THE OFFER: COMPENSATION IN CONSULTING
CASE STUDY SOLUTION
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SYNOPSIS
Sa
Noah Joss had received a full-time job offer from Genesis Consulting, following his summer internship
there. While a full-time offer had been his goal, Joss started to think critically about the compensation
package and the working hours expected of him. Worried about making the wrong decision, Joss worked
with his study group to come up with a compensation survey for those working in consulting that could be
n
used as a reference point when deciding whether to accept the offers they had secured. After receiving a
data set of survey responses from a consulting-focused media organization, Joss needed to analyze the data
tio
to inform his decision of whether to accept the offer, as well as to better understand the consulting sector’s
compensation packages.
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So
OBJECTIVES
• run a simple linear regression in Excel;
• run multivariable linear and logistic regressions in Excel or R;
• compare statistical models for prediction; and
• apply statistical analysis for business decision-making.
The Case Solution Starts From page 5
,ASSIGNMENT QUESTIONS
1. Prepare the data in a format that can be used for analysis in Excel or R.
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2. What is the relationship between compensation and the variables included in the survey? Design a linear
regression model to analyze the relationship between salary, location, firm, and number of hours worked.
pl
3. Determine whether Joss should accept the offer based on the expected salary for a job in Canada, working
60–69 hours a week. Include considerations of confidence intervals and individuals’ risk tolerance.
m
4. (Optional) Build other types of models to predict Joss’s expected salary. Compare and contrast the
results with the linear model.
Sa
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tio
lu
So
The Case Solution Starts From page 5
,1. Prepare the data in a format that can be used for analysis in Excel or R.
There are a few ways to prepare the data. For simplicity and similarity common understanding, firms could
be grouped into two dummy variables.
Big 3: McKinsey & Company, Bain & Company, and Boston Consulting Group.
Big 5: Deloitte Touche Tohmatsu Limited (Deloitte), KPMG International Limited, Ernst & Young
Global Limited (EY), PriceWaterhouseCoopers International Limited (PWC), and Accenture plc.
Base case is boutique/other.
Other combinations of these variables are valid if there is a good rationale for them, as is including all firm
e
options as dummy variables (see Table 1). However, including all firms as their own variable may lead to
issues with statistical significance.
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There are also decisions to be made on which is the most relevant Y variable to build a model around. The
m
survey includes questions on salary and bonuses. As a result, there are three possible Y variables: salary,
bonus, and total salary (salary + bonus).
Sa
There are arguments for each of these Y variables. For example, in Ontario, Canada, consultants are required
by law to receive overtime compensation and, therefore, unable to receive bonus pay as part of their salary.
Regardless of geographical location, consulting contracts typically include a signing bonus given the relatively
n
tio
lu
So
The Case Solution Starts From page 5
, EXHIBIT -1. SALARY AND NUMBER OF HOURS WORKED FOR ALL FIRMS
Salary and number of hours worked
$140,000.00
$120,000
$120,000.00
$100,000.00 $84,556
$80,000.00
$57,877 $60,869
$60,000.00 $54,240
$40,000.00
$20,000.00
$-
<40 40-49 50-59 60-69 70-79
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pl
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Sa
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tio
lu
So
The Case Solution Starts From page 5
CASE STUDY SOLUTION
e
pl
m
SYNOPSIS
Sa
Noah Joss had received a full-time job offer from Genesis Consulting, following his summer internship
there. While a full-time offer had been his goal, Joss started to think critically about the compensation
package and the working hours expected of him. Worried about making the wrong decision, Joss worked
with his study group to come up with a compensation survey for those working in consulting that could be
n
used as a reference point when deciding whether to accept the offers they had secured. After receiving a
data set of survey responses from a consulting-focused media organization, Joss needed to analyze the data
tio
to inform his decision of whether to accept the offer, as well as to better understand the consulting sector’s
compensation packages.
lu
So
OBJECTIVES
• run a simple linear regression in Excel;
• run multivariable linear and logistic regressions in Excel or R;
• compare statistical models for prediction; and
• apply statistical analysis for business decision-making.
The Case Solution Starts From page 5
,ASSIGNMENT QUESTIONS
1. Prepare the data in a format that can be used for analysis in Excel or R.
e
2. What is the relationship between compensation and the variables included in the survey? Design a linear
regression model to analyze the relationship between salary, location, firm, and number of hours worked.
pl
3. Determine whether Joss should accept the offer based on the expected salary for a job in Canada, working
60–69 hours a week. Include considerations of confidence intervals and individuals’ risk tolerance.
m
4. (Optional) Build other types of models to predict Joss’s expected salary. Compare and contrast the
results with the linear model.
Sa
n
tio
lu
So
The Case Solution Starts From page 5
,1. Prepare the data in a format that can be used for analysis in Excel or R.
There are a few ways to prepare the data. For simplicity and similarity common understanding, firms could
be grouped into two dummy variables.
Big 3: McKinsey & Company, Bain & Company, and Boston Consulting Group.
Big 5: Deloitte Touche Tohmatsu Limited (Deloitte), KPMG International Limited, Ernst & Young
Global Limited (EY), PriceWaterhouseCoopers International Limited (PWC), and Accenture plc.
Base case is boutique/other.
Other combinations of these variables are valid if there is a good rationale for them, as is including all firm
e
options as dummy variables (see Table 1). However, including all firms as their own variable may lead to
issues with statistical significance.
pl
There are also decisions to be made on which is the most relevant Y variable to build a model around. The
m
survey includes questions on salary and bonuses. As a result, there are three possible Y variables: salary,
bonus, and total salary (salary + bonus).
Sa
There are arguments for each of these Y variables. For example, in Ontario, Canada, consultants are required
by law to receive overtime compensation and, therefore, unable to receive bonus pay as part of their salary.
Regardless of geographical location, consulting contracts typically include a signing bonus given the relatively
n
tio
lu
So
The Case Solution Starts From page 5
, EXHIBIT -1. SALARY AND NUMBER OF HOURS WORKED FOR ALL FIRMS
Salary and number of hours worked
$140,000.00
$120,000
$120,000.00
$100,000.00 $84,556
$80,000.00
$57,877 $60,869
$60,000.00 $54,240
$40,000.00
$20,000.00
$-
<40 40-49 50-59 60-69 70-79
e
pl
m
Sa
n
tio
lu
So
The Case Solution Starts From page 5
