The competitor set is the group of firms against which a consulting firm benchmarks its compensation. It defines what "the market" means for a specific firm's pay decisions: the salary data, percentile distributions and market statistics presented in a benchmarking report reflect the pay practices of the firms in the competitor set, not of the consulting industry as a whole.
Defining the right competitor set is one of the most consequential decisions in compensation benchmarking. A firm that benchmarks against the wrong peer group — one that is too large, too small, too different in service offering, or simply not the firms it actually competes with for talent — will draw conclusions about its market positioning that are systematically wrong, regardless of the quality of the underlying data.
What Makes a Good Competitor Set
The most important criterion for competitor set definition is talent competition: which firms is this organisation actually competing with when it recruits and when it tries to retain its people? A firm loses candidates to and from its competitors, and those are the firms whose pay practices are directly relevant to its own compensation decisions.
Secondary criteria typically include:
- Service offering — Firms offering broadly similar types of consulting work at comparable levels of complexity and client seniority. A strategy boutique benchmarking against IT service providers will find the comparison only partially useful.
- Firm size — Pay practices differ between large global firms and small boutiques. A mid-sized firm may choose to include both in its competitor set to understand the full range, or may restrict to firms of comparable scale.
- Geographic footprint — Firms operating in the same markets. A regional firm benchmarking against global firms whose pay reflects international mobility premiums or headquarters cost structures may find the comparison distorted.
- Career level structure — Firms with broadly comparable career architectures, so that job matching to the same external benchmark level is meaningful across the peer group.
Competitor Sets in Vencon Research Surveys
In Vencon Research's Consultant Salary Survey, clients specify their own competitor set from the pool of participating firms. This means that each client's report reflects the pay practices of the specific firms they have identified as their relevant peers — not a generic industry average that may include many firms with which they do not actually compete for talent.
The ability to define a custom competitor set is one of the most significant advantages of a specialist consulting survey over broader professional services benchmarking databases, where the comparator pool is fixed and may contain many firms that are not relevant comparators for any specific client. See Benchmarking and Firm-weighted vs Incumbent-weighted for more on how competitor set data is aggregated and presented.
Competitor Set and Market Positioning
A firm's market positioning is always relative to a specific competitor set. A firm that is at P75 of the full consulting market may be at P50 of its specific competitor set if it competes primarily against the higher-paying tier of the industry. Conversely, a firm at P50 of the full market may be at P75 of its specific peer group if it competes mainly with smaller or lower-paying firms.
This relativity means that competitor set definition and market positioning assessment must be done together. Quoting a market percentile without specifying the competitor set it refers to is incomplete information. See Target Market Percentile and External Competitiveness.
Reviewing the Competitor Set
Competitor sets should be reviewed periodically as the firm's competitive landscape evolves. Mergers and acquisitions, strategic pivots into new service areas, geographic expansion and changes in the talent market all affect which firms are genuinely relevant comparators. A competitor set defined five years ago may no longer reflect the firms a rapidly evolving consulting practice is actually competing with today.