1. either improve performance/behaviour or leave
your behaviour has not been good enough, you need to shape up or ship out!
The idiom 'shape up or ship out' is often used as an informal warning to someone or a threat. To 'shape up' means to improve in some way, and to 'ship out' means 'to leave', if you ask someone to 'shape up or ship out' you are saying that they must make an improvement or increase their performance or else they will be asked to leave. This is an informal phrase used more often in social contexts. It could sound inappropriate or harsh if used in a professional context.