I might have posted about this before, but the issue recently came up again in an "Ask Dr. Isis," where a struggling tenure track professor was let go at year 4 (before coming up for tenure). People in the comments were surprised that she wasn't given a couple of more years to prove herself, since tenure usually happens at year 5-7.
Here's the deal, that isn't always clear to people applying for (or even ON) the tenure track: almost every institution will put you on a series of initial shorter term contracts. You start with a two-year contract, that will pretty much always get renewed for another two years at the end of your second year. It is extremely unlikely that your department would let you go at that point, when it isn't yet clear whether your funding/publication trajectory is flat or upwardly mobile (thus not yet predictive for tenure success) and when they've invested upwards of $750,000 in those first two years of your position (what with your startup package, salary, student support etc.).
That second renewal at the end of your 4th year, however, is NOT as automatic. Most places will have a fairly serious third year review process, where your progress towards a tenurable package of publications and grants is assessed by your department. If you are not on track to having "enough" (which is an ephemeral amount, nobody will tell you quite what "enough" would be, they'll just tell you if you aren't there yet), you are in serious danger of not having your contract renewed. That's why getting off the ground FAST and publishing least-publishable-units as soon as you INhumanly can is SO important.
Everyone knows the funding situation is really bad right now, and every institution will have different standards for what is "enough," however if you have a bunch of papers published and have applied for a grant at every reasonable cycle, most departments are going to see that as okay. But if you have not published much (only 1-2 by the end of year 3), even submitting three proposals per cycle is not going to save you. You might even almost have an R01 or equivalent grant funded, if you don't have enough papers in the system they are gonna be worried.
So for those of you on the very early TT, and those of you on the job market, make sure you know what the policies are at institutions you are (or interview) at. ASK the department chair what the contractual and third year review policies are, and ASK how many people have been terminated through non-renewal of contract. This question is every bit as important as knowing how many junior faculty did not make it through the tenure process. You want to know how this department guides people (and gives up on people) in the very early stages, too, and not just at the moment of last resort.
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