By: Helios on November 5th, 2013

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Up or Out Policies for Organizations: Everything You Need to Know

Total Rewards | Risk Management | Business Management & Strategy | Employee Relations | Talent Acquisition

Have you ever considered an Up or Out personnel policy? While traditionally used in the military and academics, I recently had a client shift their career development approach to an Up or Out policy in order to attract, retain, and motivate high performing individuals.

What is an Up or Out Policy?

This policy means that each member of the organization must achieve a certain level in their career path within a defined period of time. If employees are not promoted after a designated length of time at their existing career level (usually no more than 4–5 years), they are counseled out of the firm. There is a very specific and narrow career path, and employees must demonstrate their ability to succeed at the next level before being promoted.

Why Use an Up or Out?

While the policy is not for every organization, it has proven to be very successful in many management consulting, accounting, and law firms. The Top 3 benefits associated with an Up or Out policy:

  • Organizations are able to clearly define and communicate their career development program and career paths to current and potential employees.
  • Employees in turn are able to have a clear understanding of what it takes to move ahead in the organization.
  • This approach encourages employees to take ownership of their career development, and ensures that only the strongest performers reach leadership positions.
How to Make the Up or Out Policy Successful

For my client, we implemented a few tools and resources to ensure the new policy would be successful and accomplish the goal of attracting, retaining, and motivating high performers.

Top 5 Resources to Have in Place for an Up or Out policy:
  1. Career Paths: For this type of approach to be successful, career paths must be established and clearly communicated throughout the organization.
  2. Training and Development: Internal trainings help to ensure an employee will gain the knowledge, skills, and abilities needed for success at the next level and will help them to move up their career path. Since an Up or Out encourages an employee to own their career development, they will need access to resources that will enable them to drive their own careers such as internal training and resources and support to attend external trainings. Internal trainings should also include education tools and programs that allow for lifelong learning and skills development. This is vital to the success of implementing this policy.
  3. Knowledge management tools: These databases such as an intranet or an internal social media network should be used to organize content to make it easily findable and accessible.  Employees should be encouraged to connect with fellow employees and share their knowledge.
  4. A Support System: In order for the new career development strategy to work, there needs to be a support system put into place. Employees cannot be expected to simply move up in the organization without any support from their company and managers. Managers will also need training to ensure that they provide their employees with the clear expectations, feedback, support and resources needed to maintain the high standards associated with this practice.
  5. Mentoring: A mentoring program is a great way to provide employees with a champion and consistent feedback, while also ensuring knowledge is shared throughout the organization.
What to Expect with an Up or Out Policy

A company must be prepared for the potential of high attrition that results when this career development strategy is a part of the corporate culture. With an Up or Out policy, there is a great amount of pressure put onto recruiting. Due to the extraordinarily high levels of employee attrition, which can be an outcome of this practice, organizations must put a lot of effort into recruitment of high quality entry level employees. If the organization is not able to recruit the large number of entry level positions this practice requires each year, or is unable to attract high quality entry level candidates, the Up or Out policy will not be able to succeed.

Many areas of the business must be evaluated before deciding to implement a policy of this nature. Recruiting, performance management, training and development, and the culture of the organization must all support the intended consequences. I must point out that an Up or Out policy will not be a fit for all companies. But if the culture fits, the strategy is aligned with the goals of the business, and the proper resources and support system are put into place, it can be a very successful and powerful career development tactic.