Up or out

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In a hierarchical organization, "up or out", also known as a tenure or partnership system, is the requirement that each member of the organization must achieve a certain rank within a certain period of time. If they fail to do so, they must leave the organization.[1]

Examples[edit]

Private sector[edit]

"Up or out" is practiced throughout the accounting industry in North America,[2] most notably at the Big Four accounting firms,[3][4] which also practice this policy in other countries.[5]

Up or out is "commonly regarded as a sign of the consulting industry’s hard-nosed approach to doing business" with Bain & Co and McKinsey & Company being the two consultancies most closely associated with the approach. However, it is "not a label that the consultancies are keen to own up to".[6][7] According to Leslie Perlow, up or out is also employed at Boston Consulting Group.[8]

Among many other law firms, Cravath, Swaine & Moore's so-called "Cravath System" historically expected associate lawyers to achieve partner status within ten years of being hired or to leave the firm.[9]

U.S. entrepreneur Vivek Wadhwa has argued that engineering in Silicon Valley is also "an 'up or out' profession: you either move up the ladder or face unemployment".[10]

Military[edit]

In the U.S. military, the 1980 Defense Officer Personnel Management Act mandates that officers passed over twice for promotion are required to be discharged from the military.[11][12] It has been criticized as "arbitrary and bad management" that forces out "many fit, experienced officers...because there were only so many slots into which they could be promoted". Paul V. Kane, a Marine veteran of Iraq War and a former fellow at Harvard’s Kennedy School of Government, has argued that the "archaic 'up or out' military promotion system should be scrapped".[13]

Manning control within the British Army plays a similar role.

Diplomacy[edit]

The United States Foreign Service has used an up-or-out system since 1980. The American Foreign Service Association, which is the professional organization for foreign service officers, has criticized this system, on the grounds that it penalizes otherwise dedicated officers who do not wish to enter Senior Foreign Service.

Academia[edit]

Tenure-track professors in the United States are usually subject to an up-or-out system. Newly hired professors, most often with the rank of assistant professor, must impress their department with their accomplishments to be awarded tenure, usually but not always combined with promotion to associate professor. Those not awarded tenure within a fixed time may be terminated. This first promotion may be required for tenure and further promotions are neither guaranteed nor necessary.

Discussion[edit]

Despite widespread use in certain industries, a 1988 textbook by Michael Jensen noted that the system's effects on productivity have not been studied in depth.[1]

See also[edit]

References[edit]

  1. ^ a b Michael C. Jensen (1998). Foundations of Organizational Strategy. Harvard University Press. p. 215. ISBN 978-0-674-64342-0.
  2. ^ The Cultural Shaping of Accounting. Greenwood Publishing Group. 1995. p. 76. ISBN 978-0-89930-953-8.
  3. ^ "Talent management: Accounting for good people". The Economist. July 19, 2007.
  4. ^ http://www.big4.com/deloitte/big-4-culture-the-more-things-change-the-more-they-stay-the-same/
  5. ^ Paul Gillis (2014). The Big Four and the Development of the Accounting Profession in China. Emerald Group Publishing. p. 45. ISBN 978-1-78350-486-2.
  6. ^ Charles Batchelor (April 20, 2011). "'Up or out' is part of industry culture". Financial Times.
  7. ^ Raghavan, Anita (January 12, 2014). "In Scandal's Wake, McKinsey Seeks Culture Shift". New York Times.
  8. ^ Leslie Perlow (2012). Sleeping with Your Smartphone (Hardcover). ISBN 978-1-4221-4404-6.
  9. ^ "How to Become a Law Firm Partner | Young Advocates | ABA Section of Litigation". apps.americanbar.org. Retrieved 2018-02-09.
  10. ^ Vivek Wadhwa (August 28, 2010). "Silicon Valley's Dark Secret: It's All About Age". TechCrunch.
  11. ^ Bernard Rostker; et al. (1992). "The Defense Officer Personnel Management Act of 1980 - A Retrospective Assessment". ISBN 0-8330-1287-8.
  12. ^ John T. Reed; John T. Reed. "The 'U.S. military's marathon, 30-year, single-elimination, suck-up tournament' OR 'How America selects its generals'".
  13. ^ Kane, Paul (April 20, 2009). "Up, Up and Out". New York Times.