Let’s start with some background on the Peter Principle itself. The idea was presented by authors Dr. Laurence J. Peter and Raymond Hall in their 1969 book “The Peter Principle: Why Things Always Go Wrong”. The principle is that, in hierarchical organizations, people get promoted up to their level of incompetence… and stay there.
That means that over time nearly everyone in the organization ends up in a role where they are not performing at a high level, or a position where they are incompetent. The book was written in the tone of serious business research, but it was actually intended as satire. The examples used in the book are fabrications.
That didn’t matter at all because the “principle” resonated with business people and managers who could see how it could absolutely be true. People do a good job and get promoted. It is only when they are not doing a good job when they fail to be promoted. So that is the role they stay in… often for a very long time. Eventually a company is full of people who are not good at their jobs. The book was a New York Times bestseller, and is still in print almost 50 years later… they must have got something right.
Could your organization be an example of The Peter Principle? There are some ways to find out. Think through these seven questions, and apply them to your situation. I will add comments about how Peter Principle (PP) organizations do things.
The Peter Principle Test
Does your organization apply and measure KPIs at all levels, or just for lower and mid-level people?
PP organizations are much more like to objectively measure performance at lower levels, and use subjective measures and impressions for higher-level people.
Does the average tenure of your employees rise from the bottom to the top of your org chart?
PP organizations are always stacked at the top with very long term people who rose into their roles over many years. Non-PP organizations tend to have tenured people all over the org chart.
Do both regular employees and leadership have the roughly same percentage of their compensation tied to incentive targets?
PP businesses limit the incentive compensation as people move up in the organization. They are paid just to be in their role, not to perform in it.
Where is your professional development budget targeted, on entry-level, mid-level, or upper-level people?
PP organizations tend to think of professional development as something for lower and mid-level people. High performance organizations expect everyone to keep getting better at what they do, especially leaders.
How long has the average manager in your organization been in their current role?
PP businesses always seem to have managers in roles forever, eschewing cross-training and re-assignments.
Are promotions in your organization based on objective reasoning? Is the performance you are rewarding with promotions clearly measurable?
PP businesses promote on seniority and loyalty, rather than performance and demonstrated upside.
What percentage of your managers and leaders were promoted organically from within your organization?
PP organizations are far less likely to import leadership from other places. This “organizational nepotism” is a way of cementing the status quo and keep disruptive people out of the company.
After applying these questions to your organization you’ll have a good idea if your team may be at risk of being a Peter Principle organization. In our upcoming book we discuss many of the tactics needed to overcome this risk, but seeing things for what they are is step one.