What is The Peter Principle

William Meller - What is The Peter Principle
The Peter Principle is the tendency in most organizations for every employee to rise in the hierarchy until they reach a level of respective incompetence.

Laurence J. Peter developed the Peter principle, which states that people tend to rise to the level of their respective incompetence within a hierarchy.

In order to be promoted, employees must have demonstrated success in previous jobs until they reach a point where they are no longer competent, as skills acquired in one job may not necessarily transfer to another.

In accordance with the Peter principle, a competent employee will be promoted to a position requiring a different skill set. 

A promoted person who lacks the skills for the new role will not be promoted again if they are incompetent. 

As long as the person is competent in the new role, they will be promoted again and again until they reach a point at which they are incompetent. 

A person who is incompetent will not qualify for promotion again, and so will remain stuck at this final position.

If competent employees are given enough time and positions in the hierarchy, this outcome is inevitable. 

William Meller - Peter Principle

Too much reliance on sales as a criterion for promotion costs a business twice as much.

A number of scholars have engaged in research and discovery to prove the interpretation of the Peter principle and its effects.

"... Three professors - Alan Benson of the University of Minnesota, Danielle Li of MIT, and Kelly Shue of Yale - analyzed the performance of 53,035 sales employees at 214 American companies from 2005 to 2011. During that time, 1,531 of those sales reps were promoted to become sales managers. The data show that the best salespeople were more likely to a) be promoted and b) perform poorly as managers. The Peter Principle is real..."

It is possible for the Peter Principle to result in company-wide mediocrity in extreme cases. 

With more and more people taking on senior roles who aren't equipped for them, productivity, morale, and innovation decline.

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