The Peter Principle was explained by Laurence Peter in his book, succinctly named The Peter Principle. Simply put, a competent employee will generally be promoted until they are incompetent. “Incompetent” here does not refer to being so poor at their job as to be fired but rather to be barely functioning well in their new role.
Peter explains a situation whereby a competent employee will be promoted to a position where they may meet the requirements for the role to an adequate, but not excellent, degree while not having enough competency in the role to progress further. Ideally, the business would have been better off as a whole had the employee stayed in their previous role.
Is the Peter Principle real?
While initially appearing in Peter’s satirical book, the Peter Principle has been investigated in studies which seem to find credibility for the phenomenon. The findings do need to be taken into context, however. This article summarises a popular study investigating the Peter Principle. It explains that competent sales reps were more likely to be promoted to management but also more likely to not be competent in their new role. A key thing to recognise here is that the sales reps were promoted to a role in a completely different field. “[They were] promoted not to their level of incompetence, but rather out of the area of their competence,” one sales manager said.
To fit the Peter Principle’s definition to this context, a competent employee will generally be promoted to a role higher in the company hierarchy which is out of their field of expertise. While not a profound thing, the Peter Principle demonstrates that a competent sales rep, programmer, or marketer isn’t always competent in management.
This confusion is not all on the part of Peter. He does simplify the definition into a succinct sentence that seems very general (the book is meant to catch attention after all), but he also explains further that the effect might be attributed to promoting an employee to a position with a different required skill set. As an example, a good ‘rule follower’ may be promoted to a position where they create company rules and policies even though being a good ‘rule follower’ does not inherently qualify one for being a good ‘rule maker’.
The problem is further exacerbated when employees are generally willing to be promoted to a better role even if they are incompetent for the role. So it works two ways – employers want to reward competency and employees want better rewards.
Possible workarounds for the Peter Principle
Various proposals to deal with the Peter Principle have been offered. There is no best way, but try to keep your own business’s values and business operations in mind when deciding how you deal with promoting employees.
Promoting employees should ideally be paired with additional training for the new role that they are to take on. Ensure that the training is appropriate. This helps in that promoting an employee to a role they may be incompetent in is alleviated by training to increase their competency in the field. Furthermore, don’t promote your best employees in a field. For example, your best technicians may be better off in that position rather than becoming a mediocre manager. Perhaps you can find other ways of rewarding those employees. Pay raises and job security are big ways of rewarding employees as well as motivating them.
Some businesses adopt an “up and out” strategy where employees who don’t progress are periodically fired. With this system, employees can be promoted to positions that they are incompetent for and thus not progress further in their career. These employees are then fired. This is common in high-growth Internet companies. This drastic approach is probably a bit too extreme for most businesses so a similar approach with less fickle job security has been proposed as well. This alternative system involves a dynamic shuffling of employees. Employees are promoted as usual, but should they not perform as well, they are demoted to their previous position. This ensures that after a while, incompetent employees will be relocated to a role they can excel at.
Other solutions to the problem posed by the Peter Principle involve random promotions of employees. This usually does not sit well with employees and cannot really blend in a work environment based on meritocracy.
A good blend of these strategies is to have separate career tracks for each field of expertise. Easily enough this seems to solve a lot of problems, but it isn’t as easy to implement. Some fields have lower ceilings than others so how do you create a long-term career path? Pay raises work as an alternative. However, a spin on the linear career path has been proposed as well. In practice, the linear career path for each field should only build on the same set of skills. In some cases, the path may branch out into a role within the same field but requiring different soft skills. For example, a technician may be on the linear technician career path, but they may be able to branch out as a tech supervisor should they have the appropriate soft skills.