In an “Up-or-Out” system, a person has to climb up to a better position in a certain amount of time. Many consulting firms practiced this system to promote a competitive environment for their personnel. Whoever repeatedly fails the periodic evaluation will be asked to leave the organization.
As harsh as this may sound, in fact, consulting firms rarely fire their consultants. This article will explain how the “Up-or-Out” system works for consulting firms and uncover the myths surrounding it.
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Many organizations practiced this “Up-or-Out” system to promote a competitive environment for their personnel. At a consulting firm, “Up-or-Out” means a consultant must continuously improve and advance in the hierarchy. Whoever cannot keep up with this “Up-or-Out” will have to leave the organization. Only a few dedicated and brilliant minds will stay and eventually climb the ladder to become the firm's Partners.
In other words, for consultants, seniority means they are the finest for the job, not simply because they are older.
“Up-or-Out” is the result of the semi-annual performance evaluation
Performance reviews typically occur every six months to evaluate a consultant's potential. After six months, a consultant should have gone through at least two or three projects. While consultants constantly get feedback from colleagues and seniors throughout their work, a semi-annual review lets managers and consultants themselves see what has been achieved and what can be improved.
During this review process, a consultant gets feedback from their manager and colleague on the previously-done projects, including a detailed interpretation and assessment of their performance based on five criteria:
At McKinsey, a consultant also has to provide an “exposure list” of five stakeholders from projects they have worked on, including fellow consultants, support teams, or clients, who will give feedback on their performance to HR staff.
After collecting the feedback, the managers and Partners will review and present the strong cases for promotion. Depending on the result, a consultant can be moved one level up in the hierarchy or managed out if they fail the semi-annual review.
Rarely does a consultant get fired. A consultant receives constant feedback and support from colleagues and managers, so if one underperforms, they will have some good chances to turn the tide. After all, a consultant is a high achiever and will do their best to keep their place if they really want it. Those who fail to improve their performance often resign to avoid the unpleasant end.
Besides, no firm wants to simply let people go after spending so much effort and resources hiring and training them. The managers and colleagues will support a consultant extensively to improve their performance.
A consultant also has the opportunity to transfer to another project or division so they can prove their worth. In the worst scenario, a consultant will be informally encouraged to consider more suitable career options, and the firm can offer support for its consultant to land a new career.
In both cases, consultants usually leave on their own initiative. If a consultant falls out after a few months, either that consultant's performance and/or attitude are too bad, or the firm is encountering hardship. And no matter what, most consultants leave after two to four years, allowing many other consultants to rise and shine.
Read more: Consulting Exit Opportunities
Former consultants' exit options include corporate management, banking and finance, public-sector work, NGOs, start-ups, and independent consulting.
Each exit opportunity will depend on the firm, the office, and the consultant’s experience. The system of contacts a consultant creates during their time in a consulting firm, exposure to various industries, and intense learning from handling high-level business problems pave the way for many high-paying, prestigious career paths after consulting.
Many firms also offer support for consultants to land a new career because ex-consultants can introduce other talents to join their old consulting firm.
While the “Up-or-Out” policy seems to make management consulting excessively competitive and stressful, it is more similar to a rule of thumb than a regulation. Besides, the advantages you gain as a consultant outweigh the burdens you may feel. To learn more, check out our Rookie Consultant Playbook to get rapid promotion and become a superstar consultant.