Dealing with the Peter Principle

‘In a hierarchy, every employee tends to rise to his or her level of incompetence’, stated Dr Laurence J. Peter – a sociologist and business consultant – in the 1968 book called ‘The Peter Principle’.

The idea of the Peter Principle is straightforward: employees are promoted according not to their skills or aptitude but their current progress, forcing them up and up the corporate ladder, until – as if a crippling fear of heights develops – their ‘incompetence’ halts them.

Of course, Peter’s Principle was a parody of management theory but its core proponents have garnered attention over the years. The National Bureau of Economic Research wrote a piece in May 2018 arguing that ‘the Peter Principle isn’t just real, it’s costly’. In it, they highlighted how good sales performance increased the chance of an employee promotion, which could then be associated with sales decline among the new manager’s subordinates.[i]

Consider the example of an orchestra. As a front-row cellist, Bob has been an exceptional cog in the machine over the last few years. When the conductor retires, the orchestra looks to fill the position in-house. They turn to Bob, the most experienced musician and a talented cellist. However, he is woefully unfit for the conductor position and their first public symphony receives a number of bad reviews.

So how can one go about solving the ‘Peter Principle’? One solution is the notion of ‘reskilling’. Training ought not to be a one-stop shop for any organisation. Even the most well-placed and senior of employees needs retraining when new instruments and technologies arrive at the workplace. External consultancies do their best work when highlighting where skills deficiencies are slowly emerging, and how that can affect general productivity.

Constant assessment and reassessment, too, can help managers effectively gauge the capabilities of their employees. Certainly, an individual may be highly competent in a more manual position, for instance, but their lack of personability lets them down in a customer-facing role. A good manager is able to assess individuals based on their personality traits and behaviours, placing them under a corporate lens.

Understanding who is a good fit for each position prevents damaging skill deficiencies. ‘Incompetence’ is a difficult word for any business and so altering the process by which skilled people are developed can help bridge corporate gaps. Managers must look deeper at the skills required when considering employees for new positions or promotions, assessing the individual against a well-defined plan. If employee performance is measured against a careful planning regimen, growth becomes evident. Effective communication, through planning or otherwise, can be implemented, nurtured and sustained by external consultancies.

To prevent the Peter Principle, managers should not look to reduce promotions but simply reframe them, understanding the limits of their workforce and the relevant skills required. Getting support in this process is a key step towards success. Understanding that maybe Bob was just not ready yet, or that Bob hasn’t received the support he needs, is about being a good manager. ‘Incompetence’ cannot be considered a static form, merely something to overcome.