Overcoming The Peter Principle In Your Organization

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In 1969, Lawrence J. Peter and Raymond Hull published a book based on Peter’s research, entitled The Peter Principle. The research had one basic premise:  “In a hierarchy, every employee tends to rise to his level of incompetence.” In other words, hierarchical organizations promote individuals until they reach a position where they are incompetent or ineffective in producing results. Given the year the book was published, one would think the research would be outdated or no longer applicable. Unfortunately, that is not the case. The Peter Principle seems to be alive and well, regardless of industry. 

The Peter Principle lives on for two primary reasons. The first is that we often promote employees based on a faulty assumption: Success or high performance in one role will lead to success in the next role. In our experience that assumption does not hold true, especially when the next role involves management or leadership. It is not uncommon for the Peter Principle to start emerging when a successful individual contributor (i.e., sales, engineering, accounting, technology, etc.) is moved into a role that includes leadership or supervision. Demonstrating significant technical expertise and capabilities don’t always translate into natural or effective management and leadership. 

The second reason the Peter Principle lives on is that most organizations have no other option for high performers. There is no alternative role or path for promotion, and thus there is no alternative ‘reward’ for high performance. As a high performing individual contributor, you must move into a management role to be seen as successful within the organization. Thus, if you aren’t successful as a manager or team leader, your only option may be to move on to a different opportunity. 

From a business perspective, there are no positive outcomes for the Peter Principle. High performers who are promoted into a role that isn’t a good fit likely stop having positive performance experiences or producing positive results and lose their luster in the organization. Even if they hang on and do enough to retain a role, their team members won’t be as effectively developed or coached. Overall, it is highly probable that engagement for both the managers and the employees will erode. Thus, your most talented, high performers may seek other opportunities. Finally, there is also research indicating team productivity and results will suffer.

Based on our experience, no organization intentionally chooses these results or moves an employee into a role of incompetence to intentionally perpetuate the Peter Principle. Rather, decisions are made based on good intentions in hopes that the results will be positive. To be proactive, back up good intentions, and avoid fueling the Peter Principle, consider taking the following steps:

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  1. Ask the “desire” question. As simple as it may sound, ask the individual contributor about their career aspirations and their desire for promotion, but ensure they understand what success looks like in the next role. Desire is a significant factor for success. Many individual contributors enjoy being individual contributors and may not want to take up the manager or leadership mantle. If an individual doesn’t desire a role or doesn’t fully understand the new expectations, putting them into the role will set them up for failure rather than success and inevitably negatively impact the team.  

  2. When making promotions, look beyond individual contributor success to evaluate readiness and select managerial talent. One key aspect of readiness is demonstrating the ability to execute the next role before being placed in that role. For example, if you are going to promote someone to a supervisory position, what behaviors have you observed that would say they will be an effective supervisor, team leader, or manager?  What have you seen that would indicate they can effectively coach and develop others? Look for the talent to manage, not just high performance in their current role.

  3. Value differences and establish alternative career paths. A critical step in combatting the Peter Principle is to reimagine the advancement structure to value and reward differences. Create promotion opportunities for successful individual contributors AND those who desire management/leadership responsibilities. Ensure each path is viewed as equally prestigious and rewarded equitably. By offering more than one path, organizations can keep high performers and leverage their talent in the highest and best use. These alternative paths also provide significant benefits for attracting and retaining talent overall. 

  4. Proactively support transitions in management roles. Regardless of your selection process, and especially if you don’t have alternative career paths, ensure that you are providing newly promoted team leaders and managers with an effective foundation. Support their transition by helping them build skills beyond their technical expertise with a strong development program.  To be successful as a supervisor, team leader, or manager, it is important to know and understand the needs of employees, how to positively impact their engagement, and how to bring the best out of the team.

To build the strongest workplaces and produce the best results, we must eradicate the Peter Principle and put our best performers in positions to succeed. By carefully considering their desires, our decision-making processes, the options for advancement, and support for transitions, we can eliminate promoting performers into positions of incompetence, and instead, promote them to positions of greater competence and performance.