The Peter Principle is a belief that, in an organization where promotion is based on achievement, success, and merit, that organization’s members will eventually be promoted beyond their level of ability. The principle is commonly phrased, “Employees tend to rise to their level of incompetence.” In more formal parlance, the effect could be stated as: employees tend to be given more authority until they cannot continue to work competently. It was formulated by Laurence J. Peter and Raymond Hull in their 1969 book The Peter Principle, a humorous treatise, which also introduced the “salutary science of hierarchiology”.
The principle holds that in a hierarchy, members are promoted so long as they work competently. Eventually they are promoted to a position at which they are no longer competent (their “level of incompetence”), and there they remain, being unable to earn further promotions. Peter’s Corollary states that “[i]n time, every post tends to be occupied by an employee who is incompetent to carry out its duties” and adds that “work is accomplished by those employees who have not yet reached their level of incompetence.” “Managing upward” is the concept of a subordinate finding ways to subtly manipulate his or her superiors in order to prevent them from interfering with the subordinate’s productive activity or to generally limit the damage done by the superiors’ incompetence.
There are methods organizations can use to mitigate the risk associated with the Peter Principle. However, the implementation of such methods must be applied at all levels to be effective.
One way that organizations can avoid this effect is by having an “up or out” policy that requires termination of an employee who fails to attain a promotion after a certain amount of time. For example: A manager is able to handle the vast majority of his or her current job responsibilities, but does not reveal the skill set necessary for promotion. The manager possesses the potential to cause harm within the company, by way of preventing those beneath them with higher potential from moving up, as well as lowering morale once such employees become aware of this fact. The United States Armed Forces, for instance, require that certain ranks be held for no longer than a set amount of time, a lack of compliance with which could render grounds for dismissal.This, of course, may have the effect of institutionalising the promotion of individuals into a role beyond their competence.
Another method is to refrain from promoting a worker until he or she shows the skills and work habits needed to succeed at the next higher job. Thus, a worker is not promoted to managing others if they do not already display management abilities.
- The first corollary is that employees who are dedicated to their current jobs should not be promoted for their competence, but should instead be rewarded with, say, a pay rise, and remain in their current position; they should also not be promoted in response to their lack of competence at their current job.
- The second corollary is that employees might be promoted only after being sufficiently trained to the new position. This places the burden of discovering individuals with poor managerial capabilities before (as opposed to after) they are promoted.