In 1969, Lawrence Peter wrote a humorous book titled The Peter Principle in which he postulated that, in a hierarchy people tend to be promoted to the level of their incompetence. He noted that although this is not planned it is the unintended consequence. In most companies employees are rewarded for great performance by being promoted. The very good reasons for promoting from within include, among others, motivation and engagement of the staff. However, companies make a flawed assumption that because the employee did well in the previous job he or she will adapt and perform well in the new job. Inevitably, according to the Peter Principle, the person ends up being promoted to a job where they are no longer competent. This is referred to as their "level of incompetence". The employee has no chance of further promotion, thus reaching his or her career's ceiling in an organization.
We can see examples of The Peter Principle in many of our businesses. It is most commonly found in the selection and promotion of managers. Let’s use an example. John is a very highly performing accountant. He meets deadlines and delivers good and accurate reports for management. He is the right hand person to the accounting manager. One day the accounting manager leaves the company for another job and management decides to promote John to the accounting manager position. Here are two questions.
Nothing is wrong with promoting John. In fact, we would encourage it. However, if you do nothing more to assist John then you are setting him up for failure. The skills that John used to perform as an accountant are different than those needed in his new role as manager.
This skill curve below illustrates this point.
As we can see here, in order to be effective as an individual performer you must utilize about 90% technical expertise with only 10% people skills.
However, at the next level in the organizational structure, the supervisory level, the curve makes its most dramatic shift, and the necessary knowledge and skills you now need to be effective on the job is about half and half. You still need a great deal of job knowledge—to train, to substitute, etc.; but, now your Number 1 responsibility is developing other people—to develop other high performing workers, to teach, to lead, and to manage.
Then, as you can see from the shift in the upper levels, the higher you go in the corporate ladder, the less you need technical skills, and the more you need good, effective management and human relations skills. At the management levels, more behavioral and management skills are required for your success.
Are you promoting and hoping for success? What do you need to do differently?
Thanks for the article. I have never agreed with the premise of the Peter Principle. While it may appear to upper management that a person has reached this "highest level of incompetence" plateau, I contend this observation is really an indictment of their own failed leadership. This has long been my personal view. Late in my career, I observed first hand this belief in practice. My interaction at the highest levels in a Japanese global corporation provided further support of this notion. In the Japanese business culture, any failure by a subordinate is a reflection on the superior and not necessarily the fault of that subordinate. Therefore, one is always required to look at themselves first and thoroughly assess their own leadership. Thanks again, Larry H. Maxey, June 7, 2014
Larry - the manager is responsible for the results of subordinates. I think we need to to put more emphasis on that just like the Japanese. Thanks
We should follow that advice. However, in our "slash and burn" business mentality that seems to rule these days, the path of least resistance is usually the one followed. In this unfortunate practice, talent is tossed aside as a quick fix. While it is well known that the cost to recruit, hire and develop good people far exceeds the "quick fix" benefit, too many organizations continue to view this practice as a solution. It may or may not be. Larry H. Maxey, June 8, 2014
Contact Us: 914-953-4458