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BOOK - Enterprise Transformation - A Pragmatic Approach Using POET

 







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The Peter Principle (developed by Laurence J Peter and published by William Morrow and Company in 1969) says that people in any hierarchy tend to rise to their “level of incompetence”, because the skills required to make someone good in one job, are not necessarily the skills required for another job. For example, a good engineer would probably be a bad manager, and a good manager would probably be a bad engineer.

I had never heard the name “The Peter Principle” but very quickly after starting work in 1980, I heard a saying: “People tend to be promoted to their level of incompetence”. Very soon afterwards (and throughout a professional career spanning 40 years) I have seen it happen with my own eyes.

In 2018, professors Alan Benson, Danielle Li, and Kelly Shue analyzed sales workers' performance and promotion practices at 214 American businesses to test the veracity of the Peter principle. They found that these companies tended to promote employees to management position based on their performance in their previous position, rather than based on managerial potential. Consistent with the Peter principle, the researchers found that high performing sales employees were likelier to be promoted, and that they were likelier to perform poorly as managers, leading to considerable costs to the businesses.[1]

[1] - Benson, Alan; Li, Danielle; Shue, Kelly (February 2018). "Promotions and the Peter Principle". NBER Working Paper. 24343: 1–54. doi:10.3386/w24343. Retrieved May 22, 2018.

 

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Questions to ponder...

Do people in your Enterprise promote based on success in a previous role, or the capacity to excel in the new role?

Can you think of examples where this has happened in the past?

Who were they? What was the impact? Why do you think they acted in this way?

What needs to change to reduce the likelihood of it happening in the future?

Who needs to drive that change?




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