Much of the day-to-day work of being a consultant involves performing in situations that have clear goals and deliverables. You might not think of management consulting as involving much debate or negotiation, at least in comparison to a field like law. But the arc of one’s consulting career depends more on negotiation prowess than one might think.
Working at a consulting firm means you will have to occasionally engage in negotiations. But these opportunities are just seldom enough that you don’t necessarily get better at it without concerted effort. Further, most of the negotiations you do will be with your employer itself, in situations that will set your and their interests somewhat at odds.
In this article, we’ll take a deep look at how to negotiate in a management consulting setting. We’ll look at some of the main scenarios in which you’ll find yourself negotiating, and we’ll offer powerful negotiation tips for securing your own interest.
Negotiation Examples in Consulting
Depending on how you construe the concept of negotiations, your consulting career might draw on negotiating skills with some regularity. But there are a few obvious negotiation examples that everyone will go through. These involve internal scenarios where hiring, role, and salary are on the line. Let’s take a look at how to negotiate your way through some of these challenging situations
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How to Negotiate a Job Offer
Note: negotiating an offer in consulting is really only an option if you are an experienced hire!
The best practice for how to negotiate a job offer is tricky to manage. You have to negotiate for your own interest without detracting too much from the company’s interest in hiring you. Typically, many people would like to work at a consulting firm, so if push comes to shove, we almost always recommend taking an offer. The accelerated salary growth and brand-name experience make it worth it for most candidates.
It’s essential to do your research in order to set realistic expectations for yourself. Don’t make an unreasonable demand that disqualifies you from consideration.
Here is the information you’ll need:
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- The salary range for other consultants with the same experience level at the firm
- The starting base salary for pre- and post-MBA roles (use our consulting report!)
- Ideally, competing offers from firms that this particular firm benchmarks itself against
After you make your first counteroffer, pay attention! Good negotiators and poker players have at least one thing in common: they know how to read people. Pay attention to your counterpart’s body language and facial recognition for clues about how off-base your counter is. Be firm, yet polite. Contrary to popular belief, coming across as “tough” and antagonistic doesn’t help you here. Staying calm and composed keeps as much of the power in the conversation with you. You should also view the negotiation as a conversation in which you can acquire missing information about what the company is willing to pay you.
Don’t cross the line of playing hard-to-get - make it clear you are interested in the role but want to be compensated fairly. In many consulting firms, it’s easier to negotiate for other perks, like a 1-time signing bonus, PTO, office location, or practice area.
Finally, be realistic, and balance risk and reward. If you really do have two other options, and you like those options, you are in a different spot altogether than if this offer right here is your one and only. Trying to eke out another $5,000 in salary from the one employer who has given you an offer is extremely risky.
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How to Negotiate a Raise (or Promotion)
First of all, many consulting firms have somewhat rigid compensation structures that are very much tied to your role and level. Bonuses are typically highly variable and discretionary, but you won’t get a “raise” unless you get “promoted” to the next level. If you do get promoted there may not be much to negotiate at firms where everyone in the same geography at the same level gets the same compensation. But this isn’t always the case.
Negotiating a raise can be easier than negotiating a job offer. The difficulty and costs of employee turnover normally incentivize companies to maintain staff when possible. Though the competitive nature of the consulting world complicates this to an extent, as many companies have an up-or-out promotion & somewhat rigid raise schedule.
To that end, remember to consider the company’s perspective as you negotiate a raise. Companies generally don’t make salary decisions based on who wants or “deserves” more money—in other words, your desire for a raise doesn’t guarantee you will get one. Rather, companies make salary decisions based on available resources and on employee value. Companies generally will try to maintain an employee at the lowest salary they can, taking into account not just employee morale but also that employee’s value to the company. Therefore, the essence of negotiating a raise involves verbalizing your value to the company.
When people think of how to negotiate a raise, they typically are really wondering how much to negotiate salary. It’s good to enter a negotiation with a range in your head. Understand you and your boss are likely to be apart at first—you can present a strong opening offer with an understanding of how much you’re willing to adjust downward.
Be Sure to Do Your Research
Researching the marketplace ought to help you come up with an appropriate figure. You can take into account what you know of other employees’ salaries in order to prepare for your negotiations, although it’s unwise to make direct comparisons to other employee salaries in your pitch.
Remember also that timing is important. Some employers restructure salaries regularly, whereas other employers do it when it’s deemed appropriate. It’s probably not wise to approach your boss asking for a raise after a poor performance on your part. Nor would it be wise to approach your boss when they are obviously having a terrible day.
Here’s how to grease the skids: 6 months prior to making an ask for a raise, send a monthly recap email to your manager highlighting your wins and what you’re continuing to work on. Then, 2 weeks prior to wanting the meeting, put a “performance review” meeting on the calendar with your manager. Talk about the successes you’ve achieved, ask for feedback, and bring up the compensation at that time.
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How to Negotiate a Role
In our first two examples, we were negotiating for more money. But there is another situation regarding “internal” negotiation that is very common in consulting. Consulting firms, especially smaller ones, often sell projects for which they must “staff a team” but for which they don’t have the “ideal” team. For example, they may need someone to build a big financial model, but you have already built a big financial on your last two projects and ideally need to be put in a different position on your next project to demonstrate new skills. Or maybe there is a project on the West Coast or in Europe that requires tons of travel. You, however, don’t want to travel.
In both of these cases, it’s wise to negotiate on some level before accepting the role. Your firm and you may both recognize that, really, the chips fall a certain way sometimes, and an analyst or associate generally goes with the flow. But at the same time, having discussions of “role positioning” and “impact on bonus” is very appropriate. You might discuss how taking on this role is something you are happy to do, as long as it can be structured to allow you to also demonstrate x,y,z skill such that you continue to progress in the firm. Or you might try to gently open a dialog about special considerations during bonus discussions if you agree to spend 75% of your time in Europe when your fiancé is back in New York.
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How to Negotiate Scope
There is yet another form of “internal” negotiation on consulting. In this case, it’s around “scope.” Consulting partners and managers will often ask the team to move mountains before a big meeting. It’s not as if they don’t care about the personal lives of their team, but they realize consultants are well compensated and long hours are part of the deal. Don’t be afraid to “negotiate” in the sense that you can bring up the actual amount of time it will take to do what is being asked. One can simply say, well, we can do x, y, z analysis before the big meeting on Tuesday, but it will mean that the two of us need to work 10 hours on Saturday and another 10 hours on Sunday. This opens up a dialog around what is really necessary to have a good meeting with the client. It’s fine to work all weekend once in a while, but it should be a rare thing. If you negotiate well, it can happen less often.
As you continue to move up, you’ll realize that the best partners are those that are best at narrowing scope with the client. This is something that generally distinguishes MBB partners.
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How to Negotiate a Contract
When you progress in your consulting career, you will begin negotiating ambiguous contracts. When you are selling ideas, you are contracting to do things like “evaluate competitive dynamics” or “define alternative strategies.” These particular concepts can take 10 minutes, 10 days, or 10 months to execute depending on how you define and do the work. So, it’s important to set clear objectives, milestones, and metrics.
Contracts can be particularly difficult negotiations. They represent legally binding agreements that must be followed to the letter. The difficulties in agreeing on shared language can be immense. You could begin with a term sheet that addresses the larger goals of the contract. This will help make the different positions clear from the outset and will establish a common understanding for moving forward.
Even when most of the negotiating parties’ desires are in alignment, the procedure for how to negotiate a contract is usually long and challenging. Try not to let it overwhelm you at any stage—it’s much more marathon than sprint. And definitely be sure to seek the advice of a lawyer before signing anything.
Negotiation Tips
No matter what particular form of negotiation you’re engaged in, there are some powerful lessons you can learn about how to negotiate. We’ve compiled some effective negotiation tips.
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Figure Out What’s Really Up for Negotiation
Many things really are up for negotiation, but other things are not. It’s important to determine the difference so that you don’t start fighting a losing battle. For instance, salary is often negotiable, but it isn’t always. If you’re a particularly disempowered employee—or if your employer is an unusually precarious financial situation—you may not actually have any chance of negotiating for a higher salary. If salary is simply pegged to your “level” within the firm, you can’t negotiate around that.
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Be Like-able
We are all inclined to be generous toward those people we like. You are far likelier to win a partner to your position if they have positive feelings about you and the negotiating process. Entering into a highly antagonistic dynamic sets your interests at odds, which decreases your chances of getting what you want.
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Make Win-Win Agreements
This may be the most powerful trait shared by the best negotiators. There is some prevailing wisdom that negotiations are typically zero-sum, meaning only one party can win. But the essence of human relations is usually a positive sum—by working together, we can both win. Helping your negotiating partner to realize that can be very powerful in helping you get what you want.
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Educate Yourself
Do the research so you know everything there is to know about the negotiating positions you’re taking. You might think your salary demand is reasonable because your rent is high. But it may be that you’re asking for more money than anyone with a comparable role tends to earn. Having an informed idea of what you have a chance to win in your negotiation enables you to win more
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Practice Asking for What You Want
This might sound a bit fluffy, but many people actually find it difficult to ask for what they want. This is not to say you should be overly demanding of others. Rather, when you really believe you need or deserve something, you should try to ask for it clearly. This might seem difficult to do when you need and deserve a significant raise, which you know your boss would prefer not to give you. But you can actually practice in smaller, everyday situations. For example, if you have to move a heavy piece of furniture, instead of hurting your back to do it, try asking someone for help. The Pyramid Principle is a great tool to utilize as you build your case.
Conclusion
Most of the work a management consultant does involves situations where their interests are aligned with other stakeholders’ interests. For example, both the consultant and the client want a project to succeed.
Negotiations might seem to be a contradiction to that dynamic, as they seem to involve people taking opposing positions. But really, the most successful negotiations occur between people who are able to align their interests. In order to effectively create win-win scenarios, you need to be clear and honest about what constitutes a win for you. You also need to be smart and empathetic about what constitutes a win for your negotiating partner.
Additional Reading:
- Management Consultant Salary
- Mental Models: What Are They?
- Virtual Networking
- Leadership Development: The Ultimate Consulting Soft Skill
- The Pyramid Principle