If you’re deciding whether to pursue a career in management consulting at a top firm or to join a startup, it’s important to consider the question from every angle.
The world’s top-three management consulting firms, McKinsey, BCG and Bain, work strategically with the world’s largest organizations on some of their most important challenges and opportunities. The three firms all provide consultants with a well-defined career path, tremendous learning opportunities, generous compensation and a wealth of attractive exit opportunities.
Startups, meanwhile, are more fluid in nature. Instead of working strategically, the focus is often on execution to help ensure the success of the company. While career paths for new joiners in startups are less well defined than those in consulting, there’s usually the opportunity to take on a great deal of responsibility from an early stage. Compensation packages in startups often include stock options and other equity compensation, which can represent a potentially life-changing future pay day.
Although very different, both career paths can be appealing for ambitious, driven and talented candidates. In this article, we explore these differences in detail, and provide some insight into the pros and cons of each option.
- Top consulting firms follow a highly codified recruitment process with objective assessment criteria. In startups, the approach to recruitment can vary widely from company to company and decisions are usually made more subjectively.
- Roles, responsibilities and skills in top consulting firms are clearly defined, while in startups they tend to be more fluid, particularly in a company’s early stages.
- In management consulting, financial compensation is more predictable and often more generous than it is in the startup world. In addition, a greater degree of job security can be expected in consulting.
- Long hours and hard work can be expected in both management consulting firms and startups.
- Career advancement and professional growth are a core part of the value proposition to employees in consulting firms. However, in startups, these areas are less of a priority.
- The exit opportunities from a top consulting firm are far more attractive and predictable than those from a startup.
Recruitment and hiring
Recruitment in management consulting
Top consulting firms like McKinsey, BCG and Bain (MBB) are highly selective when it comes to hiring new consultants. With millions of candidates applying to MBB every year, the firms focus on choosing the ‘cream of the crop’ through a tightly structured and highly codified recruitment process.
MBB recruiters review applications and decide who to progress based on an evaluation of candidates’ resumes and cover letters. In some cases, candidates might also be required to complete an online test, such as McKinsey’s digital assessment.
Candidates who pass these initial screening stages are then invited to take part in consulting interviews with the firm. These consist of a case interview followed by a fit interview or, in McKinsey’s case, a Personal Experience Interview (PEI). The firms all use objective assessment criteria to evaluate each candidate’s interview performance and to determine who should receive an offer.
Recruitment in startups
Conversely, the recruitment process in startups can vary widely from company to company. Some will have the resources and experience required to develop a well-structured process that can be used to assess a high volume of candidates objectively. Others will only recruit on an ad hoc basis and may not have any specific process in place for doing so. Ultimately, the experience that candidates have when applying to join a startup depends very much on the company.
Generally speaking, it’s likely that startups may spend more time assessing a candidate’s cultural fit or technical competencies than their problem-solving skills or leadership potential. For certain roles in startups there may be exercises for candidates to complete as part of the recruitment process (e.g. coding tasks for software engineers). However, beyond this, it can be difficult for candidates to know what to expect in an interview at a startup, and therefore how to prepare for it.
Although there may be some exceptions, startups are not known for using objective assessment criteria to evaluate a candidate’s performance. This means there is a greater degree of subjectivity to recruitment decisions in startups, which can result in a variable quality of talent. This is in stark contrast to top consulting firms, which are well known for recruiting the most talented candidates available.
Roles, responsibilities and skills
A greater degree of definition in management consulting
The role of a management consultant and the skills required for success in consulting are clearly defined. Within top consulting firms, there are frameworks and processes that underpin everything from onboarding to performance reviews and career progression.
The focus of a consultant’s work is on working with the client to help crack their problem. This involves undertaking a wide range of analytical and strategic activities, including:
- structuring the problem
- collecting insights
- analyzing data
- communicating findings
- bringing the client along with ways of thinking
- formulating a recommendation
In the startup world, on the other hand, roles and responsibilities tend to be less well defined, particularly in a company’s very early stages. Teams are invariably small, and a single person might find themselves with a very wide range of responsibilities while the business seeks to establish itself.
A greater focus on execution in the startup world
In startups, there tends to be an ‘all hands on deck’ mindset, where everyone pitches in to get the work done and help move the company forward. Broadly speaking, everyone will be expected to be adaptable, open-minded and comfortable with working at pace to help the company achieve its goals.
A role in a startup will be appealing to those who are comfortable with being flexible and focusing on execution. The roles, responsibilities and skills of consulting, meanwhile, are likely to be more attractive to those who favor structure and are interested in participating in strategic decision-making.
Compensation and financial security
Compensation in management consulting
Top management consulting firms are among the best-paying employers in the market. At McKinsey, BCG and Bain, new graduates in the US can expect to earn a total of $120-125K a year, while MBA graduates can expect to earn a total of $220-225K.
At every level of the consulting career path, compensation increases steadily in line with a consultant’s career progression. At Partner level, a starting compensation close to $1,000,000 can be expected. This figure increases further to multiple millions of dollars for Senior Partners.
In addition to being generous, compensation for consultants is also predictable. For every firm and office, there is a unique base salary for each role from Graduate level to Partner. McKinsey, BCG and Bain also use a formula – based on the performance of both the consultant and the firm – to calculate consultants’ end-of-year bonuses.
Compensation in startups
In the startup world, compensation differs from company to company. In some startups, packages may involve a low base salary but will include stock options and other equity compensation, which would come to fruition in the event of the company going public or being acquired at a premium. However, it’s important to note that this only happens in a fraction of cases. When it does, the amount awarded depends on a number of factors, including the company’s valuation, when the employee joined and fluctuations in share price.
A greater degree of job security in consulting
Management consulting firms tend to be less affected by changes in the global economy than other types of companies, which means that there is a high degree of job security for top performers. Startups, by contrast, tend to be far more volatile, with job security often depending on external forces and, in some cases, the results of the founders’ efforts to seek funding.
Achieving a healthy work-life balance as a management consultant can be a challenge. Consultants work long hours under intense scrutiny and pressure, in an environment that is often stressful. A great deal of travel is also involved, which can further compromise consultants’ work-life balance. That said, travel to far-flung or exotic locations – along with a generous policy on hotel rooms and restaurants – can be something of a perk, and among the reasons why many people want to join top a consulting firm.
While every startup is different, it’s likely that in the early stages of a new company, a huge amount of work will be involved. Long hours and a degree of stress can be expected. However, those who are drawn to the startup environment often find its sense of mission and many ups and downs exciting, and therefore worth any compromise to work-life balance.
Ultimately, hard work, long hours and stress are part and parcel of the employee experience at consulting firms and startups alike.
Career advancement and growth
Rapid career progression is possible in top consulting firms
Top-tier management consulting firms offer consultants the possibility of rapid career progression, with the opportunity to progress to the next level of the consulting career path every two years. At McKinsey, BCG or Bain, a high-performing new consultant can expect to progress to Partner level in around only nine years.
Startups, on the other hand, typically offer a far less structured approach to career advancement and growth. In the very early stages of a company, the startup environment can be chaotic and the team is unlikely to be fully staffed. This can sometimes be beneficial to career progression: proactive individuals can usually identify opportunities to take on additional responsibilities and contribute to decisions that impact the business. However, there is rarely a defined path for career progression in startups and it’s unusual for team members to have visibility of the internal opportunities that might be ahead.
Top consulting firms take professional development seriously
At McKinsey, BCG and Bain, entry-level consultants receive comprehensive formal training, along with mentorship and guidance from senior team colleagues and frequent feedback from project managers and Partners.
In the startup world, each company will take a different approach to employee development, although it will rarely be as structured as it is in a top consulting firm. It’s also likely to be less of a priority to a new company, particularly in its earliest stages, where the focus is often on achieving the short-term milestones required to secure the next round of funding.
Management consultants develop a wealth of transferable skills
At McKinsey, BCG and Bain, consultants work across a wide range of sectors and functions to solve some of the most pressing problems for the world’s largest organizations. As a result, they leave the world of consulting with an abundance of desirable transferable skills and a highly respected brand on their resumes. This means that they are able to work in almost any function or industry.
The variety of attractive exit opportunities available to former consultants is one of the main reasons that many people choose to leave consulting after two to four years.
Lack of prestige can limit the exit opportunities from a startup
Spending time in a startup can position people well to join – or even found – another startup in the future. The huge amount of responsibility that those in startups tend to have can also stand them in good stead for future opportunities.
However, by their nature, startups are significantly less well known – and therefore less respected – in the wider business world than top consulting firms. Many startups fail, often before the company has had the chance to gain any kind of recognition. While a small handful succeed in becoming household names (e.g. Facebook, Uber, TikTok), this usually takes at least a decade to achieve. The name of a startup on a candidate’s resume is therefore highly unlikely to have the same impact as that of a prestigious consulting firm like McKinsey, BCG or Bain.
In summary, startups are a great route for those who want to get things done, are excited by the mission of the company, and are willing to take some risk with their professional growth and pay. Consulting, on the other hand, is an excellent way to gain exposure to strategic problems, build a transferable skill set, receive generous compensation and be well positioned for a number of attractive career opportunities.
If a career in management consulting sounds like it might be right for you, you can learn more in our complete guide to the management consulting industry. And if you’re preparing to apply to a top consulting firm, the resume and cover letter templates and specialized advice in our Free Resume Course will help you get your application in great shape.