It has been suggested that large tall hierarchies will predo

It has been suggested that large, tall hierarchies will predominate in physical capital intensive industries, and these will typically have seniority-based promotion policies. By contrast, flat hierarchies will be seen in human capital intensive industries. These will have up-or-out promotion systems, where experienced managers either become owners or are fired. Can you provide a basis for this suggestion or against the suggestion? Explain

Solution

It is an HR policy consulting firms have which refers to predetermined time frames within which consultants either get promoted or managed out. You cannot stay at the same level for too long.

The implementation of the up or out policy is simple. If you are perceived as good enough to one day make partner, you will progress to the next level. If you are not perceived as good enough, they will ask you to leave.

It is correct because in human capital intensive industries, the entire success of a business is dependent on quality of human capital . In these circulstances, if a candidate provies his worth, he gets grequent promotions and ultimately becomes partner in the business. On the other hand, if he is not able ot provie his worth, he is asked ot quit the industry.