Creating Excellence Through People

The Peter Principle: Impacts to Your Organization and Your Career

The Peter Principle suggests an organization will not fare well when an employee cannot perform duties effectively, especially if they decide to pull up a chair and stay a while.

A few blog posts ago, Beyond the Promotion: Identifying and Developing New Managers discussed several key considerations when determining which employees are ready and willing to take the next step in their careers. The post highlighted the skills and strengths that make an individual contributor excel will not hold the same value as the skills required to grow a new manager into a great leader. This concept is an example of something called the Peter Principle.

The Peter Principle is based on work by Dr. Laurence J. Peter. In 1969, Dr. Peter wrote a book on this theory, The Peter Principle: Why Things Always Go Wrong, that pointed to current performance as the reason for promotion instead of the skills needed to take on a management role. As a result, people within the organization will be promoted until they reach a level of incompetence. They will remain in the position if they do not display any further competencies that make them eligible for another promotion.

An organization will not fare well when an employee cannot perform duties effectively, especially if they decide to pull up a chair and stay a while. There will be the consequence of deterioration for the manager and their team. A study on the Peter Principle focused on performance and promotion of salespeople. Results of the study indicated that sales is a field where promotion to management was likely based on sales performance. The study also revealed sales performance is negatively correlated with performance as a sales manager to the extent the performance of the sales manager’s team will also decline.

The Peter Principle raises numerous questions about how we view climbing the career ladder within an organization and what this means for an individual’s career path. Does climbing the career ladder hold the same relevance and reward that it once did? If climbing the career ladder as a manager poses the risk of reaching a level of incompetence, the organization and the individual must work together to determine if taking that next step up the rung is advantageous for either party.

There are other ways to reward and retain employees who do a great job, but who may not be or want to be management material. Dual career ladders are a consideration to offer upward mobility based on technical skills and performance. It’s also necessary to review salary structure annually, including pay scales and performance incentives.

We don’t know what we don’t know, so employers should be paying attention to ensure they are in the know about promotion practices and policies, what duties are required in each position, and what competencies and qualifications it takes to achieve satisfactory performance. Things to consider:

  • Is it a trend in your organization to base promotions of individual contributors on current performance or tenure?
  • Does your organization review or perform a job analysis as position responsibilities or structure changes, or at least every 2-3 years?
  • Does your organization review and update job descriptions as position responsibilities or structure changes, or at least annually?
  • Does your organization offer professional development opportunities? Skill assessments?
  • What employees are taking advantage of professional and personal development offerings through the company or on their own?

The Peter Principle results in damaging consequences for the organization, but what about the employee’s career? An individual’s career path is theirs to own. Job opportunities and employers come along to help or hinder the pathway. Hopefully, they help more than anything, but the wrong opportunity at the wrong place or time can have substantial career consequences. Things to consider:

  • Are you taking steps to own your career? This means knowing yourself – strengths, as well as areas or tasks that challenge you most. Are you investing time in setting goals and being intentional to create habits that will allow you to reach your goals and set more? Are you contributing at a company that you are aligned and can grow with?
  • Are you taking advantage of personal and professional development opportunities? If there is an area that challenges you, do you want to improve? If so, what are you doing to make that happen? Personal development is the cornerstone for professional growth.
  • Do you have an interest in managing others? Do you possess and display the skills it takes to effectively manage? If you can’t answer this question, I would advise pressing pause on taking a management role at this time. It is critical that you understand and possess the skills it takes to be a manager and aspiring leader.
  • It’s okay if you take on a role that wasn’t meant for you. We live and learn, so do just that. Stand up, dust yourself off, and begin again!

The Peter Principle is a dynamic theory with numerous variables to consider, but I think it’s safe to say that most of us have crossed paths with this concept at some point along the way in our careers. Its twofold context is a valuable reminder of the interchangeable outcomes in relation to employment decisions. Gaining awareness through an HR assessment, as well as career planning and development, will go a long way towards ensuring placement and retention of the most qualified people in roles best suited for them.

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Terri Cummings

As Owner & Senior Consultant at Level Up Solutions HRD LLC, Terri Cummings is an advocate of lifelong learning who fosters bridging the connection between personal and professional development. Through strategy and proactive development, her aim is to align students, members of the workforce, and employers with continuous growth and opportunity that achieves sustainable success.

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