Top consulting firms McKinsey, BCG, and Bain, pride themselves on being meritocratic workplaces where promotions are based on the demonstration of ability and potential.
The flip side of this is that some do not make the bar when review season rolls around. In these cases, the firms will terminate a small number of employees due to them not meeting the promotion criteria. This is commonly known as the “Up or Out” policy.
In this article, we share how the “up or out” process works in reality, how often it happens, and what this means for a potential new consultant.
How the “Up or Out” Policy works
Consulting firms expect their consultants to progress quickly and typically complete performance reviews every six months. At each review, they assign every consultant a performance bracket e.g., underperforming, as expected, exceeding expectations, etc.
The bracket in which a consultant is placed is decided upon by the committee of Partners who look after the performance review process. Their decision is informed by the specific Partner in charge of collecting and reviewing the feedback from the managers and partners who worked with the consultant over the previous six months.
If a consultant is in the bottom performance bracket and if there is no sign that the individual has the potential to turn the situation around the consultant is asked to leave. That decision is normally made after a vote from the Partners, which is sometimes assisted by a remote-controlled voting machine to ensure fairness and anonymity.
However, if the Partners feel the consultant has the potential to improve the situation and rapidly work on the areas that they are failing to meet the bar in, they are given a chance to improve and are often given a few more months to prove themselves.
It’s worth noting that a consultant is rarely asked to leave if they’ve been in the job for less than a year, because firms are more inclined to give them a chance at this stage, given how new the job is to them.
How frequently consultants are asked to leave
Based on our experience of managing the “up or out” policy at one of the top firms, around 5% of a given class will be asked to leave after the one year mark. This attrition rate takes place every six months due to the frequency of the performance reviews.
The 5% is compounded over the years so it’s easy to see why only a small percentage of a given cohort of new consultants stay and make it to Partner ten years later.
Most people who are placed in the bottom bracket are those who struggle and don’t enjoy the work, so finding themselves in this situation rarely comes as a surprise.
The intensive feedback environments of top consulting firms means that if a consultant is heading in the direction of being in the bottom bracket they often have plenty of indication that this is the case.
This also means that they’re made aware of the things they need to work on before the review takes place. The firm is likely to support the consultant with training to address these points of feedback and to give them a chance to improve.
The majority of consultants who aren’t enjoying the job or are underperforming often look for different opportunities before getting to the stage of being asked to leave. The Partner reviewing the consultant, and/or their staffing manager, will do what they can to help the consultant make a decision. This means that many people leave before being pushed out, in addition to the 5% who are asked to leave.
When this happens, the consultant is often allowed to stay on the payroll for a few weeks or months depending on their tenure to allow theme to find a new job without being dedicated to a specific project.
These consultants often find impressive new jobs due to the time, resources, and connections available to them. This is clearly in the interest of firms; having successful alumni looks good for the firm and may even result in attracting work from these people when they find themselves in executive roles in the future.
What this means for a potential new consultant
It’s clear that most people don’t join a top consulting firm to have a long-term career; most people spend 2-3 years in the job and this length of time is already considered a success.
Even if you work in a top firm for only a few years, you’ll still be able to realise the vast majority of the incremental benefits in training, connections, and learning as they begin to peter out around this time.
This means that the “up or out” policy should not prevent you from moving into consulting, as long as you are committed enough to push hard for 2-3 years and have enough indication that you will enjoy the work.
Then, if you have the motivation, resilience, and passion for the work to stay longer, good for you! You’re in a good place to make Partner.
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