At first glance, the idea of up-or-out seems counterintuitive. There are talented professionals from top universities that you hired through an elaborate and costly process, provided with a ton of training through their first years out of school, and who showed decent performance on the job – and still, you fire them. Sounds like the biggest waste of resources imaginable. 

For younger consultants it might make more sense. Even the most intricate hiring process isn't perfect and only on the job you see if someone's got what it takes. So that's the big leap of faith you take with all new hires. And given that it's a demanding job that requires a lot of hard work, long hours and a multi-faceted skillset (hard skills, soft skills), it's no surprise that it's not for everyone. But what about those that have shown an okay performance, even if not stellar? Well, that's fine, at least for the moment. 

Consultant's however, are often pushed to the edge of their comfort zone and sometimes beyond. They are asked to take responsibility early on, and are asked to perform beyond their job description. Even if you're just 2 years on the job and work as a senior business analyst, you'll have to lead workstreams independently. The project manager is just too busy to be holding your hand every step of the way. So you'll have to execute with less guidance than you sometimes feel comfortable. And that same business analyst, on the next project, may actually be asked to take the role of project lead himself. In every consulting firm, analysts and associates are leading projects before they are actually promoted to project manager officially. 

Still then, why fire people if their performance is adequate? Well, consulting firms need top performers on all levels. If you do your job well, but make no progress in a couple of years, there's a question about your potential for the future. Meanwhile, a younger consultant might be able to do an equally good job than you. But if that guy with less experience can do your job, obviously, he or she is on a steeper trajectory than you. If you need someone to take the next step on a challenging project, that person will be seen as the one with more potential. So, on all levels people are evaluated and low-performers are sifted out. In the end, a consulting organization resembles a pyramid. You need a lot of analysts/associates who are dedicated on a single project, plenty of project managers to manage these projects, and a bunch of partners who are responsible for multiple projects at once. This continuous screening on all levels ensures that only the top people make it to the top. 

All that being said, the up-or-out principle isn't something that gets half of the people fired each year, and an average performer is on the brink of losing his job all the time. It just means that you can't hide in the herd and tag along, like you would in many corporate jobs. You're constantly being evaluated and for a small percentage of people of a cohort (<10%) it can actually materialize. A somewhat higher percentage leaves voluntarily before the official process concludes (more on that later). Combined with those leaving completely voluntarily, that makes for the 20-30% turnover among for top consultants. 

The way the up-or-out principle works is not like many imagine. It’s not like you’re working along happily and then all of a sudden, one day, you have a termination letter in your inbox. The reality is that you get frequent feedback and performance appraisals and if your rating is below average, you’re perfectly aware of that. You’ll get feedback and support that can help you rectify the situation. If that doesn’t lead to the desired improvement, you’ll get a stern warning and more support. And if all that still doesn’t help, you are counseled to leave. Only then it’s time to leave. If you otherwise showed good conduct, the consulting firm will then always look for an amicable, mutual termination instead of firing. If you refuse that as well, you might actually be fired.

All of this is just to say that a termination doesn’t come out of the blue. The situation that you think everything is fine and dandy while the firm views your performance as bad rarely occurs. In fact, if you’re getting bad performance reviews, the job tends to be no fun for you as well. You’re obviously struggling with something and maybe already play with the thought of quitting yourself. That’s why a mutual termination often makes sense. You feel overwhelmed by the demands and the firm feels it’s not getting what it needs from you.

Of course, there is always a gray area in all of these discussions. Firstly, performance reviews aren’t always super objective. Most obviously, when the consulting firm or even the economy at large is struggling, all performance reviews get relatively harsher. Fewer people get high ratings or are elected partner, more people get warnings or are being let go. Another reason is that things happen which are outside your control. Maybe your core client stops engaging you for reasons unrelated to you (relevant for more senior consultants). Also, you might not always get a fair shake, simply because negative feedback by one partner overshadows an otherwise solid performance. And of course, not all situations are created equal. If you’re in a great project with great clients and can leverage one project phase into the next, you look like a star. Meanwhile, you won’t get as much credit for being parachuted onto a burning platform and turning it into an okay-ish outcome. However, as inconsistent as performance reviews are, if you’re a star, you will always make it, and if you’re a low-performer, you’ll always be out. Most, however, are somewhere in the middle and circumstances can have a huge impact.

The second gray area is the mode of your departure. There is a wide range between quitting yourself, a mutual termination, and being fired. If you feel like the job is not for you long-term anyway, if you feel like you should’ve gotten a better rating, or if you feel like you’ve been underappreciated or unfairly criticized, you might find yourself ‘quiet-quitting’. Then you put in only the minimum effort so you cannot get fired for cause, but you’re already looking for another job. That way you can keep the nice consulting checks coming in, and maybe even extract a garden leave or severance pay which you wouldn’t have gotten for quitting yourself. Then, technically, you were fired (or rather, asked to leave), but in reality you just shifted the responsibility for an already planned step from yourself onto the firm. 

Whatever the reason for your departure, however, you're well-advised to look for an amicable solution. If the people committees have made their decisions, there isn't much you can do about it. That is, of course, unless you feel that you've been truly discriminated against, or your performance was grossly misrepresented. The burden of proof in the court of law, however, can be quite high. That really depends on the jurisdiction you fall under (in some you can be fired easily, in others they'll look for a reason, like an inaccurate expense report). And the firms typically have their behinds covered quite well. If they've given you multiple bad performance reviews, there is enough evidence that it's hard to argue against. That means, that if the decision has been made, accept it. Don't be bitter about it, and don't behave in an unprofessional way. If you want to be remembered in a positive light, be welcome at alumni events, or leverage the network you've built, you better maintain a positive, forward-looking attitude. So, like in practically any other job, don't be a dick when going out. 

Interestingly, the firms can actually quite helpful if you’re asked to leave, as long as the separation is an amicable one. If you conducted yourself well, there will be partners that offer their help and their network, making a phone call or providing a reference if needed. If more senior consultants are asked to leave, there are sometimes even career counseling offers, or outplacement services. The consulting firm really wants to minimize bad blood and that you talk badly about the firm on the outside. Eventually, you might still have a prominent corporate leadership position and then it’s your decision to hire consultants. A friendly and professional separation can therefore pay dividends many years down the road.

Most people leave consulting after a couple of years at the latest, and quite a few don’t do so on their own terms. That’s the result of an up-or-out policy. Consultants are typically not fired out of the blue and usually come to the conclusion to leave together with the firm. It’s of course a performance question but there are quite some nuances to it, such as your personal motivation, your conduct and behavior, as well as the economic situation of the firm. 

If you want to know more for about the reasons for getting bad performance reviews and getting fired, check out this blog post (Why consultants get fired).