What do you think of when talking about career paths? Usually, people mean going up a corporate ladder; the higher the rank, the better, somewhat like this:
People excel at their job, show outstanding performance, get noticed by the management, and get promoted to the next level. Seems like a fair and straightforward way to reward successful employees and build capable, qualified management. What is at the top of that ladder, one would wonder. Dr. Laurence J. Peter, a Canadian psychologist, sociologist, and educator from the 1960s, had an underwhelming answer:
The Peter principle
Dr. Peter worked in education for several years and grew from a regular teacher to a school principal. During this time, he began observing the dynamics of organizational hierarchies and promotion patterns. Later he got a Ph.D. in educational psychology and moved into management consulting, where his insights into corporate behavior helped companies understand and navigate the complexities of their structures.
These observations laid the foundation for the theory initially introduced in his satirical book "The Peter Principle: Why Things Always Go Wrong," published in 1969. The counterintuitive principle states that:
"In a hierarchy, every employee tends to rise to his level of incompetence."
So in Dr. Peter's interpretation, career progression looks more like this:
The book became a bestseller, gained recognition in academic circles, and sparked discussions about organizational dynamics and management practices that continue up to this day.
What does the Peter principle mean?
Essentially, Dr. Peter says that traditional corporate hierarchies are inherently dysfunctional.
Over decades he kept seeing how people, especially in large top-down organizations, would receive promotions based on performance in their current roles, even if it didn't translate into the requirements of a new position.
As promotions usually come with a higher status and financial gains, people seldom decline propositions. And if they prove themselves in the new role, they get promoted again and again until biting off more than they can chew.
As a result, individuals would eventually reach a position they could not perform effectively and get stuck there, not eligible for promotion anymore. For example, a great task performer promoted to a manager would be bad at planning and enforcing tasks for others, slowing production. Or a talented manager promoted to director would lack skills for navigating between stakeholders' interests and fall out of favor.
The only obvious corollary that follows the principle, continues Dr. Peter, is that given enough time and levels in the hierarchy, all of the organization's posts will eventually be occupied by incompetent people that don't produce any meaningful results anymore.
What are the consequences and the remedies?
The companies shoot themselves in the foot twice.
First, they lose their top performers by moving them to positions they do not fit.
Second, incompetent management hinders their progress with very few available ways of addressing it, namely, moving undesired people even higher or to newly invented useless roles where they can't interfere with the actual business. Reversing a promotion or firing an employee is not an option unless they are utterly terrible at their job, as it would plant a seed of doubt about the administration's competence.
For employees who are highly competent and content in what they are currently doing and don't want to end up as failed promotees, Dr. Peter suggests only one solution - to sprinkle incompetence symptoms here and there to avoid promotions altogether and stay in their sweet competence spot: fail small assignments, clutter one's desk, act a bit awkward, slip some faux pas jokes around the higher-ups, etc. Quite a sad prospect if we say so.
Is there any proof the Peter principle works?
As a humorous book, it doesn't provide formal empirical evidence. Instead, Dr. Peter condensed his observations into a collection of made-up anecdotes as vivid illustrations of the principle's universality. However, there were several attempts to test the principle against the reality.
One of the most recent pieces of research was done by Alan Benson of the University of Minnesota, Danielle Li of MIT, and Kelly Shue of Yale. The professors analyzed the performance of over 50,000 sales employees at 214 American companies from 2005 to 2011, of which around 1,500 sales reps were promoted to sales managers.
They found that "Consistent with the Peter Principle, […] promotion decisions place more weight on current performance than would be justified if firms only tried to promote the best potential managers. […] As a result, the performance of a new manager's subordinates declines relatively more after the managerial position is filled by someone who was a strong salesperson prior to promotion."
Alan Benson says, "To see that the best salespeople were becoming the worst sales managers was surprising." Dr. Peter certainly wouldn't be surprised: companies removed their best salespeople from the line, hurting their client relationships, and watched the team performance drop even further under new management, just as the principle predicts.
Now, we can't say that the Peter principle is indeed universal. Social structures are too complex for such simple explanations, and there are countless reasons why employees may perform worse after promotion.
However, the principle does highlight one of the evident drawbacks to traditional promotion approaches — each job position requires a unique skill set, so meeting the standard at one post doesn't guarantee success at another. A company should support and grow its talents into positions that suit them most before and after promotion. In other words, companies need a comprehensive Learning and Development strategy.
Learning and Development
The primary goal of L&D is to improve individual and collective performance, foster professional growth, and align employee skills with organizational objectives. It encompasses various activities such as training programs, workshops, e-learning modules, coaching, mentoring, and continuous learning initiatives.
How does L&D affect employees' careers?
L&D shapes many aspects of hiring and promotion policies within organizations, the major ones being:
A clear vision of the company's state
L&D focuses on roles, knowledge, skills, and abilities an organization deems necessary to move forward, and all other L&D processes are then benchmarked against them.
Continuous learning culture
Encouraging a culture of continuous learning is crucial in tackling the Peter principle. When employees have motivation and support to enhance their skills through ongoing training programs, workshops, conferences, and online learning platforms, it helps them stay up-to-date with industry trends and develop new competencies.
Competency-based promotion
L&D provides a more comprehensive and objective evaluation of candidates' suitability for specific positions and alignment with a company's goals. Successful tenure is no guarantee for a promotion, as having or proactively acquiring skills required by a future job is equally, if not more, important.
Succession planning
L&D programs guide professional development and switch focus from past employees' occupations to realizing their potential and desire for growth and development through training programs, certifications, workshops, access to external learning resources, and an overall supportive environment. And high-potential employees can be prepared for future leadership roles through mentoring, coaching, and targeted development plans.
Organizations prioritizing L&D create a culture of continuous improvement, attract top talent, and foster the development of capable leaders.
What exact L&D tactics counter the Peter principle?
Competency-based promotion approaches and succession planning programs provide the framework for several tactics organizations can implement to counteract the Peter principle and ensure employees are well-prepared for their roles.
Leadership development programs
Companies can train employees into the managers they need through leadership development programs where high-potential individuals acquire the skills and knowledge necessary for future managerial positions: soft skills, communication, decision-making, strategic thinking, risk assessment, team management, etc.
Performance management and feedback
Regular feedback on employees' performance helps highlight how their work contributes to the company's overall success and spot areas of improvement, guiding their further development closer to their desired career goals. Feeling that your work matters and having your prospects figured out are crucial motivation drives.
And for organizations, performance management helps identify and address skill gaps that affect team productivity and find ways to align individual career goals with business objectives. It's also a clear-cut way to identify and nurture employees who demonstrate exceptional skills and potential for growth.
Job rotation and cross-functional projects
Job rotation is moving employees to different roles or departments for a designated period. This way, individuals learn about other functions, processes, and teams, enhance their understanding of the organization as a whole, and expand their skill set.
Cross-functional projects gather colleagues from different departments or areas of expertise to work on a specific project or initiative. These projects force individuals outside their regular job responsibilities and enhance collaboration, communication, and problem-solving skills, contributing to an individual's professional growth within their current job level.
Both are forms of horizontal career growth which is a way to continue advancing and challenging oneself within one's chosen domain and achieve professional fulfillment without climbing the corporate ladder.
Mentoring and coaching
Pairing employees with experienced mentors or coaches can provide valuable guidance and support throughout their career journey. Mentoring can help individuals develop the necessary skills, navigate organizational challenges, and obtain insights into higher-level roles, learning best practices and acquiring knowledge outside their immediate role. And should the mentor leave, the company can secure the relevant expertise.
One of the forms of mentoring is job shadowing, when an employee follows an experienced professional throughout their workday, observing their day-to-day tasks, responsibilities, and interactions to gain firsthand knowledge and insights. Job shadowing can provide valuable information about the daily tasks, skills required, work environment, and overall career trajectory.
Corporate training and L&D initiatives ensure that individuals are well-prepared and equipped with the skills and competencies required for their current and future roles. By implementing these tactics into an L&D strategy, organizations can mitigate the adverse effects of the Peter principle.
Career journey as a joint responsibility
The Peter principle stands on the assumption that promotion systems in traditional hierarchies are faulty because each person has a preset of skills, a default level of competence that they can be promoted out of. And while we disagree that everyone is doomed to end up incompetent in their role, we can see how promotions can throw people out of their element.
An organizations' duty is thus to support their employees on career paths:
- Assess competencies objectively.
- Provide sufficient resources all the way through.
- Help people self-actualize, whether by going up the ranks or deepening and broadening their expertise.
Another point the Peter principle highlights is how promotion became the primary way to recognize successful employees and boost the team's morale, even if it's detrimental to the business. Instead, companies can facilitate horizontal growth for people not striving to reach top positions.
These are not trivial endeavors but can be incredibly fruitful if approached holistically. That's why enforcing a smart L&D strategy is so pivotal both for employees' career progression and the organization's success. By investing in corporate training and L&D programs, organizations can maximize the potential of their workforce, drive growth, and maintain a competitive edge in the market.
Published on June 20, 2023.