In 1969, Canadian Author Lawrence Peter developed an unorthodox concept that became known as The Peter Principle. Paraphrased, it states that employees will always rise to their level of incompetence. You know all too well what this means. A line employee, or an individual contributor does great on his job. John may be the best auto-mechanic on this planet, and therefore management promotes him to become a middle-manager. However, John is not a good manager. He doesn't know how to be a good manager. Nor is he interested or passionate about managing other people, which is likely why he is not good at it. As a result, his following performance reviews are not as good as the previous ones, and he will never be promoted again. Oh, and one more thing--he is not as satisfied with his job as he was before. Sounds familiar?
Why was he promoted, then?
- Because he was great at another job, irrelevant with respect to the new job.
- Because the promotion brings more money.
- Because the promotion brings a higher social status with it.
- Because John didn't ask himself whether he likes it or not.
- Because management never assessed John's skills for the new position.
- Because John was never trained for the new position.
Why it's too late to do something about it.
Stepping down from management to line positions is hard, if not impossible, for several reasons:
- Because you would have to admit to failure. Nobody wants to admit to failure.
- Because the pay is lower. Nobody wants to take a pay cut. It's very easy to get used to a higher salary. Your lifestyle quickly matches your new salary. The problem is to get used to the lower salary again.
- Because higher management (and the human resources department) don't want to admit to failure in this promotion, either.
- Because management feels bad for the person, and don't want to make it worse.
As a result, John leaves the company on his own. He just doesn't like his new job, nor does he enjoy his poor performance, but he is stuck, because nobody wants to be demoted. Quitting is his only option, and he takes it.
How could this be avoided?
The good news is that it could be avoided! Several things must happen to avoid the outcomes of Peter Principle:
- Employee must want the higher level for reasons beyond the higher pay or social status. Those are extrinsic motivators and not intrinsic ones, and therefore are not powerful enough for the employee to do well at the higher position. Only employees who really, and intrinsically are motivated to perform the duties of the higher position should be considered for such promotion.
- Before employees are considered for a different position, their skills, attitudes, and preferences should be assessed to evaluate whether they will be successful in the new position or not. Not everyone has the right skills and attitudes to work in every position in the organization. Not every employee can be a manager. I'm one of those. After being promoted to the position of a general manager in a $100 million business unit in Texas Instruments, I realized I wasn't cut for that job. I could have quit, but I preferred to take on an individual role which was a much better fit for me (and for the company). This could have been assessed before I was promoted.
- Before promoting an employee to a higher position, the right training must be provided. One day, a friend of mine, who was leading a small Engineering group at his company told me that he is transitioning to lead the marketing group. I asked him if he had any background in marketing. He was surprised by my question and said "but it's only marketing..." He no longer works for that company... Marketing is a different discipline from engineering. So is management. There is training for that, and it should be taken seriously. One bonus advantage of the training: it gives the employee an opportunity to decide whether he or she wants to make that move or not. Before it's too late.
- Pay and benefits should be tied to the value that employees bring to the company, more than to the managerial position they hold. This would prevent employees from seeking promotion to their level of incompetence, and also focus employees on creating value.
Could someone be more competent at a higher-level job?
This is where the Peter Principle got it wrong. The general assumption is that management requires a higher level of competence than line employees. In reality, it requires a different competence than an individual contributor role. Today, a person can be trained and be more competent as a manager than as a line employee. Technology became so complex that no single manager could be an expert in all facets of a project. A manager has to rely on the technical expertise of the individual contributors. At the same time, a manager must have skills of facilitation, motivation, inspiration, and other soft skills that an individual contributor may not need to have, at least not at the level required from a manager. As a result, a person can be more competent at a higher position than at a lower one. Even as a CEO. Completely the opposite from the premise of the Peter Principle.