Every employee in a hierarchy tends to rise to his or her level of incompetence – at least according to the underlying philosophy of the Peter Principle.

Never heard of it? The Peter Principle is a management concept developed by Canadian educational scholar Laurence J. Peter and published in the 1969 book of the same name, co-written with Raymond Hull.

The Peter Principle states that a person who is competent at their job will earn promotion to a more senior position which requires different skills. If the promoted person lacks the skills required for their new role, then they will be incompetent at their new level, and so they will not be promoted again. However, if they are competent at their new role, then they will be promoted again, and they will continue to be promoted until they eventually reach a level at which they are incompetent. Being incompetent, they do not qualify to be promoted again, but will remain stuck at that final level for the rest of their career (termed “Final Placement” or “Peter’s Plateau”).

According to the book, while incompetence is a barrier to further promotion, super-incompetence is grounds for dismissal; so too is super-competence. How so? It’s all part of protecting the hierarchy. A small number of outliers at either end of the competence spectrum are represented on a bell curve, and it’s these employees who must be expelled. Peter called it “hierarchical exfoliation”. One example of a super-competent employee is a teacher of children with special needs who has been so effective at educating the children that they’ve exceeded all expectations for reading and arithmetic. However, the teacher was still fired because he had neglected to devote enough time to bead-stringing and finger-painting.

As you can probably tell, there’s a strong satirical edge to Peter’s work (he also added a twist to the old adage that “the cream rises to the top” by stating that “the cream rises until it sours”). Nonetheless, the Peter Principle highlighted fundamental flaws in the traditional way in which employees are rewarded with promotions and has been debated ever since. We’ve all probably encountered the Peter Principle in practice, in organisations where – in our view – the “wrong” people are rewarded with promotions. The definition of “wrong” is based on perceptions of their (poor) behaviour, their (lack of) skills and competencies, and their (obviously favourable) relationships with others in positions of power.

Although a concept of its time, the Peter Principle still resonates today, even if its creators assumed there would always be plenty of layers within a corporate hierarchy and perhaps didn’t foresee the “thinning of the ranks” following various economic setbacks such as the Global Financial Crisis. Thankfully, flatter org structures aren’t the only element keeping the Peter Principle at bay today. We also have (or should have):

  • Defined performance management processes. According to the Peter Principle, competence is measured only by the employer, not customers or anyone outside the hierarchy. “Competence, like truth, beauty and contact lenses, is in the eye of the beholder,” the book stated. Fortunately, performance management has been transformed thanks to 360 reviews and regular performance “check-ins” between employee and manager. Promotion “mistakes” are far less likely today due to improved employee performance insights and clearer organisational definitions of what constitutes poor, good and excellent performance.

In addition to helping with all these pain points, ELMO Performance Management assists with aligning individual and team goals with organisational strategies, the creation of development plans and facilitating 360 reviews.

  • A commitment to continuous learning. Peter pessimistically predicted that even good employee training is ultimately unable to overcome the general tendency of organisations to promote employees to positions of incompetence. However, this didn’t factor in the scope of learning options available to employees today. Gone are the days when employees tended to kiss goodbye to professional development once they hit the workforce. Today’s workers want – and expect – a steady stream of learning and development opportunities. This has been reinforced by the pace of change in business today where the half-life of a learned skill is just 5 years.

ELMO Learning Management helps foster a continuous learning culture by empowering employees with self-directed learning options and giving managers the ability to create and curate a comprehensive catalogue of courses. It also provides tools to keep track of employee training needs, course completion rates and compliance requirements.

  • Sophisticated succession management. When the Peter Principle was created in the 1960s, promotions were often tied to tenure and rarely factored in other elements like performance or potential. A promotion was viewed as a way of rewarding loyalty – and often there was only ever one person considered as a successor for top roles. Today, succession management is seen as the key to successful talent management and a way to build talent pipelines for essential roles in the organisation.

ELMO Succession Management, for example, helps to build a talent pipeline to reduce business risk associated with the loss of key staff, assists managers to identify high performers by assessing potential, performance, flight risk and readiness for new roles, and empowers employees to investigate their own career paths.

So, smarter HR operations may have thwarted the Peter Principle from taking hold in some areas of the business world. Now, if only we could look more broadly…The final chapter of The Peter Principle applies Peter’s theory to the entire human species. The book poses the question: can humanity survive in the long run, or will extinction loom as technology advances and humanity reaches its level of incompetence? It’s certainly thought-provoking and more relevant today than ever before – but something to investigate another day!

ELMO Cloud HR & Payroll helps organisations automate and streamline HR and payroll operations, from hire to retire. For further information, contact us.

Learn more about how ELMO can help your organisation.
Learn more about how ELMO can help your organisation.