Peter Principle

Peter Principle

What is Peter’s principle?

Peter’s Principle is an observation that the tendency in most organizational hierarchies, like that of a company, is that each employee moves up the hierarchy by promotion until they reach a respective level of incompetence . In other words, a front office secretary who is fairly good at work can thus be promoted to executive assistant to the CEO for whom she is not trained or prepared – which means that she would be more productive for the company (and probably herself) if it had not been promoted.

Peter’s principle is therefore based on the logical idea that competent employees will continue to be promoted, but at some point will be promoted to positions for which they are incompetent, and they will then remain in these positions because they do not fail to demonstrate any other skill that would have them recognized for further promotion. According to Peter’s principle, each position in a given hierarchy will eventually be filled by employees unable to perform the functions of their respective positions.

Most people do not refuse a promotion, especially if it comes with increased salary and prestige, even if they know they are not qualified for the job.

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What is Peter’s principle?

Understanding Peter’s principle

Peter’s Principle was presented by Canadian educationalist and sociologist Dr. Laurence J. Peter in his 1968 book “Peter’s Principle”. Dr. Peter also stated in his book that an employee’s inability to meet the requirements of a given position to which he is promoted may not be the result of general incompetence on the part of the employee, because it is due to the fact that the position simply requires skills different from those that the employee actually possesses.

For example, an employee who knows very well how to follow company rules or policies may be promoted to the position of creating rules or policies, although being a good follower of the rules does not mean that an individual is well suited to be a good rule maker.

Dr. Peter summed up Peter’s principle with a twist on the old adage that “cream rises up” by stating that “cream rises until it is painful”. In other words, excellent employee performance is inevitably encouraged to the point where employee performance is no longer excellent or even satisfactory.

According to Peter’s principle, skill is rewarded by promotion because skill, in the form of employee output, is noticeable, and therefore generally recognized. However, once an employee reaches a position in which he is incompetent, he is no longer evaluated on the basis of his performance, but rather on entry factors, such as arriving at work on time and having a good attitude.

Dr. Peter added that employees tend to remain in positions for which they are incompetent, since mere incompetence is rarely enough to cause the employee to be terminated. Usually only extreme incompetence leads to dismissal.

  • Peter’s Principle is an observation that the tendency in most organizational hierarchies, like that of a company, is that each employee moves up the hierarchy by promotion until they reach a respective level of incompetence .
  • According to Peter’s principle, each position in a given hierarchy will eventually be filled by employees unable to perform the functions of their respective positions.
  • One possible solution to the problem posed by Peter’s principle is for companies to provide adequate job training for employees who are promoted and to ensure that the training is appropriate for the position to which they have been promoted.

Overcome Peter’s principle

One possible solution to the problem posed by Peter’s principle is for companies to provide adequate job training for employees who are promoted and to ensure that the training is appropriate for the position to which they have been promoted.

However, Dr. Peter pessimistically predicted that even good employee training is ultimately incapable of overcoming the general tendency of organizations to promote employees to positions of incompetence, which he describes as “final placement” positions. Promoting people at random has been another proposition, but one that isn’t always good with employees.

Proof of Peter’s principle

Peter’s principle seems intuitive once the idea is understood, and models can be constructed to predict the phenomenon. However, it is difficult to obtain real evidence of its widespread presence.

In 2020, economists Alan Benson, Danielle Li and Kelly Shue analyzed salespeople’s performance and promotion practices in 214 U.S. companies to test the Peter principle. They found that companies did tend to promote employees to managerial positions based on their performance in their previous position, rather than on management potential. Consistent with Peter’s principle, the researchers found that high-performing salespeople were more likely to be promoted and were more likely to perform poorly as managers, resulting in considerable costs to businesses.

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