We are living and working longer, yet some partnerships enforce mandatory early retirement for their most senior people.  As Andrew Hill’s article in the Financial Times explains, partners at EY must retire at 60. In UK law firms, partners start getting ushered towards the exit a few years earlier.

There are various reasons why “up-or-out” has morphed into “up-THEN-out” in partnerships.  Some are openly discussed; others remain unstated.

First, seasonal pruning of the oldest partners can keep a partnership healthy, by making space for future generations of partners. This makes sense in partnerships that enforce a strict up-or-out policy at ALL levels, but Big Four firms don’t do this.  Instead, they swell the ranks of salaried partners and allow other professionals to plateau, until a downturn forces a shedding of the “excess fat” around the middle of the pyramid.

Second, put bluntly, most older partners don’t have the stamina or drive they once had to sustain previous levels of billable hours, though they still potentially have a lot of less tangible value to add to their firms. When remuneration is based on individual performance, rather than lockstep, it should be possible to adjust remuneration downwards to reflect these less tangible contributions. But in practice, this is hard to do.

Third, culling older partners can inflate PEP.  While PEP tells you nothing about the spread of earnings across the partnership, it is a very public measure of the status of the firm vs its competitors.  Culling partners whose biggest selling and billing years are behind them is a simple, though potentially short-sighted, way of massaging PEP.

Fourth, older partners are less biddable than younger partners because they are financially secure and have nothing left to prove.  They may remember a time when being a partner meant being less subject to management controls.  They may be cynical about "new" initiatives because they have watched them fail before.  They therefore represent a potential threat to the senior leadership of the firm, either through passive noncompliance or active resistance.

Over the past year in particular I have heard one message consistently from the senior and managing partners who approach me for advice: “I can’t do anything with the older partners.”  It seems that post-pandemic many older partners have not adjusted to the new world of work and, for understandable reasons, have struggled to remain motivated.  And their wisdom and insights don’t seem to be valued anymore.

If this sounds familiar, it may help to read my recent Harvard Business Review article on "Three Ways to Prepare for the Future of Work", co-authored with Jennifer Howard-Grenville. And if you aren't curious about the future of work, then why are you still at work?