Up or out - how bad is it?

hierarchy MBB on the job promotion Structure up or out
Recent activity on Jan 09, 2017
2 Answers
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Anonymous A asked on Jan 05, 2017

I read about the "up-or-out" system that apparently works in business consulting firms as a mechanism to retain the pyramidal structure of the organization. You either get promoted or are asked to leave.

How intense is this system and what % of people are asked to leave? What impact does it have on the culture of the firm?

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Marco
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replied on Jan 08, 2017
MBA | Head of Product for a Tech company | Former Strategy& and KPMG Advisory

Hi there,

because of the way a consulting firm works (charging a different hourly fee on projects based on the seniority of the professionals working on it) this system is vital to be profitable.

Answering your questions:

% of people leaving: the pyramid gives you a clear representation of how "intense" is this process. Imagine it being divided into different levels that represent the different roles within the firm: Level 1 = Analyst; Level 2 = Associate; Level 3 = Manager; ... ; Level N = Partner. It is difficult to give precise measures becauses there are several factors to take into equation but you can assume, in a healthy firm, the size of Level 2 will not be neither 90% nor 30% of Level 1. You can assume it will be in the range of 60 / 70% but expect the funnel to get more and more narrow as the Levels increase. An important factor to take into account that not all of the people leaving were asked to leave: a good number of them probably just opted for a different career path despite having the chance of being promoted.

Impact on the culture: as in every competitive environment, you can expect this sytem to create some rivarly between peers specially when the seniority increases and less chances of promotion are available. Nevertheless, I'd say it's rare to have strong antagonisms: in consulting you have to be a team player and a person who doesn't act accordingly has as many chances of being asked to leave as someone who has sub-par analytical or communication skills.

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Anonymous replied on Jan 09, 2017

Agree with everything that Marco said.

To re-inforce the point: In my experience people being asked to leave are the minority (at least after the first 6 months).
Many people that leave do so because of an attractive outside option.

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Marco

MBA | Head of Product for a Tech company | Former Strategy& and KPMG Advisory
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