Lawrence J. Peter's principle: people get promoted until they reach a job they can't do well. A study of 53,000 sales workers found top performers often flopped after becoming managers. Better training, trial roles, and planned demotions could help.
Chapters
For me, the Peter Principle was one of those ideas in business that stuck from the moment I heard about it. It made sense to me. It was logical, and while it was initially satirical, I was immediately able to identify those around me to whom this applied. It is based on the book of the same name by Lawrence Peter. So how does the Peter Principle work? It's very simple. We promote people based on their accomplishments in their current role. For example, the most successful salesperson is promoted to sales manager. The position they're promoted to requires a different skill set that they may or may not have. This continues until a person is ultimately promoted to a role that is being beyond their abilities and they fail based on the principle. Everyone is promoted until they eventually reach a role beyond their ability. Or as Lawrence Peter puts it, in a hierarchy, every employee tends to rise to their level of incompetence. The principle was put to the test. Researchers from three universities analyzed the performance of over 53,000 sales employees in over 200 companies. During that time, 1,500 of those sales reps were promoted to become sales managers. The data showed that the best salesperson were more likely to be promoted and perform poorly as a manager. The Peter Principle is real. The most productive worker is not always the best candidate for manager. And yet firms are significantly more likely to promote top front sales workers into managerial positions. In its simplest form, does that mean you keep everyone in the role they excel in? No promotions ever? In a world filled with ambition, this would not work. Smart companies look for ways to promote and beat the Peter Principle. And there are three ways to do Promote better, train better, and as a last resort, demote. When you promote, ensure they're prepared for the next move. The responsibility is on the company to ensure they have the competence to be successful in the new role. Do not just assume they will automatically be good in this new role. Rope them in a bit at first and watch for early warning signs that they may be in over their head. And do not give up with coaching, training or more frequent check ins. An online course, a mentor you can course correct. But also don't ignore the early warning signs. Set people up for success. Sometimes you can even create ways or projects to try a role for a size, a test drive of sorts of to get clues on how they might perform in a new role. And last but certainly not least, think in advance about what you will do when things do not work out. Can you demote the person? Can you find a way to let them save face internally? Can you transfer them to another role where the competencies will translate, and they'll continue to learn and grow.
