Often, the joy of a promotion is soon overcome by the burden of under-performance. This is a typical example of “The Peter Principle”, propounded by Dr. Lawrence J. Peter and Raymond Hull in their 1969 satirical book bearing the same name.
What is the Peter Principle?
To put it simply, the Peter Principle is the manifestation of the law of diminishing returns, as applied to the field of leadership and internal promotion. The Principle says that employees are promoted, based on their current achievements, and move into new roles, whereby their skills don’t match this new position. This then creates a level of incompetence – a skills gap between what they currently know and do and what they should know and do in their new role. Sooner or later, they reach the Peter Plateau, whereby they can’t get promoted any further due to their level of incompetence.
Here’s an example. Let’s take the case of Peter who is a Software Engineer at XYZ.inc; a leading IT firm. The following illustration tracks his career growth until unfortunately he reaches a level of incompetence. The skills he developed and perfected to get a promotion, are almost redundant in his new role and require a totally new set of skills that he doesn’t have.
As a Software Engineer, Peter needs to use his knowledge of the various software platforms as well as his analytical and troubleshooting skills, as well as coding and development, to excel at his work.
He delivers way above expectations in this role and his skills more than match the requirements for a software engineer. As a result, he is promoted to the next position, that of a Product Leader.
Though he might find it difficult to cope with his new position at first, the overlap of the necessary skill set with that of a Software Engineer means he can gain competence in his new position, through training and hard work.
Peter does so well that he is now promoted to the next position of Sales Manager. This requires a completely different set of skills than what he possesses and has perfected over time.
In this new role. he finds it hard to communicate with clients and he is a poor negotiator.
Though an excellent programmer, he is poor in the softer skills side of managing people and influencing them effectively.
As a result, he is out of his depth in his new position as the Sales Manager. This incompetence means he won’t be promoted further. In the words of Dr. Lawrence J Peter, he is at the “Final Placement” or the “Peter’s Plateau”.
This problem not only impacts the individual career growth for Peter, but is also detrimental to the Organisation.
The Company loses a brilliant programmer and gains an incompetent manager.
This negatively impacts both productivity as well as revenues for the Firm and his team could suffer, too.
In fact, research organisation Gallup, identifies that 24% of employees across the world are actively disengaged at work. In other words, they are actively seeking new employment and are unhappy in their current jobs.
The reason? Their managers are failing to meet their needs effectively.
This 24% figure hugely outweighs only 13% of employees who are engaged, worldwide.
They also highlight that poor management, leading to disengaged employees, creates an average 17% productivity loss.
Why Does the Peter Principle Happen?
Keeping someone developing in the business is a key requirement for managers. They have to reward their talent with promotions, right? Well, according to the Peter Principle, it’s a dangerous game to play.
Some of the ways we can see it in the workplace are in the following circumstances:
Competence Based Promotion – If you’re good at your current job, then you’ll get that promotion to the next level (where you could possibly be promoted to incompetence)
Promotion Based on Seniority – If you’re here longer, then you’ll get more of a chance of promotion. This policy then means that companies can often overlook able and younger talent, favouring seniority and loyalty
The Peter Principle In Action: 1 in 10 People Promoted Have Basic Management Skills
When you look at it through the lense of the Peter Principle, it doesn’t make sense to blindly promote people into senior positions.
In an additional study Gallup identifies that a paltry 1 in 10 people promoted to management positions, have the basic man management ability, which they can use to go on and manage in higher positions.
Conversely, that’s 9 out of 10 managers that are not capable of managing effectively.
What’s the main reason that they identify?
In their words: “Most companies promote workers into managerial positions because they seemingly deserve it, rather than have the talent for it. This practice doesn’t work.”
The Peter Principle is real.
Impact of the Peter Principle
Obviously, for an organisation, its employees and those promoted, The Peter Principle offers all sorts of problems.
Here are some of the symptoms:
When an employee realises that he/she is incompetent in their current role, they can start to loose self esteem and confidence. Work may get them down and what once was an exciting place to be, soon becomes a painful and stressful workplace.
For the manager, after this promotion, they may feel isolated and exposed, with little support from their seniors.
This can often get worse and spiral out of control.
I have had the opportunity to see this first hand in many cases:
- A talented process chemist was promoted to plant manager of a global manufacturing business – He couldn’t take the position and resigned after a stressful 18 months
- A great CNC operator promoted to team leader – After 3 employees resigning and one claiming to be bullied, the team leader moved back to the CNC operator role where he felt valued
- An Operations manager that was promoted from a totally different department, knew nothing about the requirements of her new role – She lasted 2 years before she was let go. At the time of leaving, the business lost several main contracts, due to poor delivery, quality and service. Employee morale was at its lowest and no one trusted management
In all three cases above, the business lost a vital asset in the role that they were prior to being promoted. Two of the three eventually walked away from the business for good.
It’s a waste of talent and a tragic end to things.
Another study supports this principle, too. Three researchers at the Minnesota University, studied the Peter Principle on 53,000 Sales professionals. They found that:
- Good sales people were more than likely promoted to sales managers
- These people promoted, were likely to fail as managers.
What if We Flipped the Script & Employees were Not Promoted On Current Job Merits?
If managers are performing poorly, then employees will too. Now, if a company opted to reduce the effects of the Peter Principle, by employing managers that have good management and leadership skills, then Gallup identified that the result of good management can have the following effects:
- An average of 10% improvement can be seen in customer satisfaction levels
- Up to 21% uplift in productivity
- 41% less absenteeism
- 70% less safety incidents in the workplace
In order for this to happen, we can do two things:
Prepare the star employee for the promotion ahead of time – Highlight that they are targeted for future promotions and define their current skills gaps now.
Once this has been defined, they could be coached and mentored, as well as develop some key skills as they slowly move towards this promotion.
This process allows a professional and smooth transition to reduce the chances of the Peter Principle being the sad and final effect.
I remember, in my career, I was highlighted as a high performing employee and enrolled on the company’s flight plan (it was a major aerospace company, hence the name). This was a two year path to be trained to divisional level leader.
As part of this, I had to demonstrate a range of natural leadership and communication abilities, which is our next point.
Promote on Ability – If someone does not have the natural ability or willingness to lead and manage “the right way”, then perhaps the bold decision would be to avoid the promotion altogether.
The Compounding Effect of The Peter Principle
As more people are promoted to higher positions, most of the strategic positions get filled with incompetent people. This leads to a company wide mediocrity, resulting in an incompetent and top-heavy organisation, in danger of imploding under its own weight.
Avoiding the ‘Final Placement’
By its very definition, the Peter Principle is inevitable. However by consciously taking various measures, both the individual as well as the organisation can minimise its impact.
This includes steps that the individual can take to cope with the demands of the new position and maintain his vitality to the organisation.
If it Doesn’t Feel Right – Avoid Promotion
This is both the easiest as well as the most difficult decision on the part of the prospective person.
By refusing the promotion, you may stay in your comfort zone. But sometimes, the perks you face in your current role, may well not be there in the new position. Before jumping in, weigh up the big picture, including how you are expected to work, in comparison to the current way you’re working.
Consider this analogy:
The first option of refusing promotion is most applicable in fields where success is determined by individual capabilities, rather than working in a team. Some examples are:
- Competitive athletics
- High skill professions such as doctors, lawyers, hackers etc.
In these professions, individuals prefer to remain in their respective fields of excellence rather than getting promoted to an administrative position. Management is not really for you? Do you see yourself as an expert in your current field?
If so, then there is no harm whatsoever in this fact. Equally, if you love the idea of leading, then it’s time to get learning fast.
Understand Your Developmental Needs
As early as possible, try to identify your skills gaps. This will give you a clear idea about the training that you would need, to develop your skills and make yourself competent for the new position.
Once you have figured out your needs, you can seek appropriate training from your organisation.
Typical areas to focus on would be:
- Communicating effectively
- Leading and coaching team members
- Building and developing teams
- Delegating tasks, authority and accountability
- Motivating employees
- Setting targets and goals
The main idea here is to constantly revise your learning curve in order to ensure that it never flattens out.
Even during the time in between promotions, you should develop horizontal skill sets and gain knowledge about the latest developments in your industry. This makes you indispensable to your employer.
Look for Lateral Opportunities
When you feel you have reached the Peter’s Plateau in your current organisation, try to actively look for lateral opportunities in other organisations. Often, a change in the organisational setting and culture, along with the excitement of starting a new job, pushes you to a newfound inspiration to excel within your current skill sets.
Ask for Help
Help is always provided to those who ask for it. One of the ways to cope with apparent incompetencies is to ask for guidance from the seniors and mentors. People who have already been in your situation will be best suited to help you. They can give you tips from their own life or refer you to other sources from where you can get the desired assistance.
The best way to judge a superiors’ performance is through the feedback of the subordinates. So why not use it for an exercise of self evaluation. When in a leadership position, periodically seek honest feedback from your team members and figure out where you need to improve. This is one of the sure fire ways of nipping incompetence in the bud.
As an employer, you can take certain measures to cope with the problem of the “final placement”.
While recruiting new employees at the very start of their careers, do not base your decisions solely on the technical skills demonstrated by the applicant.
You should also look for qualities that would be instrumental in serving managerial positions in the future. More so, focus on emotional intelligence capability.
Capability Based Promotion
Instead of taking decisions of promotion solely on the degree of competence at the current level, you should set certain qualities as qualification criteria to be eligible for the promotion.
Set the criteria more stringent than the actual requirement for the higher post. This way you can ensure that the person being promoted not only possesses the qualities and skills necessary for the desired position, but in fact surpasses them.
This would help you make the Peter’s Plateau higher and narrower.
This is often employed by organisations to deal with people who have been promoted to the highest level of incompetence.
Mere incompetence at a certain level does not make a case for termination of the employee, until extreme incompetence critically impacts the functioning of the organisation. Hence, most companies take one of the following routes:
- Percussive Sublimation: The employee is promoted vertically from one unproductive and incompetent position to another
- Lateral Arabesque: The employee is moved to a lateral and relatively insignificant position, but with a fancy job title and perhaps even a raise in compensation.
Higher Pay / Benefits Without Promotion
In most cases, employees are mainly interested in the rise in compensation that comes with a promotion. In such cases, the high performing employees can be given a pay hike, perhaps even beyond what their superiors get.
If we consider the case of Peter in our example, XYZ.inc could have opted to reward his brilliance as a software programmer by increasing his salary and perhaps creating a new position in the same vertical of software development, instead promoting him to a position whose demands are significantly different from his core capabilities.
Skill Mapping and Succession Planning
Human skill is an important resource for any organisation. An organisation aiming to create good leaders should first create a skill map containing the existing skills of the employees and the skill requirements for the higher position that it is aiming to fill.
Once this is done, identify the need for training in specific domains to build the necessary skill sets among the employees.
This is called succession planning, where the company starts grooming its lower level employees from an early stage to successfully take up higher positions in future.
Succession Planning has been the major driving force behind the leadership development programmes in companies like Google and Microsoft.
The Peter Principle is unavoidable and it can catch up with everyone. But if we can plan our actions so as to delay its onset and minimise its effects, we can avoid reaching stagnancy at the Peter’s Plateau, and live a fulfilling professional life.
The benefits of minimising this are that employees are not pulled down by incompetent management, staff retention is longer, the business is more productive with employees excelling in largely the right positions.