Many will already be familiar with The Peter Principle, that “In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence” and many will probably also be able to point out someone to whom they feel that applies! Given that Laurence J. Peter originally described this in a 1969 book of the same name, isn’t it about time that it was addressed?
What is The Peter Principle?
Laurence J. Peter was a Canadian educator who is best known for his book (written with Raymond Hill), The Peter Principle but what you might not know is that the book was intended as a work of satire. While it is based on research carried out by Peter it hadn’t, until recently, been extensively tested.
The book describes a phenomenon that you may well be familiar with described thus:
If organisations promote the best people at their current jobs, then organisations will inevitably promote people until they’re no longer good at their jobs. In other words, organisations manage careers so that everyone “rises to the level of their incompetence.”
This isn’t actually terribly surprising as people are actively encouraged to seek promotion and take on more management. The effect of this is that you get the double whammy of losing valuable skills that the individual had plus them not necessarily being competent at the management role.
Is it real?
In short, yes it is.
In early 2018 the results of a study were published in the National Bureau of Economic Research. This looked at the employee sales performance and promotion practices at a sample of 214 companies and covered more than 1,500 employees promoted into management and 156 million sales transactions.
Sales organisations were chosen for the research because it is easy to identify which individuals are those that are the best performing. Also you can easily see the performance of a team both before and after the highest performing individual has been promoted. This means it is possible to infer what impact the promotion of said individual has on the team.
The results showed that the higher performers were more likely to be promoted than their peers. In fact a doubling of sales credits made it 14.3% more likely that a high performer would be promoted than a lower performing peer. However, once in the promoted position there was a 7.5% lowering in the sales levels for those that worked for the promoted manager.
What can you do about it in your organisation?
Promotion is often seen as a way of rewarding individuals for great work done in their current post but, as we have seen, this can have negative impacts on not only the individual but also the people that work for them and the organisation itself.
In many organisations promotion is about prestige but firms should break with tradition and look for management ability in individuals and not just at results. In the survey quoted above it found that poor sales performers who were promoted despite this saw significant improvements in their subordinates’ performance. A true win-win for all.
I have worked in an organisation, sadly now consumed into a much larger consultancy firm, that had two parallel promotion streams one technical, one business and each were equally valued. You could be quite senior and respected in the organisation without having to take on any management responsibility. It was one of the best places I have ever worked. Other organisations such as Microsoft have implemented a similar dual track.
Another potential way forward is to decouple promotion from pay and grade but this may be difficult to achieve in larger organisations where that is already embedded.
So the next time that you are looking to fill a position make sure you don’t fall into the Peter Principle trap and choose someone who is likely to be a good manager rather than just good at their current job – it could be good for everyone.