Up or Out?

You gotta start somewhere.

As a recent job seeker, I got used to hearing this phrase. The rites of passage of a job search are familiar, and like many people I needed time to acclimate myself to new organizations and to a different country than I was working at the time. Both of these circumstances placed me in the role of translator—not just for prospective employers in the United States but also to non-American colleagues curious about my experience.

I learned that there are many different cultures for managing people. In the United States, the idea of “up-or-out” is widespread. Often it entails (a) hiring predominantly smart young people as entry-level employees, (b) who compete for promotion during a fixed time interval; (c) failure to advance entails termination. Up-or-out culture is characteristic of the U.S. and British militaries, faculty in “American-style” universities, and in partnerships such as law firms and consultancies. Given this ubiquity, I was surprised that many of my colleagues were unfamiliar with the management culture.

In fact, up-or-out has a very American history. During the early 20th century, Paul Cravath promoted the system to maintain the culture of his firm, now called Cravath, Swain, and Moore. Shortly afterward the U.S. Navy and Marines were the first branches to adopt an up-or-out system for officers that would later expand across the military. The father of management consulting, Marvin Bower, began his career in law before joining with James O. McKinsey.  When McKinsey died in 1937, Bower remade his partner’s consultancy to resemble Cravath, including its management style. By 1940, the American Association of University Professors revised its guiding documents to include a recommended seven-year probationary period, which remains the up-or-out standard for tenure-track faculty.

Now more than a century old, the Cravath system has both advocates and detractors. At its best, the system is structured around a meritocratic ideal, where standards for advancement and firing are uniform and transparent. Up-or-out management naturally matches mentors with protégés, and promotion from within helps to maintain institutional culture. Today, Cravath remains one of the most profitable law first in the world, other consultancies have promotion and retention policies similar to McKinsey’s, and the American-style tenure system is increasingly prevalent in European and Asian universities. However, in settings where creativity and personality are essential to productivity, frequent peer comparisons can undermine performance. It is not clear that a tournament always brings out the best in people. Even when competition is motivating, there is evidence that the effect has limits.

For private firms, there are also questions of sustainability. Adherents to the Cravath system include some of the most profitable firms in their industries, but successes come at a time when clients are placing increasing demands on staffing and cost. There is a risk that new entrants will erode market share, or that the firms’ brands will suffer as they grow. Either in spite or because of the rigors of the system, many up-or-out organizations continue to thrive, and 115-year-old management principles continue to command respect.

In October, I started a new job at the U.S. Department of Energy, where I look for ways that the nation’s energy portfolio can benefit our manufacturing sector and vice versa. Though there are many differences from British academia, the similarities are striking: I get to work on unsolved energy challenges, the culture is not up-or-out, and I still translate between subcultures every day. I am fortunate, because having “to start somewhere” meant I could rediscover meaningful work in another context. And although the path to forward is not defined, I also have freedom to find my own.

Note: Any views expressed in this article are the author’s own, and do not reflect the opinions of his employer, the Chemical Society of Washington, or the American Chemical Society.

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