At some point in our professional careers, we all have come across some managers and wondered –
How on earth did this person become a manager. He seems to be so incompetent?
Welcome to the world of Peter Principle. Peter Principle states that
People in a hierarchy tend to rise to their “level of incompetence”
– Laurence J. Peter
In other words, people get promoted based on their past performances until they are no longer able to produce the same level of performance and they remain stuck there.
The principle was proposed as a satire to the practices observed by Laurence Peter but seemed to have been taken seriously by most of the working population.
Now, a study by Alan Benson, Danielle Li, and Kelly Shue shows that there might be some truth to the principle after all.
Studying sales executives in more than 200 US firms, the authors of the study conclude that the Peter Principle seems to be consistent across the sample.
Sense of Fairness in an appraisal process seems to far outweigh potential.
– Mukesh Gupta
When looking at promotions, organisations are more than willing to promote top performers, even if they don’t necessarily have the qualities to succeed at the next level. They are doing this to ensure two outcomes – a sense of fairness (best performance gets promoted) which they expect to have an impact on the rest of the force to give their best performance.
This is despite the fact that most often the best performers are not necessarily the best managers. But maintaining the sense of fairness in the promotion process seems to be more important in the long run, even more important than immediate future performance.
What does this mean for us?
There are two ways to approach this fact.
Future Potential vs Past Performance:
We can start thinking of changing our promotion policies to promote people based on future potential than for past performance. To address the questions of fairness, we need to be completely transparent about the entire process and set the right expectations and rewards policies.
We could even look at rewards which are designed by the employees themselves so that they don’t feel like they are missing out when overlooked for promotions. Train these high performers so that they continue to grow their performance in their current roles.
Separate Promotions from Performance:
We clearly tell the team that good performance will be expected, recognised and rewarded but not necessarily through promotions. Promotions are completely removed from the entire performance evaluation process and is run as a separate process.
Nominations & Recommendations
Ask your team the following two questions:
- Whom would they recommend to be considered for the promotion (outside of themselves)? Why?
- Would they like to be considered for the promotion? Why?
Once we the list, help the people who would like to be considered (if someone has been nominated by multiple people and they have not nominated themselves, talk to them to find out their interest). Then help them make a full assessment of their skills/competencies and compare that with the skills/competencies that is required if they are promoted.
Train Multiple Candidates:
Identify two or three candidates who have the potential to do well at the next level. Then find opportunities to train them and allow them to take some on-the-job responsibilities as the next level manager and see how they perform. Help them build skills and competencies where they show potential but lack skills.
Share Feedback & Deploy when needed
Once we are able to help these candidates build the necessary skills, we need to constantly provide feedback. This also means that if someone needs to be dropped off the program, we do so openly and transparently, with fairness.
Then, we have a set of candidates ready to be deployed at the next level of leadership, whenever an opportunity presents itself. This need not necessarily be in the same team but can be in any part of our organisation.
In Conclusion:
By following this process, we are able to address some important things at the same time:
- Stop Peter Principle becoming true in our organisation.
- Build a strong pipeline of managers/leaders who are ready whenever an opportunity arises.
- Keep high performing employees performing at their peak.
- Separate promotion from performance and still maintain the sense of fairness in the process.
By all of this, we can ensure that we have the right people, with the right skills, at the right place and at the right time.
PS: You can also hear from the authors about the study and what it means here and here.
