Fixing the Peter Principle in Large Organizations

The Peter Principle states, “In a hierarchy, every employee tends to rise to the level of their incompetence.”

This is one of those ideas that has been around so long, it has become a joke where the punchline is that everyone knows it is true. We all can think of someone who is bad at their job who got to where they are because they were great at what they were doing before. It is a serious problem that can lead to disastrous long-term results for any organization unlucky enough to have its rising talent find themselves moved upwards into positions where they struggle to succeed.

So many of the senior leaders in Executive Platforms’ network are talking about workforce and talent development, shaping future leaders, and building career paths for the next generation. How does the Peter Principle fit into those larger conversations?

Some Background and Context

Before we get too far into things, you should know the Peter Principle entered the zeitgeist in 1969 thanks to a book written by Laurence J. Peter and Raymond Hull. The prose was written humorously with a popular audience in mind —among other notable quotes is the line, “The noblest of all dogs is the hotdog; it feeds the hand that bites it”— but it also spoke at length and in detail about a real managerial problem that has seen it taken seriously by a number of business programs throughout North America.

Peter began his career as a teacher before becoming a professor of education and a coordinator of both not-for-profit and for-profit programs and services for children with special needs. His experience with schools, academia, charitable organizations, and businesses led him to observe there are some universal truths that apply to hierarchies within all organizations regardless of function. Peter thought about his idea for a number of years before collaborating with Hull, a playwright, to share his insight with the reading public.

The book begins by explaining how someone rises through a hierarchy based on positive performance only to arrive at a position that demands skills that were not required or developed in earlier roles throughout that person’s career. For example, an excellent schoolteacher might become a competent assistant principal but will eventually become an incompetent principal. The teacher who was promoted because they were great at educating children was good a dealing with parents and teachers as an assistant principal, but by the time they become principal their earlier excellent work has not prepared them for the administrative workload, the budgetary authority and responsibility, and the particular hard and soft skills necessary to maintain good relationships with the school board and the superintendent while also advocating for the resources the school needs. A career that included decades of excellence ends on a sour note because the terrific teacher was not suited to be a principal but was promoted over time for good reasons from lower positions in a hierarchy where they were recognized as a top performer and rising star to a position of greater seniority where their earlier experience and competence did not translate.

I appreciate not many of the people who read this blog are educators, but we can replace that teacher with a salesperson or a machine operator or a customer service representative or a data analyst or a quality control technician or a delivery truck driver very easily and see how that person at the bottom of the hierarchy may excel and deserve recognition and promotion only to rise to a position so far removed from where they started that what made them excellent does not matter, leaving them ill-equipped to perform their new role.

A Few More Ideas

Without repeating the whole book in detail, there are some other ideas about how someone moves through a hierarchy that are worth highlighting.

First, some people object to the Peter Principle by pointing out incompetent people often continue to be promoted after reaching their point of incompetence. Peter and Hull argue all promotions after reaching the point of incompetence are actually pseudo-promotions moving from one unproductive position to another. The details of the work that is not being done well do not particularly matter. In many cases this pseudo-promotion takes the form of what they dubbed, “Lateral Arabesque” where a person is given a longer job title while being moved out of the way to allow someone else to rise up and try to do what needed to be done in the first place.

Another key point of the book is that an employee who has reached their level of incompetence does not understand their predicament. They will rationalize their failure to perform away, blaming outside factors beyond their control. Meanwhile, various medical and psychological manifestations of stress will appear, becoming more and more serious over time as the struggling employee realizes they are failing and cannot escape their situation.

Oddly enough, Peter and Hull also document cases where even if the hierarchy is small enough that someone can rise to the highest level while remaining competent, there is a strange compulsion for a person in that position to seek out a different hierarchy to fail in. The book uses the example of Socrates, who almost twenty-five centuries later is still remembered as an incredible philosopher, orator, educator, and deep-thinker but who was a terrible lawyer. As a more recent example, how many business leaders or entertainment icons try to translate their success into a political career, and how many of them end up either failures or mediocrities after that transition?

What Should Be Done About It?

With these ideas explained and illustrated, let’s talk about addressing them. We should also remember it is always better to be proactive than reactive; an ounce of prevention is worth a pound of cure.

If the underlying theme of the Peter Principle is people will eventually be promoted to the point where they are not suited for their job, we need to rethink how promotions work in hierarchies.

Most people would argue a meritocracy is good. Most people would argue that it is better to promote from within first, only seeking outside talent to come into a leadership position over others when a suitable candidate for promotion cannot be found within the existing workforce. I am not suggesting those positions be abandoned, but we need to discuss what we are actually trying to achieve, which is moving the business forward in the best possible way.

Rather than starting from a position where promotions are intended to be incentives and rewards for rising Top Talent, we should look at the job function. What is someone in the role supposed to do, and is the employee you want to promote suitable for that job? Regardless of how great they are in their current position, offering them a promotion in recognition for their excellence that moves them out of what they are great at into something they will not be able to do has not moved the business forward. In fact, you have now created two jobs that need to be filled: Someone will need to do what the promoted person used to do, and you still have not really filled the job function this once-excellent employee has been asked to do for which they are unsuited.

It would be better to think of promotion in recognition for excellence in a role as an opportunity to give a title bump and a salary raise while keeping that person performing at least broadly the same role that made them excellent in the first place. If the company’s vision for this person includes a path into senior leadership but they do not have the necessary skillset to move away from their current role and up the hierarchy, then an additional incentive and reward should be opportunities for cross-training, mentoring, job shadowing, and company-subsidized further education. It will take a little longer, but it builds and reinforces the competence you want in your future leader while also demonstrating the company has shown an interest in them and sees great things in their future, which is going to have almost as great an impact on Talent Retention as rapid promotion up the hierarchy without any of the drawbacks of a possible Peter Principle scenario where the promising individual ends up being unproductive and even actively detrimental to the business.

Some of this —like so many things when it comes to business leadership— is going to require having an honest conversation. Top Talent by their very nature tend to have ambition and a healthy estimation of their own capabilities. Few top performers think they will fail at the next step up the ladder, and many have been conditioned throughout their life to think if they are not moving up, they are failing. That is prime Peter Principle fodder thinking right there, and you would do well to explain that far from holding them back or bringing someone new in above them, you are investing in them and preparing them to rise equipped with all the tools and capabilities they will need to succeed. Have a development plan for your employees. Maybe even chart out their future career path in two- to five-year pieces with clear lists of things to learn and do in order to rise higher.

For people who fear a star performer will leave the company if rapid promotion is denied them, I would argue two points. First, rapid promotion has never been the only way to recognize and reward Top Talent. Second, the moment that top go-to person steps out of what they are great at and into a position where they have fallen victim to the Peter Principle, you have already lost their contributions to the organization as surely as if they had quit, and you have also saddled your business with someone earning more money in a position of responsibility who is not going to do a good job.

Having discussed the proactive mindset that can be taken, we should acknowledge that almost no organization is starting with a clean slate on this issue. If your company has a hierarchy, there are individuals in that hierarchy who are almost certainly ill-equipped to do what they are supposed to be doing, even if they have an impressive work history that led them to fill that role. What is the reactive response to employees who are already trapped in the Peter Principle and likely do not know it?

I am writing this column today because of a conversation I had earlier in the week with a business consultant who made an off-hand comment, “You would not believe how much of my work once I’ve partnered with an organization is identifying people who were promoted and then left without the tools to do their new role. Just giving them what they did not know they needed can do a world of good!” Who can argue with that? Whether it’s coaching, or specific leadership training, or adjusting their job function to include an ongoing skill-specific educational component, there are options both inside your company and with external partners to help people who are stuck in the Peter Principle.

One further thought that can apply both to people looking for promotion and people who have been promoted too quickly? When a vacancy opens up higher up the hierarchy, what about approaching the best candidate to fill that role based on their seniority and previous work experience and talk about making them an ‘Acting’ whatever-the-job is, with the understanding the company will either make it official in six months, or will find a replacement from outside the company if the promotion is not a good fit. In those six months, the one-time top performer will either grow into their new role, or they will not, and an open dialogue with people further up the hierarchy should be able to see which way things are trending.

It could be suggested that at any time the ‘Acting’ whatever-the-job-is can ask to return to their former function, and they will get to do so with a title bump up to ‘Senior’ whatever-they-used-to-do while maintaining some or all of the increased salary, and then the green light has been given to bring in someone suited for the role from outside the company. The whole thing can be expressed to others as the top performer was holding down the fort in a role they did not really enjoy while the company found exactly the right candidate for the position. Your star employee got a shot and an opportunity to test the waters without risk, and win or lose they still were recognized for their excellence and received a better title and pay increase.

Final Thoughts

Now of course any conversation speaking in broad hypotheticals that will be relevant to any kind of business lacks nuance. I don’t know your rising Top Talent. I don’t know who in your business is struggling to perform an unfamiliar role. You do, though. As you have been reading this, some of it is going to sound good but difficult to apply to a real person who is either at risk of the Peter Principle or is already trapped by it. This column hopefully sparks the start of a thought process, rather than drawing specific conclusions for your specific situation.

Have a conversation with your peers. Have a conversation with your team. So much of the pressure and discomfort of this topic can be dissipated by saying what we want to avoid and how we are working to avoid it. Who knows? Maybe one of the great ideas for avoiding the Peter Principle will come from the very person who without you broaching the subject would have one day been promoted to the level of their own incompetence?