Earlier quoted context omitted.
> They have the rule that you either get better and a promotion or you will be fired. The conventional term for this is "up or out".
Yes, but why aren't other companies do this?
And as Applejinx says, the fact that someone isn't suited to the role above them doesn't mean they aren't suited to their current role. Up-or-out means tossing out the guy who knows his job well and is doing it well to replace him with someone who's never done it before and needs a training period; this is significant overhead applied to every job in the company.