In a hierarchical organization, "up or out", also known as a tenure or partnership system, is the requirement that each member of the organization must achieve a certain rank within a certain period of time. If they fail to do so, they must leave the organization.
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Private sector
"Up or out" is practiced throughout the accounting industry in North America, most notably at the Big Four accounting firms, which also practice this policy in other countries.
Up or out is "commonly regarded as a sign of the consulting industry’s hard-nosed approach to doing business" with Bain & Co and McKinsey & Company being the two consultancies most closely associated with the approach. However, it is "not a label that the consultancies are keen to own up to". According to Leslie Perlow, up or out is also employed at Boston Consulting Group.
Among many other law firms, Cravath, Swaine & Moore's so-called "Cravath System" says that associate lawyers who fail to achieve partner status within ten years of being hired are required to leave.
U.S. entrepreneur Vivek Wadhwa has argued that engineering in Silicon Valley is also "an 'up or out' profession: you either move up the ladder or face unemployment".
Military
In the U.S. military, the 1980 Defense Officer Personnel Management Act mandates that officers passed over twice for promotion are required to be discharged from the military. It has been criticized as "arbitrary and bad management" that forces out "many fit, experienced officers...because there were only so many slots into which they could be promoted". Paul V. Kane, a Marine veteran of Iraq War and a former fellow at Harvard’s Kennedy School of Government, has argued that the "archaic 'up or out' military promotion system should be scrapped".
Manning control within the British Army plays a similar role.
Academia
Tenure-track professors in the United States are usually subject to an up-or-out system. Newly hired professors, most often with the rank of assistant professor, must impress their department with their accomplishments to be awarded tenure, usually but not always combined with promotion to associate professor. Those not awarded tenure within a fixed time may be terminated. This first promotion may be required for tenure and further promotions are neither guaranteed nor necessary.
Discussion
Despite widespread use in certain industries, a 1988 textbook by Michael Jensen noted that the system's effects on productivity have not been studied in depth.