Hiring for start-ups
A common question asked by candidates who are thinking about leaving consultancy is whether future earnings will greatly vary based on the type of company they join next. This is also something that employers often struggle with when hiring, with questions such as “how much should we be paying based on industry and seniority?”
Hiring based on seniority
When they think about leaving consultancy, candidates generally want to know how their immediate and long-term pay will differ from their progression within their consulting firms. In general, start-up recruitment teams and hiring managers need to be aware when searching for candidates that corporate employers and consultancies pay significantly better at junior levels than start-ups, which may be seen by a candidate as a disadvantage.
A senior analyst role will start on an average salary of £31k compared to £52k at a large consultancy. An associate role will start at £46k compared to £77k and a managerial level position will pay on average £91k vs £109k per annum.
However, this is reversed for senior roles, with a director earning around £261k within a start-up compared to £199k within a large consultancy. The reason for the vast difference and the sudden jump in start-up salary levels is equity – by the time a senior level is reached within a start-up, almost 60% of the total annual compensation is made up of equity. Despite the junior level salaries being significantly lower, the room for salary growth and compensation at a senior position within a startup can be significantly higher. This is something to emphasise in job adverts at any and all levels. Start-ups are a popular post-consulting career choice, even at the comparatively lower-paid junior levels. This is only partly due to the much higher level of responsibility and impact offered. Future prospects are just as important a factor, so explicitly mentioning career progression is key.
Early vs Growth-stage start-ups
Of course, the basic annual salary within a start-up also depends on the stage the business is at. At the growth stage of a start-up, the salary for junior roles up until a manager position is significantly lower compared to an early stage start-up, with a manager role averaging at around £70k for a growth level start-up in comparison to around £90k at the early stage. However, roles at a director level come with similar compensation, around £100k, for both stages of start-ups. Ever wondered what is what like to work in a rapidly growing start-up?
Pay breakdown by seniority
As previously mentioned, the breakdown of compensation for directorial hires shows that only around 30% of the annual compensation is made up of the basic salary, with around 60% made up of equity.
In comparison, around 75% of a manager’s or associate’s compensation is made up of the basic salary, with around 15% of it being made up of equity.
The remaining 10% of each is made up of bonuses, dividend, pension etc.
Overall, it’s important for start-up employers to keep in mind the lower pay progression for junior roles when hiring. As the movemeon salary report statistics demonstrate, start-ups offer lower salaries up until a managerial level than corporates and larger consultancies, which can be seen as off-putting, particularly for consulting alumni. However, the compensation eventually increases alongside business growth and seniority, with director-level positions largely overtaking more established industries. This can make even more junior start-up roles attractive to (ex-)consultants – at movemeon, we have seen clear evidence that start-up roles at all levels are popular with consultants and alumni. If you’re interested in start-ups,read our 6 tips on how to break into the start-up scene. What is key is simply explaining how the hiring team envisages career progression, and which other elements of total compensation, aside from basic pay, are going to make up for the immediate drop in basic earnings.
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