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By Yao Tang - Business Development Manager

In recent discussions with consulting firms in the U.S., one recurring theme has been job hugging: employees remaining in their current roles longer than usual, not necessarily due to engagement or satisfaction, but because external opportunities appear limited or uncertain.

From a Total Rewards standpoint, this trend carries several implications:

• Lower turnover may give an incomplete picture of workforce stability.
• Firms with slower salary progression or career advancement may face sharper attrition once mobility returns.
• Reviewing competitiveness now can prevent costly corrections later.

What Is “Job Hugging”?

Job hugging refers to employees choosing to stay put — often despite feeling underutilised or dissatisfied — rather than pursuing external opportunities. It represents a reversal of the “job hopping” behaviour that characterised much of the post-pandemic period.

Why It’s Emerging

Several factors are contributing to this shift:

• Economic uncertainty and layoff activity: Employees are more risk-averse and value job security.
• Perceived scarcity of external opportunities: A cooling labour market has reduced hiring across sectors.
• Relative comfort: If pay and benefits are broadly competitive, employees may see limited incentive to move.

Implications for Consulting Firms

1. Low Turnover Can Mask Underlying Risk

U.S. quit rates have fallen to around 2% per month (compared with roughly 3% during the peak of the “Great Resignation,” according to the Bureau of Labor Statistics). On the surface, this appears positive — but reduced movement may reflect caution rather than commitment.

When hiring activity picks up again, turnover could accelerate sharply, particularly among high performers who have postponed their next move.

Key point: Low attrition during periods of uncertainty should not be interpreted as loyalty. Job hugging is a temporary pause, not a sign of long-term satisfaction.

2. Slower Career and Pay Progression Amplify Future Attrition

Career growth remains a defining factor for consulting talent. If internal progression is noticeably slower than market norms — for example, where promotion steps take several years longer or salary growth at promotion is smaller — frustration can accumulate even during periods of low mobility.

When external opportunities re-emerge, those who feel “stuck” are often the first to leave.

Key point: Firms with below-market progression structures risk concentrated attrition once confidence returns to the labour market.

3. Proactive Benchmarking Reduces Future Costs

The last period of rapid mobility (2021–2022) showed how quickly pay structures can come under pressure. Firms that had not reviewed salary levels in advance often needed substantial market corrections to retain staff.

Regular benchmarking helps identify misalignments early and allows for phased, measured adjustments — avoiding sudden, reactive pay increases later.

Key point: Periodic benchmarking is not simply about keeping pace; it’s about maintaining readiness when market dynamics change.

Staying Prepared

Vencon Research works with consulting firms across markets, using directly collected and regularly updated compensation data from entry level through senior roles. This provides firms with a clear view of how their salary structures compare today — and how they may need to evolve as market conditions shift.

Accurate benchmarking is ultimately about preparedness. Understanding where you stand now ensures you’re ready when job hugging transitions back into job hopping.

Vencon Research is the largest player in the field of consulting compensation metrics. Our client list includes 85 per cent of the world’s major management consulting firms and we have over 20 years of experience and data at our fingertips. To find out more about our benchmarking products and services, visit our website or get in touch with our team.

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By Irina Kvirikadze & Makar Evdokimov

Consultant pay is often used as a benchmark for career and business decisions, but headline figures alone rarely tell the full story. Pay may look similar across Germany at first glance, yet local costs mean the real value of a consultant’s salary can vary widely.

Based on Vencon Research’s compensation data, we benchmarked consultant compensation across six major German cities: Berlin, Düsseldorf, Frankfurt, Hamburg, Munich, and Stuttgart. We used our firm-weighted dataset that captures both base salary and bonus (Total Cash Compensation or TCC). To make comparisons more meaningful, we adjusted salaries against the Cost of Living + Rent Index (Numbeo), which reflects the true purchasing power of a consultant (all levels excluding partners) once local expenses are considered.

The results highlight striking differences in how far consultant pay really goes across Germany.

Key Findings

Munich: high pay, high cost

Consultants in Munich earn the most, with median TCC across all levels excluding Partner at just above €104,000. But with a cost index of 62, the steepest in Germany, much of this headline advantage is consumed by living expenses. Munich remains attractive for its prestige, corporate headquarters, and concentration of top-tier firms, but it is far less compelling when measured by net take-home value.

Düsseldorf: the sweet spot

With median compensation of €103,000 across all levels and a relatively modest cost index (54.5), Düsseldorf offers the most attractive balance between earnings and affordability. It consistently ranks as the strongest city for consultants seeking both competitive earnings and reasonable living costs.

Frankfurt: strong pay, middling value

Frankfurt consultants earn a median TCC of €102,200, but the city’s cost index (56.8) places it squarely in the middle of the pack. As Germany’s financial capital, Frankfurt provides stability and opportunity but doesn’t shine in relative value once affordability is factored in.

Berlin vs. Hamburg: a convergence story

Both Berlin and Hamburg cluster at €101,000 median pay with cost indices between 54–56. This is significant: Berlin was historically far more affordable, but rising rents and living costs have nearly eliminated its affordability edge, bringing it level with Hamburg.

Stuttgart: the hidden value play

Stuttgart ranks lowest in consultant pay (€100,200 median across levels), but also lowest in cost index (52.8). For consultants seeking to maximize savings rather than prestige, Stuttgart offers a compelling case as the most cost-efficient city in this comparison.

Real Purchasing Power Perspective: The Rankings Flip

Looking beyond nominal pay to purchasing power (PPI 2025) adjusted for cost of living and rent, the rankings shift dramatically:

• Munich drops from #1 in nominal pay to last place (#6) once high costs are included.
• Frankfurt follows a similar decline, slipping down the ranks when affordability is considered.
• Düsseldorf remains the most balanced, combining high pay with manageable costs.
• Berlin and Hamburg are now nearly indistinguishable in value.
• Stuttgart emerges as the clear winner, ranking #1 when adjusted for both cost of living and rent.

Why These Differences Exist: It’s More Than Just Numbers

Several dynamics explain why salaries and affordability have evolved the way they have:

• Munich continues to attract global headquarters and top-tier consulting firms, especially in strategy and technology. This prestige drives up both salaries and housing costs, creating a high-pay, high-cost profile.
• Berlin, once seen primarily as a creative and start-up hub, has evolved into a magnet for global consulting firms. The city attracts young, international talent with expertise in digital, analytics, and technology—skills that are increasingly critical as client projects shift toward transformation and digitalization. This demand is pushing salaries up, but it's also making the city more expensive for everyone.
• Frankfurt remains Germany’s financial centre. Driven by the banking and financial services sector, demand for finance, risk, and regulatory expertise fuels robust compensation and a steady, high-pay, high-cost environment, however with less explosive growth than tech-centric hubs.
• Stuttgart reflects its regional profile: fewer top-tier consulting firms and more moderate salaries, but far more manageable living costs.

The Future of Consultant Pay (2025-2030)

Looking ahead, several dynamics are likely to reshape consultant pay and affordability across Germany’s major cities:

• Housing market pressures will intensify. Demand for urban housing in cities like Munich, Berlin, and Frankfurt will remain high, keeping the cost of living elevated.
• Remote and hybrid models may redistribute talent. As consulting firms adopt more flexible working models, consultants may increasingly live in lower-cost regions while remaining attached to high-paying city offices. This could weaken the traditional pay–location link over time, especially in costlier locations like Munich.
• Sector shifts will influence city attractiveness:
• Munich and Frankfurt are likely to maintain premium pay due to strategy and finance concentrations.
• Berlin should keep climbing as digital, data, and transformation work become core revenue drivers for firms.
• Stuttgart’s automotive focus could face headwinds if industrial transformation accelerates, potentially limiting salary growth unless diversification occurs.
• Generational and lifestyle choices will shape preferences. Younger consultants continue to value cultural vibrancy and international exposure (Berlin, Hamburg), while mid-career professionals with families may gravitate toward more balanced, affordable environments (Stuttgart, Düsseldorf).
• Purchasing power gaps may narrow further. As costs rise everywhere, the real purchasing power of salaries will become more similar across cities. By 2030, take-home pay could become less of a differentiator between locations

Implication: For consulting firms, this means compensation strategy will need to be more finely tuned to role, level, and specialization, not just location. For professionals, location choice may increasingly be driven by family status, lifestyle and sector focus, as the pure financial trade-offs between cities gradually flatten.

City-Level Dynamics and the Future of Pay

Understanding city-level dynamics is essential for consulting firms when shaping talent strategies, setting competitive pay, and maintaining internal equity. Over the next five years, rising housing costs, remote work, and shifting sector dynamics are expected to narrow city-to-city differences making lifestyle, specialization, and career goals as important as pay when choosing where to work. Firms will therefore need to refine compensation strategies beyond geography.

To stay competitive in this evolving market, deeper insight into level-specific pay, performance-linked rewards, and benefits will be critical. Our detailed country reports provide the intelligence consulting firms and professionals need to make informed, strategic decisions.

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By Yao Tang - Business Development Manager

In a previous article, we discussed the various components of remuneration packages, and today, we will dive deeper into one of the key elements: Allowances.

Allowances are additional fixed payments provided alongside basic salary to address specific expenses, such as housing, transportation, or meals. While allowances are not typically included in bonus calculations, in certain regions they play a significant role in the overall compensation structure.

Regional Differences in Allowances

Allowances and their importance vary significantly across regions. Here's how they differ:

Gulf Countries (UAE, Saudi Arabia, Qatar)

In the Gulf region, allowances play a critical role in consultants’ pay packages. They often account for 30-50% of total compensation, particularly for expatriates. Common allowances in this region include:

• Housing: Often provided due to the high cost of living in major cities.
• Transportation: To cover the cost of commuting or car ownership.
• Education: Expatriate families may receive allowances to cover tuition fees for their children.
• Relocation: Moving expenses are often reimbursed.
• Home leave: Usually flights (roundtrip) once per year for employees and their families are reimbursed.

Allowances are prominent in the UAE because they offer employers greater flexibility and cost control. Since end-of-service gratuity is calculated only on the basic salary, structuring pay with a lower base and higher allowances reduces long-term liabilities. This approach also aligns with local labour laws and common market practices, particularly for expatriate-heavy workforces where housing, transport, and education allowances are expected. Additionally, allowances can be adjusted more easily than fixed salaries, making them a practical tool for managing changing business needs.

India

In India, allowances are highly structured and play a significant role in compensation packages, often due to tax benefits. Common allowances in India include:

• Housing Rent Allowance (HRA): To help cover the cost of housing
• Leave Travel Allowance (LTA): To reimburse travel expenses for employees and their families.
• Fuel/Transport Allowances: To assist with commuting costs.

India also uses a Cost-to-Company (CTC) model, where the total compensation (salary, allowances, and benefits) is disclosed as a single figure. As a result, employees may find that their take-home pay is lower than expected, since some allowances and benefits are included in the CTC but not always in the direct salary portion.

Europe & North America

In most parts of Europe and North America, allowances are less common compared to regions like the Gulf or India. Instead, firms tend to offer higher base salaries. When allowances are provided, they are typically for specific purposes, such as:

• Transportation stipends
• Meal vouchers
• Relocation support

In these regions, performance-based incentives, such as bonuses, stock options, or profit sharing, are more common than fixed allowances.

Asia-Pacific (Singapore, China)

In high-cost cities like Shanghai, Hong Kong, and Singapore, housing allowances are quite common to offset the high costs of living. Expatriates in these markets may also receive additional perks, such as:

• International school tuition for children
• Home leave flights
• Relocation benefits

Local hires in these regions generally receive fewer allowances, with firms often opting for higher base salaries or bonuses instead.

Are Allowances Always Considered Part of Total Cash Compensation (TCC)?

The answer is generally yes—and this is consistent with Vencon Research’s approach. In most markets, allowances such as housing, transportation, and meal stipends are included in Total Cash Compensation (TCC), especially in regions where such allowances make up a substantial portion of overall pay.

One exception is children’s education allowances, which are usually excluded and instead captured in our separate Benefits Survey. This is primarily because such benefits are not universally applicable—for example, not all employees have children.

Accurate Comparison Requires Regional Nuance

At Vencon, we understand that taking into consideration regional differences in each component of Total Cash Compensation (TCC)—such as allowances—is essential for accurate and meaningful compensation comparisons. We've discussed how allowances can significantly impact total compensation packages in different markets, and we ensure that all these variations are considered in our analyses.

In markets where allowances make up a larger portion of compensation, we provide detailed breakdowns to offer a comprehensive understanding of the total compensation package. These insights combined allow Vencon Research to help organizations make well-informed decisions when benchmarking salaries and structuring compensation packages globally.

By leveraging Vencon Research’s structured approach and industry-specific insights, consulting firms can ensure their compensation practices remain competitive, equitable, and aligned with market expectations.

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By Osas Ohenhen - Business Development Manager

Benchmarking compensation accurately starts with identifying the right peer group—and in consulting, that also means matching by line of business (LoB).

Many firms operate across multiple LoBs, from strategy to IT implementation to risk advisory. Each of these business lines serves different markets, demands different skill sets, and carries different compensation expectations.

Comparing roles across unrelated LoBs—whether within your own firm or externally—introduces distortions. A senior consultant in digital transformation doesn’t operate under the same market pressures or salary expectations as a peer in commercial due diligence. Yet we frequently see data misused in exactly that way.

One Firm, Multiple Realities

Consulting firms are rarely single-specialty. Even smaller firms may offer services across several distinct areas. Larger firms might have a dozen LoBs under one umbrella. Treating them as one homogenous group for compensation purposes obscures important differences.

Take two examples:

• A consultant in IT Risk & Cybersecurity (ITR) is likely to have a specialized technical background and face strong competition from both consulting and non-consulting employers. Compensation must reflect that scarcity.
• Meanwhile, a peer in Operations-Based Management Consulting (OPO) might face a more traditional consulting talent market, with different leverage models and client fee structures shaping pay expectations.

Even within broadly defined domains like IT or Finance, sub-lines matter. IT Strategy, IT Infrastructure, and Enterprise Software Implementation differ in project focus, required experience, and salary bands.

The Scope of LoBs

Vencon Research tracks more than 35 distinct lines of business in our compensation benchmarking—offering granular, role-by-role data within each. This includes well-established categories and fast-evolving specialties:

• Strategy Consulting Firms
• Operations-Based Management Consulting
• Digital Strategy and Transformation
• AI Consulting
• Commercial Due Diligence
• Restructuring and Turnaround
• Cybersecurity Consulting
• Tax, Transfer Pricing, and Assurance Services
• Actuarial, Legal, and Government Consulting
• ...and many more.

This breadth ensures that benchmarking is never reduced to broad categories like “Consulting” or “IT Services.” Instead, we ensure each job is matched to its correct peer group—based on functional focus, project type, and market conditions.

Why It Matters

HR leaders rely on benchmarking to set competitive pay, manage internal equity, and guide offer negotiations. But those decisions are only as sound as the underlying comparisons. Without alignment to the correct LoB, even the most robust benchmarking data can lead you off course.

At Vencon Research, accurate benchmarking—within clearly defined lines of business—isn’t an extra. It’s a pillar of our methodology. We work closely with clients to ensure each role is benchmarked where it belongs, across a peer group that reflects both the function and the market.

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The promise of artificial intelligence in HR technology has caught the attention of many leadership teams — and compensation management is one area where interest is growing fast.

With rising expectations around pay transparency, regulatory compliance, and pay equity, many HR departments are wondering whether AI could help manage these increasing demands more efficiently.

At the same time, it’s important to take a realistic view of what current tools can deliver — and, more importantly, what it takes to implement AI systems that are truly effective and reliable in compensation work. While there is clear potential, significant investment and expertise are still required to move beyond basic applications.

Why Salary Data Remains a Limiting Factor

The usefulness of AI in compensation depends first and foremost on the quality of the data it can access. Unlike some other areas of HR, compensation data is largely private. Salary details reside within companies or specialist benchmarking services and are subject to confidentiality, compliance, and commercial sensitivities. Publicly available data — such as figures scraped from job boards or self-reported on crowdsourced sites — is often incomplete, inconsistent across markets, or skewed toward particular industries and seniority levels.

General-purpose AI models trained on open data (such as ChatGPT or similar tools) do not have access to the kind of verified salary data used in professional compensation management. Attempting to generate salary benchmarks based solely on such models carries a high risk of inaccuracy — which could lead to poor decisions on pay levels, legal exposure, or damage to employee trust.

Building Useful Tools Requires Expertise and Investment

There is genuine potential for AI to support compensation work — but delivering useful tools is not a matter of simply “adding AI” to existing systems. It is important to be clear what is meant here. Having access to an AI chatbot (such as one embedded in a broader HR system) is very different from building a bespoke AI application that has been trained and configured using a company’s internal data, role structure, pay philosophy, and specific business requirements.

Many of the most promising use cases require exactly this kind of customisation. For example:

• Automatically generating salary ranges for new or evolving roles
• Identifying pay disparities or inconsistencies across levels, regions, or business units
• Simulating the financial and structural impacts of salary changes
• Monitoring compliance with pay transparency regulations

To achieve this, AI models must be tailored to a company’s compensation framework, legal environment, and data structures. Developing such solutions involves technical expertise, time, and a significant financial investment — both to build the system and to ensure it can be trusted and maintained in practice. The costs of doing this — and of ensuring results remain auditable and aligned with changing pay practices — can be substantial.

Human Oversight is Built Into the Process

Even when custom AI tools are implemented, compensation work remains a sensitive and business-critical area. Outputs need to be reviewed and contextualised by experienced professionals — not just because of current limitations in the technology, but because compensation decisions often involve balancing objectives that are not easily reduced to data alone.

It is this complexity — combined with the need for regulatory compliance and employee trust — that makes careful human oversight an integral part of any AI-supported process.

Areas Where AI is Already Proving Useful

While the more advanced applications require considerable investment, there are areas where AI can already deliver value in a more straightforward way:

• Data cleaning and preparation, especially when combining multiple survey sources
• Drafting job descriptions or compensation documentation with natural language models
• Flagging anomalies or outliers in pay data for further review
• Supporting pay equity reviews by highlighting trends and patterns

These practical applications can help free up HR and compensation teams to focus on higher-value analysis and decision-making. Still, while some of these use cases may be served with ready-to-use models on a subscription or even free basis, others will require bespoke implementation that will come at significant cost. Using online models also opens up a plethora of data confidentiality questions that should not be taken lightly.

A Measured Path Forward

AI is unlikely to transform compensation management overnight — not because of a lack of potential, but because building models that genuinely reflect the complexity of compensation requires considerable customisation and resources. For many companies, the path forward will be gradual: using AI first to support data processing and review, while investing in more advanced tools where business needs and resources align.

In the coming years, AI will no doubt play a larger role in compensation management. But as with many areas of HR, its value will depend not just on the technology itself, but on the care and expertise brought to its implementation.

How Vencon Research Can Support Your Compensation Work

At Vencon Research, we work with consulting firms to ensure their compensation decisions are grounded in accurate, relevant data. Whether you're exploring how AI might support your internal processes or simply need reliable benchmarking to build on, we can help you get the foundations right.