December 14, 2018

Is the Peter Principle alive and well?

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I recall with fondness the ironic humour of a colleague when he explained: “By promoting just one person, I accomplished two very significant things. I lost my very best engineer and I gained a very problematic team leader!”

It had seemed logical to choose the most competent person in the team to be the new supervisor. But it hadn’t worked. The job of an individual engineer was substantially different from that of leading the team of engineers.

Intuitively, it makes sense to promote the outstanding performer. Wouldn’t the best welder or the best accountant likely make the best group leader? After all, they can do the job better than anyone else. Often, however, this premise does not work out. And the reason is not difficult to ascertain. The supervisor’s job may require technical knowledge in a monitoring or teaching capacity, but it also requires an additional and substantially different set of skills to support the success of the team members: the skills of leadership.

Dr Laurence J. Peter (1969) identified this issue nearly 50 years ago in his bestselling book The Peter Principle. His premise was that organisations tend to promote their best people until they reach a level at which they are no longer successful. In short, people ‘rise to the level of their incompetence’. Many readers would understand Peter’s book as being somewhat tongue in cheek. While at the same time, they probably have experienced colleagues who have been promoted into management only to flounder in the new position.

But is there truth in Peter’s principle? Do organisations tend to overlook the best potential leaders by promoting top performers from old positions? Benson, Li and Shue (2018) decided to examine this question empirically by assessing salespeople and their managers at over 200 firms. They specifically chose salespeople because their performance could be quantified. They found that sales performance was highly correlated with promotion into management but negatively correlated with managerial performance. In short, their study population showed there to be truth in the Peter Principle.

Importantly, the authors also identified ways to avoid the Peter Principle. For example, outstanding contributors can be rewarded for performance with pay rather than promotion, avoiding the dilemma that the only route to a pay increase is to become a manager. Pay and recognition can also be managed through dual-track career ladders: with a technical track as well as the traditional managerial track. The authors also point out that new managers can be selected with a focus on their leadership skills, rather than just on their technical skills.

It is apparent to me, organisations with well-developed management and leadership development programmes will be considerably less likely to fall prey to the Peter Principle. They will have developed systems to continually identify and develop those men and women who will best succeed as leaders.

When organisations focus on the overall function of leadership, rather than individual leaders, they will have developed systems which address the requirements of effective leadership, current and future.

Strikingly, these efforts will always be actively supported and driven from the top. Leadership development aims will be woven into and evolve with organisational strategy, often based on competencies important to the individual organisation. Of course these competencies will be fundamental to the selection process.

Performance management systems will continually evaluate and then reward, develop and redirect (or even remove) leaders, while looking to the future with succession planning, thus avoiding the Peter Principle.

Leadership development will be continual, multi-faceted (think workshops, coaching, mentoring, structured development programmes, 360 degree feedback, corporate universities, etc.) and typically have a broad interface with external resources.

And with all of this in place, the organisation’s annual report may still state that one of its largest challenges is the identification and development of leaders! For it will be recognised that the journey toward effective organisational leadership is dynamic and never-ending.

Peter, L.J. and Hull, R. (1969) The Peter Principle: Why Things Always Go Wrong. New York, NY: William Morrow & Company Inc.

Benson, A., Li, D. and Shue, K. (2018) Research: Do people really get promoted to their level of incompetence? Harvard Business Review, 8 March. [Online] Available at: https://hbr.org/2018/03/research-do-people-really-get-promoted-to-their-level-of-incompetence

Dr Richard Bunning, Teacher, EBS MBA Programme About Dr Richard Bunning, Teacher, EBS MBA Programme

Co-author of Leadership with Tony Berry and co-examiner for the Leadership elective.