The Peter Principle

Have you ever noticed that some people perform worse after being promoted?

There’s a name for this and its called ‘The Peter Principle’.

The term is named after the hierarchologist Dr. Laurence Johnston Peter. He co-authored the publication The Peter Principle in 1968, with Raymond Hull which states,

In a hierarchy every employee tends to rise to his level of incompetence. In time every post tends to be occupied by an employee who is incompetent to carry out its duties. Work is accomplished by those employees who have not yet reached their level of incompetence.

The Peter Principle is about how employees who function well in their first job within the hierarchy of the company are often promoted once too often and therefore end up in a job in which they do not come into their own.

This theory of organisational dysfunction observes that in most companies, team members are rewarded for their high performance with a promotion, but if they under-perform in the new role, they are rarely demoted. What happens is that an organisation becomes filled with people who’ve reached roles for which they’re unqualified, and the organisation only continues to succeed based on the employees who have not yet reached their own incompetence level.

The Peter Principle levels are:

1. Unconscious Incompetence

The employee isn’t aware that a skill or knowledge gap exists. The individual neither understands nor knows how to do something, nor recognises the deficit, nor has a desire to address it. In short, you don’t know what you don’t know.

2. Conscious Incompetence

The employee is aware of a skill or knowledge gap and understands the importance of acquiring the new skill. This is the stage where you know what you don’t know.

3. Conscious Competence

The employee knows how to use the skill or perform the task, but doing so requires practice, conscious thought and hard work. You know how to do it, but you have to think your way through it.

4. Unconscious Competence

The employee has enough experience with the skill that he or she can perform it so easily they do it unconsciously. You just know what to do.

5. Unconscious Incompetence

The employee gets complacent and could end up returning to the first level. You think you know it all but don’t.

The main problem is that far too many people accept promotion based on their job titles rather than on their skill sets. This is not surprising in a culture that over-values titles and under-values being connected to the work we are actually best at. Promoting someone to a higher position should not be an ‘automatic’ process and an organisation should have talks with an employee involved, so that it can learn all about this person’s level of knowledge, skills and ambitions.

We might assume a promotion is a smart next step without fully examining all the other directions we could take.

Do the incompetent rise to the top?

Benson, Li and Shue (2018) have examined the Peter Principle and found some truth to it.  In their research they looked at salespeople and their managers in over 200 firms and found that sales performance was highly correlated with promotion into management but negatively correlated with managerial performance.

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