Ep 92 | The Peter Principle with Brian Gubernick

Thank you for joining me today. It's Brian Gubernick, and welcome to the No Days Off podcast, where we believe that every single day brings a new opportunity to get better. Let's get into it. Today I want to talk about a concept in management and organizational theory known as the Peter Principle. The Peter Principle. Maybe you've heard of it before. The principle is a pretty interesting one, and here it goes. I'm just gonna state it as written or as proposed by Dr. Lawrence Peter in 1969, and the principle is that in a hierarchy, every employee tends to rise to their level of incompetence. In a hierarchy, every employee tends to rise to their level of incompetence. Now, why am I talking about this? Recently, just a couple days ago, we did a, we did an episode on circle of competence, and it reminded me of this Peter Principle, which is again promoting somebody to their level of incompetence. So the Peter Principle suggests that within an organization, employees are typically promoted based on their performance in their current role. And as long as employees perform, perform well in their current positions, they keep getting promoted to higher-level positions with more responsibility and more authority. And this process continues until they ultimately reach a position where they're no longer competent, so their promotion stops. So I know many of you listening today are in the real residential real estate business, and you run real estate sales teams or brokerages. So I'm going to use that as the example. And I know many of us, if not all of us, have likely hired for that real estate business. And maybe we brought a real estate agent in, a new agent, and that new agent had some success and became a more experienced agent. And then we looked for ways to create more opportunity. So we maybe gave them some more leverage, and then we're like, okay, now they're ready for their— for, for, for a promotion of sorts. So we make them a, a coach or a manager within the business, and then we promote them further to a director of lead generation role or something of that extent, to that extent. And at some point, that person stops being the great performer that they were. And we wonder, what happened? You were so great as an agent, and you were so great as a manager, but when I promoted you to this, this next tier, well, you were not nearly as competent as you once were. What happened? And so once it— what happens is once an employee reaches this position, you know, we all do this, we reach a level where we're just no longer competent. And the reason we're no longer competent is because that new level requires different skills, different actions, different mindset, different behavior, just different experience altogether. I'll tell you, I see it in sales businesses. Forget about real estate for a moment. I see it all the time, especially in the corporate world. What do you do with a great salesperson? Well, you promote them to sales manager. But it shouldn't be a surprise why so many sales managers that were your best salespeople don't work out as great sales managers. You wonder what happened. Well, what happened is managing or leading others is a much different skill set than being a great salesperson. Now, yes, there are some people that make the transition and thrive, but there are a lot of people that do not. And that, you know, if you're the one making that promotion, yeah, it's on that person to, to thrive, but it's also on you to recognize that you could be setting somebody up for failure by promoting them to a level of incompetence because they either don't have the skill set or frankly just have not had the time to develop the skills required to thrive in that role. Because once an employee reaches a position where they're no longer competent, they're likely to remain in that position as they're no longer considered for more promotions. And as a result, the organization, the team becomes filled with people who are not performing effectively in the roles that they've been promoted to, which leads to tremendous inefficiency, reduced productivity, and maybe reduced profit and even worse. So the Peter Principle highlights the potential pitfalls of promoting individuals based solely on their performance in their current roles. And instead, what we need to be do— do— what we need to be doing is considering whether these individuals possess the necessary skills, the knowledge, the capabilities required for the new position. And if they don't, then as the leader of the organization, it is your job to get them skilled up, to get them the knowledge, to develop the capabilities so they can thrive in the next role. In other words, don't promote and set them up for failure. Instead, slow it down, skill them up, and then bring them into the role when they're, when they're fully prepared for it. So to mitigate the effects of the Peter Principle, I think teams, I think organizations need to implement just better talent management practices, which are things like proper training, development programs, Giving them course curriculum, things to study, and just all of these other factors that should be considered that go beyond just performance when we're making these, these promotion decisions. So the focusing question for you today, if you're a business leader, as most everybody who's listening happens to be, where in your business have you quite possibly promoted somebody to their level of incompetence? Where have you Peter Principled somebody? And if you have in fact done that, can you look in the mirror, accept responsibility, and then figure out, okay, I've done it, it's done. I want to see this person though survive and thrive. I don't want to see them struggle, and I certainly don't want somebody in a role that's incompetent. How do I come alongside them? How do I support them? How do I train them? How do I skill them up starting today? Now, if you haven't promoted somebody yet, you were about to, but you haven't yet, I want you to assess their skills. I want you to go beyond just the performance in their current role and ask yourself, are they truly ready? And if not, slow it down, get them skilled up, get them trained, get them developed, and so they can thrive, get them prepared for that role. Last focusing question. This is a tough one here, but let's be real. Let's be honest. Have you quite possibly promoted yourself to your level of incompetence? Have you taken on roles in your world or in the world of others that, you know what, your prior performance maybe made you believe you earned the right for the next opportunity, but the reality is your skills are not quite there yet? If that is in fact true, what steps do you need to take to raise your lid, to increase your abilities, to break through this incompetence and get to your circle of competence, which as we discussed a couple episodes ago takes a heck of a lot to get to. So be honest, have you Peter Principled yourself? It's a really good, really good self-awareness question. That's all we have for today, the No Days Off podcast. Thank you so much for listening, and remember, every single day brings a new opportunity to get better, so let's get after it.