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Everything you need to know about the Peter Principle

Everything you need to know about the Peter Principle

In behavioral psychology, positive reinforcement is when good behavior is rewarded by a reinforcing stimulus. This concept has been applied in numerous organizations, where, the better you perform, the more likely you are to be rewarded accordingly, in most instances this reward comes in the form of a promotion to a higher ranking position. Most people join organizations with little to no skills, and in several years, they would have earned their stripes and made it to the top. However what happens when someone is promoted for a role they are not suitable for? What happens when an individual is promoted to a senior-level role but proves to be incompetent in that position? This concept is known as the Peter Principle, and this article will further elucidate it.

What is the Peter Principle?

According to Hull and Peter (1969), The Peter Principle states that a person who is competent at a job will earn promotion to a more senior position which requires different skills. If the promoted person lacks the skills required for the new role, they will be incompetent at the new level, and will not be promoted again. If the person is competent in the new role, they will be promoted again and will continue to be promoted until reaching a level at which they are incompetent. By being incompetent, the individual will not qualify for promotion again, and so will remain stuck at that final level.

The Peter Principle is therefore based on the idea that competent employees will continue to be promoted, but at some point will be promoted into positions for which they are incompetent. They will then remain in those positions because they do not demonstrate any further competence that would get them recognized for additional promotion. (Hayes, 2020).

How the peter-principle works

Figure 1: Image Source: www.marketbusinessnews.com

Promotion tends to be based on your performance in your current role, rather than your suitability for the next one. The Peter Principle observes that employees rise through a firm’s hierarchy through promotion until they reach a level of respective incompetence. As a result, according to the Peter Principle, every position in a given hierarchy will eventually be filled by employees who are incompetent to fulfill the job duties of their respective positions (Hayes, 2020).

According to the Peter Principle, competence is rewarded with the promotion because competence, in the form of employee output, is noticeable, and thus usually recognized. However, once an employee reaches a position in which they are incompetent, they are no longer evaluated based on their output but instead are evaluated on input factors, such as arriving at work on time and having a good attitude (Hull and Peter, 1969).

Dr. Peter further argued that employees tend to remain in positions for which they are incompetent because mere incompetence is rarely sufficient to cause the employee to be fired from the position. Ordinarily, only extreme incompetence causes dismissal. For example, an employee who is very good at following rules or company policies may be promoted into the position of creating rules or policies, even though being a good rule follower does not mean that an individual is well-suited to be a good rule creator.  The fact that the employee is not good at making policies may however not be reason enough to cause the said employee’s dismissal. Resultantly, the employee will fail to perform effectively in the leadership position.

The consequences of the peter –principle

In research by Benson, Li, and Shue (2018), they analyzed sales workers’ performance and promotion practices at 214 American businesses to test the Peter Principle. They found that companies did indeed tend to promote employees to management positions 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 also more likely to perform poorly as managers, leading to considerable costs to the businesses. The Peter Principle may also have the following consequences for an organization:

Company-wide mediocrity

Having an individual in a person they are ill-equipped for may have detrimental effects on the organization as a whole.   The organization may fail to perform to the best of its ability. According to Jaques and Kathryn (1994) if a manager at a higher level was ill-equipped in respect of his or her inherent mental processing capability, or lacked the required skills and knowledge the risk is they would interfere in the work of managers at a lower level generally propelled by their anxiety and insecurity. The process of delegation would be undermined leading to organizational dysfunction.

Reduced productivity

If an individual does not know what they are supposed to do in a given role, there will likely be an impact on the productivity of the organization. This is because the said employee will spend more time trying to find their way around their job, and trying to look for ways to do their job effectively.  The individual may also attempt to mask their inefficiency by doing tasks that are not related to their job to appear productive. As a result, there will be no productivity in their given role as they are unable to perform in the role.

Reduced morale and innovation

In the Peter Principle, if the underperforming employee is in a management position, for example, the effect may be reduced morale and innovation for their subordinates. If one is being led by someone who does not demonstrate their capability, their subordinates may develop a negative attitude to the way they approach their duties as they do not have any parameters set by their manager as points of achievement.  This will result in a possibly a whole department underperforming, affecting the productivity of the company. With time, this company may be overtaken by other competitors in the industry as it would have failed to evolve and innovate.

The Peter Principle may have the effect of bringing down an entire organization. However, the effects may be mitigated before any disruptive effects on the organization. If you’re promoting from within your team or organization, make sure that you’re choosing the person who’s best suited for the role, rather than rewarding someone for past successes. The individual may have performed well in their current role, but that does not translate to effective performance in a higher-level position.

References

Peter, Laurence J., and Hull, Raymond. The Peter Principle, William Morrow & Co Inc, 1969 (Pan Books edition 1970).

Hayes, Adam. Peter Principle, Investopedia.com (2020)

Jaques, Elliott; Cason, Kathryn (1994). Human capability: a study of individual potential and its application. Falls Church, VA: Cason Hall & Co. ISBN 978-0962107078.

Benson, Alan and Li, Danielle and Shue, Kelly, Promotions and the Peter Principle. Quarterly Journal of Economics (2018)

Lindah Mavengere is a Business Consultant at Industrial Psychology Consultants (Pvt) Ltd, a business management and human resources consulting firm.

LinkedIn: https://www.linkedin.com/in/lindah-mavengere-552b32b2/

Phone: +263 242 481946-48/481950

Mobile: +263 717 988 319

Email: lindah@ipcconsultants.com

Main Website: www.ipcconsultants.com

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