25.08.2016 : Jessica Perkins

When your boss gives you a book about ‘up or out’

The flinty organisational principle that is rarely a cause for celebration, despite HR helpfully removing the terms ‘shape’ and ‘ship’ from it.

My manager recently recommended that I read a book about the commercial model of the consulting firm – the ‘Up or Out’ policy. Three hundred and sixty seven pages later and I was convinced that this book would not only shape the future of my consulting career, but how I approach the management of people in all facets of my life. I was also convinced that I could change everyone else’s lives by writing a short, five minute summary – a fraction of the time it took me!

If you, like every other employed person, sit in anticipation of your annual performance review and the promotion you are sure should be delivered at the end of it, you need to understand this invaluable career advice: if you can stomach the corporate Darwinism aspect, ‘Up or Out’ is liberating – and not just in a euphemistic ‘spend more time with your family’ way.

The ‘Up or Out’ policy is as simple as it sounds – within an organisation, you either move up or you move out. That is, after a prescribed amount of time in any role you either get promoted or you leave the organisation altogether. The latter can happen in one of two ways; you can be performance managed out or, if you understand the game, you can leave of your own volition and make the most of the experience in the process.

Here’s what you need to know.

1. Consulting is a pyramid scheme

Leverage models are important for ensuring businesses remain profitable, and the ‘Up or Out’ policy is rooted in the need to maintain this delicate organisational balance. If you can imagine a simplified top-tier organisational structure as a three tiered pyramid based on a leverage model of one senior to two intermediates to five juniors, you can believe that the balance of the employment ratio (in this case 1:2:5) is paramount.

It also does not take much intricate mathematics to realise that without infinite organisational growth, there are not enough promotions to go around. Let’s consider that it takes four years to progress from junior to intermediate and another four years to progress from intermediate to senior, your organisation will look something like this:

At the end of an intermediate employee’s four years, and a junior employee’s four years, the organisation must make a promotion decision. If one intermediate staff member was promoted, and their remaining peer left the company, the ’golden ratio’ would take a form similar to 5:10:25. This means that the organisation can promote all but one junior employee, who presumably would also leave the company. Now the organisation will look like this:

The ‘Up or Out’ strategy maintains the delicate balance of the growing organisation’s leverage ratio and demand in skill development.

2. It’s a dog eat dog world

So what does this mean for me as the employee?

Well firstly, I’m competing directly with my peers for a finite number of promotions because the organisation cannot disrupt the leverage ratio to promote endless numbers of people.

Secondly, if I am the employee that does not get promoted, the organisation does not want me to hang around taking up a position from a younger employee whose turn it is for a well-earned promotion.

The ‘Up or Out’ policy means that your peers are not your companions on this journey together, but instead are your direct competition. The organisation that has fostered you since graduate level would, in the politest way possible, prefer you pursue your craft elsewhere if you are not the very best of the best you could be at that point in time.

3. The truth will set you free

Here’s the kicker: the ‘Up or Out’ policy is liberating.

Firstly, you know exactly where you stand. You have the road map to success at the organisation and as soon as your trajectory starts to slow down then you know exactly what that means – it’s time to step up or step out!

Secondly, the approach dictates that leaving your job because you were overlooked for a higher promotion is a completely legitimate decision and not a case of sour grapes. There is always something to be said for knowing when to leave the party at the right time.

Thirdly, organisations thrive on the castoffs of other bigger or more diverse firms. That is, after gaining valuable experience at one of the industry’s established firms, lower tier companies will be boosted by the injection of fresh, motivated and well-trained talent. This approach breeds collaboration and experience sharing, over time improving the industry as a whole, levelling the resource capability and nurturing the ecosystem.

This is in fact one of the reasons that young employees put themselves through such brutal competition, because the next job you get is far better than the job you would have landed at the same point in your career if you had worked elsewhere first. Furthermore, this result is also in your original employer’s best interest, because a reputation as a firm who produces extremely sought after alumni, keeps the applications coming.

Are you trying to tell me something?

The ‘Up or Out’ policy means that the leverage model of your firm is not going to change just to accommodate little individual you. While this can mean facing some tough competition, uncomfortable decisions and possibly harsh realities, it is in yours and the organisation’s greater interest.

This being said, you could forgive me then, after reading the book at my manager’s request, being left wondering – is she trying to tell me something?

About the Author

Jessica Perkins

Assistant Project Manager

Jessica is a Project Manager based in our Sydney office. When she isn’t busy delivering projects for Transport for New South Wales, she enjoys lending her hand at civil design with the Infrastructure team and performing Shutdown cost management at large industrial sites. In her spare time, Jessica is the president of the Beca Sydney Social club and is a self-professed cruise enthusiast.

Ignite Your Thinking

What Do You Think?