries

• The year-on-year market headcount increase across these six countries ranged from 5% to 10%, with “Energy, Environment,     Sustainability Consulting” and “Risk Advisory Services” lines of businesses witnessing the largest growth.
• The average time required to progress from analyst level to partner level ranged from 24 to 28.5 years, with China having the fastest track.
• “Strategy-Oriented Management Consulting” was one of the highest-paid lines of business.
• Japan had the highest bonuses (relative to fixed salary) across LOBs and levels (18% median and 43% maximum) and Australia the lowest (10% median and 28% maximum).

The sheets also present median salaries for all Vencon Research career levels as percentages of basic salaries paid in the United States. Out of the six countries presented here, consultants in Australia and Singapore were paid the highest, ranging from 50% to 75%, while those in India were paid the least, ranging from 13% to 38%.

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COVID-19 currently influences all of our lives and its constraints will have continued effects on the consulting industry, especially with regards to communication within firms and with clients and on how work for clients is delivered. Our survey’s results show operational changes are expected, as, for example, “working from home” has become and will continue to be an alternative “modus operandi”. All this is also expected to have a positive impact on the attractiveness of consulting as a job, especially with regards to the work-life-balance of consultants with families. At the same time, none of our survey’s respondents indicated reducing or planning to reduce consultants’ pay.

Starting in early 2020, the COVID-19 crisis has become a drastic influence on our lives. In the light of the potential economic, financial, and other impacts of this world-wide crisis Vencon Research initiated a “Pulse Survey” in September 2020 to gather information on how the consulting industry has reacted to the crisis. We were particularly interested in finding out if the measures taken and implemented by firms also had an effect on job descriptions and on remuneration, especially for client-facing staff. We furthermore wanted to find out whether these changes represented temporary solutions or a “paradigm shift” in how the consulting industry operates.

The key findings of the survey can be summarised as follows:

• Three-quarters of respondents reported “travelling” to have been a “normal” part of the existing job profile of their consultants / client-facing staff.
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• Meanwhile, all responding firms have largely eliminated the day-to-day travel typically required of their client-facing staff, for example for project delivery.
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• Many firms have furthermore significantly reduced face-to-face time spent with their clients.
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• All respondents had invested to ensure their client-facing staff can work efficiently from home.
• -In this respect, client data confidentiality and data security have come to the forefront and may be a matter that requires additional review and improvement.
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• Most respondents signalled a significant change in how their business was being conducted and delivered. For example:
• -Communication with clients was previously often completed face-to-face and has now been forcedly changed to being conducted primarily via online tools.
• -The delivery of client work would normally be completed on client premises or from the contracted firm’s office. Today instead, consulting work is often organised and completed from the consultant’s “home office”.
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• Clients seem to accept these changes in how consulting work is delivered.
• -However, during the feedback of the survey results, some clients mentioned that “selling on” into existing projects has become more difficult as a direct result of the lack of “face-to-face” time (i.e. coffee, lunch and dinner time) with key client representatives.
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• Almost 2/3rds of respondents were additionally considering operational changes, such as a reduction in office space.
• -During feedback discussions with respondents, a potential move of office space to less prominent (and less expensive) areas of the city, due to limited in-house client meetings and the introduction and use of working from home alternatives, was also mentioned.
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• The measures mentioned above have a radical influence on the work-life-balance generally offered by and associated with the consulting industry, whereby:
• -Close to 60% of respondents expect to see a positive impact on the intrinsic “attractiveness” of the consulting job.
• -Furthermore, more than half of respondents expect to be able to offer a better work-life balance to their client-facing staff, especially due to reduced travel requirements, working from home, etc.
• -They also expect to be able to more successfully hire and retain female consultants and thus anticipate an improved gender-split, especially at the more senior levels.
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• Most respondents expect these changes to be longer term, i.e. to continue to strongly influence the job of consulting even after the COVID-19 crisis and well into the future.
• -Interestingly, while discussing these results with clients, we also heard another point of view, namely that although reduced travel was seen as an attractive benefit for staff with families (mostly more senior), junior staff (i.e. those without families) actually complained about the lack of travel during COVID times. These anecdotal responses seem to confirm what 15% of respondents stated in the survey: due to the aforementioned changes, the job of consulting will become less attractive, especially for those more junior employees who actually like and prefer the travel aspect of the job.
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• Although a number of firms experienced a significant reduction in business and have put at least some of their consultants on furlough, none of the participants reported actually reducing remuneration. Neither the base salaries nor targeted bonuses of their client-facing staff were reduced, even when considering a potential change in the consultant job profile (for example due to less travel, more time at home or the like).
• -This result however does not reflect any potential short-term reductions in remuneration e.g. due to an introduction of furlough.
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• This is partly confirmed by our 2020 salary surveys which continue to show increases in the remuneration offered to consulting staff in many countries. These increases may however result from the timing of salary reviews as most firms had completed and in part already implemented changes in remuneration before the COVID crisis hit their markets.
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• Although increases in target remuneration were seen, unfortunately most firms will not be in the position to pay out the targeted bonuses in full in 2020 (or at a similar level as for 2019).

Should you have any further questions or would like to receive more detailed information on this topic, please reach out to us at info@venconresearch.com.

Andy Klose is an Associate Partner at Vencon Research International and heads the firm’s consulting unit.

Erwin Harbauer is a Partner at and co-founder of Vencon Research International.

Vencon Research International is a leading provider of compensation benchmarking and research as well as of compensation and performance-related consulting services for professional service firms, especially for audit and tax, management consulting, and IT services firms. Vencon Research International provides services to a full range of clients in more than 75 countries worldwide and is proud to name more than 85% of the world’s major consulting and/or professional services firm its clients.

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By Osas Ohenhen - Business Development

The Compa-Ratio (Comparative Ratio) is a widely used metric in salary surveys and compensation management. It's a measure of an individual’s salary relative to the market or company average for similar positions. This quick guide gives an overview of its importance and how it comes to play in Vencon Research’s Consultant Salary Survey.

Importance of Compa-Ratio in Salary Benchmarking

In salary benchmarking, the Compa-Ratio serves as a key metric, indicating how an individual's or a firm's salary levels compare to the broader market or industry standards.

1. Market Positioning: Compa-Ratio allows companies to position themselves competitively in the job market. By comparing their own salaries to the market average, companies can determine if they are paying above, at, or below the market rate for similar roles.
2. Attraction and Retention of Talent: Competitive compensation is key to attracting and retaining top talent. A Compa-Ratio lower than 1 might suggest that salaries are below market rates, potentially affecting the company's ability to attract and retain employees. Conversely, a higher ratio indicates a competitive edge in the job market.
3. Informed Compensation Strategy: Compa-Ratios provide insights that help in shaping a company’s overall compensation strategy. Understanding how salaries compare to the market informs decisions regarding salary adjustments, increments, and setting salary bands for different roles.
4. Budget Allocation: Knowledge of how salaries compare to the market guides how a company allocates its budget for salaries and benefits, ensuring that resources are used effectively to maintain market competitiveness.

Compa-Ratio in Vencon Research’s Data Services

Compa-Ratio’s come into play across our compensation data and analytics services, where they serve:

1. Market Analysis: Vencon Research uses Compa-Ratios to provide clients with a detailed analysis of how their compensation levels compare with a selected market or group of participants. This helps in identifying positions or departments where the compensation is not aligned with the market.
2. Tailored Benchmarking Reports: By leveraging Compa-Ratios, Vencon Research can offer customized benchmarking reports, providing clients with precise insights into their competitive position in the talent market.
3. Strategic Advisory Services: Utilizing Compa-Ratios, Vencon Research can advise clients on how to adjust their compensation strategies to better align with market standards, aiding in talent attraction, retention, and overall organizational success.
4. Sector-Specific Insights: Understanding that different sectors may have different compensation standards, Vencon Research provides sector-specific insights using Compa-Ratios, ensuring that clients receive the most relevant and precise market comparison data.

Compa-Ratio in the Vencon Research Consultant Salary Survey

Vencon Research's Consultant Salary Survey features a concise Compa-Ratio tool, enabling firms to directly compare their remuneration against market data. The tool, integrated within remuneration element tabs, provides a percentile table showing market compensation from the 5th to the 95th percentile.

Color codes—green, yellow, and red—indicate how a firm's pay varies from the market average, allowing for quick visual assessment. Users can select specific percentiles for targeted comparisons, understanding their firm's competitive position. The tool also offers functionalities to compare against the firm’s mean or median and simulate necessary budget adjustments, ensuring firms can strategically align their compensation with market standards.

A video overview on how Vencon Research uses Compa-Ratios in our surveys is also available.

We are at your disposal for tailored advice and solutions based on comprehensive data and industry expertise. Contact our team here.

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