How The Top Consulting Firms Rank: From Prestige To Life/Work Balance

Do you want to join a prestigious firm…or would you rather have a life?

Who says you can’t have both?

Every candidate thinks they know the tradeoff. In theory, prestige translates to big name clients, boundless resources, and lush paychecks. The downsides, of course, are 75-hour weeks capped by nonstop demands and travel. In consulting, such myths have gone the way of Mad Men’s morning martinis and teatime trysts. Increasingly, prestige firms are intensifying ways to boost mobility, flexibility, and balance. For them, compensation is a commodity. Culture and satisfaction are the true differentiators in drawing the best talent.

That trend defined Vault's Consulting 50 ranking, the gold standard for evaluating consulting firms on prestige and performance. The 2018 ranking heralds a new #1 — and a comeback story for the ages. A year ago, McKinsey had seemingly lost its mojo, hobbled by low survey marks in such areas as work hours and culture. Consider the message received. Thanks to raising employee satisfaction while maintaining prestige, McKinsey roared back to claim 1st in Vault’s overall ranking this year, edging out the Boston Consulting Group and Bain & Company for top honors.

McKINSEY WINS OUT THE OLD FASHIONED WAY: HAPPIER EMPLOYEES

It was a victory to savor for McKinsey, which had slipped to third overall in 2017 after playing hot potato with Bain for the top spot in recent years. The result was the payoff of a long-standing effort at McKinsey to enhance employee health and happiness. “They’ve always been the most prestigious firm,” explains Phil Stott, consulting editor at Vault in a written interview with Poets&Quants. “But they’ve been focusing on quality of life in a big way in recent years, and it really came through in this year’s ratings from employees.”

McKinsey’s ascension can be traced to the ranking criteria used by Vault, a leading collector of market intelligence for employer ratings and reviews. Each year, Vault conducts a management and strategy consulting survey. In 2017, this survey netted nearly 9,000 verified, confidential responses from active consultants who work at more than 60 North American firms. The two section survey evaluates performance using a 1-10 scale (with 10 being the highest score). In the first section, consultants score the prestige of competing firms. After that, they assess their own employers in areas like diversity, innovation, and supervisor relationships. Overall, Prestige receives the highest weight at 30%, which is followed by Employee Satisfaction (15%), Compensation (15%), Firm Culture (10%), Work-Life Balance (10%), Business Outlook (10%), Promotion Policies (5%), and the Ability to Challenge (5%).

Not surprisingly, McKinsey topped all comers in prestige with an 8.954 score. The company name alone conjures up words like savvy, tradition, and influence. Founded in 1926, McKinsey generated $8.8 billion dollars in revenue in 2016, more than the $7.3 billion in combined sales by Bain and BCG according to Forbes. Boasting 14,000 employees in 100 offices worldwide, McKinsey alumni are found in every corner of business, politics, and academia. They include Facebook COO Sheryl Sandberg, Best Buy CEO Hubert Joly, Arkansas Senator Tom Cotton, Darden School Dean Scott Beardsley, and Good to Great author James Collins. With such placement, McKinsey has created a mystique; a few critics even view the firm as an all-powerful puppeteer who can remake an industry with the slightest gesture.

McKINSEY’S BIGGEST IMPROVEMENTS COME IN COMPENSATION AND OVERALL SATISFACTION

A compliment, no doubt, but it doesn’t square with Vault’s 2018 results, where McKinsey’s prestige score sank by .077 of a point from the previous year. Considering that Prestige takes up nearly a third of the weight in Vault’s ranking, McKinsey was seemingly doomed — on the surface, at least. However, it overcame this setback by achieving a herculean feat: earning higher scores from employees across the evaluation criteria.

In Vault’s Quality of Work and Life measurement, McKinsey produced higher scores from employees in 17 of the 22 categories. It also ranked among the top three consulting firms in 15 categories, sporting the highest scores in six categories: Diversity, Exit Opportunities, Interaction with Clients, Internal Mobility, International Opportunities, and Promotion Policies. What’s more, McKinsey finished in the Top 10 in every category except Travel Requirements — a miss that it shared with Bain and BCG.

McKinsey’s biggest improvements stem from work requirements and culture. After finishing outside the Top 10 in both Hours in the Office and Work-Life Balance in 2017, McKinsey crept up to 10th in both categories. At the same time, McKinsey’s scores rose significantly in both Diversity (9.382 to 9.619) and Culture (9.349 to 9.540). Beyond fostering a softer and gentler workplace, McKinsey also shelled out big bucks over the past year, as evidenced by the compensation average jumping from 8.919 to 9.3326 — its biggest improvement in any category. Not surprisingly, Employee Satisfaction climbed from 9.052 to 9.350. Overall, McKinsey’s best performance came in Exit Opportunities (9.920), Business Outlook (9.868), Selectivity (9.839), Benefits (9.837), and International Opportunities (9.817).

That’s not to say that runner-up BCG did anything wrong in the 2018 rankings. Long ranked among the most employee-friendly companies and a prolific developer of intellectual capital, BGC’s overall score actually rose from 9.171 to 9.218 over the past year. What’s more, BCG employees gave the firm higher scores in 14 Quality of Work and Life categories, with its biggest improvements coming in Relationships with Supervisors (+.327), Work-Life Balance (+.286), Selectivity (+.199), Employee Satisfaction (+.16), Culture (+.155), and Formal Training (+.125). At the same time, BCG produced the highest scores overall in three categories: Ability to Challenge, Benefits, and Selectivity.

In contrast, Bain & Company slipped from 1st to 3rd after its overall score slid from .027 of a point to 9.129. Bain’s prestige score also lost some cache, falling by .026 — though only a third of what McKinsey suffered. Bain consultants also gave their employer higher marks in 11 categories, with the biggest jump coming in Compensation (+.146). To put that in perspective, Bain improved in just eight categories in 2016 when it ascended to the top spot. In addition, Bain produced the highest overall scores in the areas of Culture and Informal Training.

“I should stress that there’s no negative connotation there for Bain,” adds Vault’s Stott. “They still do an amazing job as an employer — all of the Big Three do, or they wouldn’t be at the top of the list. It’s just that they had a minor fall-off this year, while BCG maintained and McKinsey surged ahead.”

Looking ahead, Bain’s fall from its perch may just be a one-year anomaly. In the 2018 employee surveys, Bain consultants lauded their peers for their devotion, energy, intelligence, and teamwork. How satisfied are Bain employees? Among Vault’s 822 verified reviews of Bain, 76.8% of respondents gave the firm a perfect 5-star rating, with 99.1% scoring it with 4 stars or better — higher percentages than either McKinsey or BCG achieved. Long known as a serious but freewheeling bunch, Bain consultants heaped praise on the company’s culture, particularly its deeply-entrenched mentorship model.

So what went wrong? Like McKinsey, BCG’s prestige score — which is derived from consultants outside the firm —fell substantially…by .05 of a point to 8.623. In other words, due to evaluations based on outside opinions over internal experiences, BCG was unable to close the gap with McKinsey and remained lodged in 2nd place. Despite the disappointment, BCG remains committed to its fundamentals, comforted in the knowledge that the firm’s planning and progress will eventually win out.

To see how all the major and boutique consulting firms fared in the survey, check out PoetsandQuants.com:

Best Consulting Firms To Work For In 2018