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How the ‘up or out’ policy works at McKinsey, BCG and Bain

Top consulting firms McKinsey, BCG and Bain, pride themselves on being meritocratic workplaces, where promotions are based on the demonstration of a consultant’s ability and potential. However, not everyone meets the bar for promotion when performance review season rolls around.

In this article, we take a close look at how the firms use an ‘up or out policy’ to manage this scenario, and what this means for consultants.

What does ‘up or out’ mean?

Top consulting firms expect their consultants’ performance to rise with their seniority and tenure. ‘Up or out’ is a performance management policy under which those who fail to meet these rising expectations are asked to leave the firm.

How do firms evaluate their consultants’ performance?

At McKinsey, BCG and Bain, performance reviews typically take place every six months. From new hires to Senior Partners, consultants are all evaluated on a set of core skills. The performance expectations for each skill rise in line with the consultant’s role and their length of time with the firm.

At the more junior levels, consultants are typically assessed on skills such as problem solving, communication, autonomy and client relationship management. As consultants become more senior, more emphasis is placed on team management, client development and expertise.

Feedback is gathered from individuals who have worked with the consultant in the previous six months. A committee of Partners then assigns the consultant to a particular performance bracket (e.g. ‘underperforming’, ‘as expected’, ‘exceeding expectations’).

Each consultant who is assigned to the lowest performance bracket is then reviewed again by the committee of Partners, who must consider whether the consultant might be able to turn the situation around. The committee uses a live voting app to record these decisions in order to ensure fairness and anonymity.

If the majority conclude that the consultant has potential, they allow them to stay at the firm for a few more months to work on the areas where they have not met the expected standards. However, if the majority deem there to be no chance of the consultant’s performance improving, the consultant is asked to leave the firm.

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Who does ‘up or out’ apply to?

The up or out policy at McKinsey, BCG and Bain applies to consultants at all levels, including Senior Partners. However, it rarely affects those who have been in the job for less than a year.

After year one, around 5% of the population of a class of consultants will be asked to leave every six months. While this is a small percentage, it compounds over time. This is one of the reasons why some consultants don’t make Partner; only a fraction of a cohort of new consultants will stay at the firm long enough to reach this level.

What does the up or out policy mean for consultants at McKinsey, BCG and Bain?

There’s no doubt that the up or out policy can seem intimidating. It certainly puts consultants at the top-3 firms under more pressure than consultants in other firms, including the strategy units of the Big 4. However, in reality, if a consultant is heading in the direction of being in the lowest performance bracket they have plenty of warning.

McKinsey, BCG and Bain all provide consultants with frequent feedback and extensive support for addressing it. Those who fail to improve their performance after receiving this feedback and support often decide to resign, and end what has inevitably become an unpleasant situation.

In other cases, consultants underperform because they’re struggling with the demands of the role or they’re simply not enjoying the work. In this situation, they’re informally encouraged to consider more suitable career options, even before the formal review process begins.

In both cases, most consultants who are not performing well tend to leave under their own initiative, rather than face the prospect of being pushed out as a consequence of the up or out policy.

Whether consultants leave by choice or as a result of ‘up or out’, they are generally offered the chance to stay on the firm’s payroll for a few additional weeks or months – without being assigned to a specific project – while they look for a new job. While this degree of support might sound unusual, it’s in the firm’s best interests to have successful alumni, who may bring work to the firm in the future if they land an executive position elsewhere.

Whatever the circumstances for moving on from the world of consulting, it’s clear that the majority of people don’t join a top firm to have a long-term career. In fact, most leave consulting after two to four years. This length of time is considered to be a success because it’s long enough to realize the vast majority of the incremental benefits of training, connections, and learning to be gained at a firm like McKinsey, BCG or Bain. It’s also long enough to be well placed to pursue the many attractive exit opportunities available to former consultants.

If you think you would enjoy the work of a management consultant and you’re committed to working hard for two to four years, the up or out policy shouldn’t prevent you from applying to a top firm. You can find out more about a career in management consulting in our complete guide to the industry. And if you’re preparing to apply to a top consulting firm, the resume and cover letter templates and specialized advice in our Free Resume Course will help you get your application in great shape.

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