Shue’s team obtained data from sales performance management software, which included records on sales and employee hierarchies for more than 53,000 workers at 214 firms. “It shows us that firms are not completely unaware that the Peter Principle problem may exist, and they’re trading off the costs and benefits,” says Shue, who collaborated with Alan Benson of the Carlson School of Management and Danielle Li of the MIT Sloan School of Management on the study. The results suggest that companies may sometimes use the Peter Principle to incentivize employees to work harder in their current jobs, but they recognize when a different approach is needed. When filling supervisory roles that involved more responsibility, firms paid more attention to management-related skills. The results do not necessarily mean, however, that the companies were acting against their own self-interest. Read the study: “Promotions and the Peter Principle” “Firms do promote top performers into managerial positions for which they’re not particularly well-suited.” “We find a lot of support for the original Peter Principle hypothesis,” Shue says. But those top salespeople didn’t perform very well as managers. The team found that, as expected, companies tended to promote employees based on sales performance. Shue and her collaborators decided to test the theory on a large data set from sales workers. “It’s a very intuitive idea that hasn’t really been tested in the data,” says Kelly Shue, a professor of finance at Yale SOM. A low-ranking employee might be promoted based on excellent technical skills, but that person could lack the abilities required to be a successful manager, such as leadership and organizational prowess.īut research to determine if the Peter Principle is actually true has been sparse. The theory became popular-a pre-internet meme for the era of the gray flannel suit-because it made intuitive sense and provided a satisfying explanation for managerial incompetence in large organizations.
Promoted until incompetent plus#
Grooming people to succeed before they step into the next role helps to prevent the Peter Principle and offset the ineptitude of colleagues who are good at what they do now, but not up to the future challenge of the next role.Īs the author Laurence Peter once wrote, “Incompetence plus incompetence always equals incompetence.In the 1960s, teacher and author Laurence Peter playfully put forth an idea called the “Peter Principle.” He suggested that firms promote workers who are performing well in their current jobs until they reach positions for which they are ill-qualified. Of course, leaders must first identify the ingredients essential for the next role and design the experiences and training that will ensure competence before it is required. Using skill development as a prerequisite to promotion encourages an honest conversation about who is, or is not, ready for the next role. The best way to prevent the Peter Principle is to offer skill training, coaching, and mentorship before promoting people. Good organizations and teams have learned an important lesson. In case you haven’t yet noticed, incompetent people are typically oblivious to their incompetence. And to make matters worse, once in a new role, their subordinates with higher skillsets go crazy reporting to someone so hopelessly incapable. The good news is that once it is known that a colleague is incompetent in their current position, they generally stop being promoted. Incompetent people abound throughout most organizations. Unfortunately, the idea is as true today as it was in 1969 when it was first published. The Peter Principle instantly became an international bestseller. People rising to the level of their incompetence captures the reality many leaders observe in organizations everywhere. They then stay put, without any real capacity to perform in the role. They continue to get promoted until they reach a level at which they are no longer competent. Written as a satire that struck a chord of fidelity with leaders across the globe, The Peter Principle suggests that people in any hierarchy tend to be promoted based upon their success in their previous role.
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