In 1969, leadership expert Dr. Laurence Peter wrote about the management predicament of promoting top talent to the point where they are no longer competent enough to do their jobs well. While Peter’s observations had a sarcastic spin, they were right on point 45 years ago, and are still very relevant in today’s workforce.
The Peter Principle, which explains that every employee tends to rise to his/her level of incompetence, applies to virtually every position in an organization, from the office manager to the C-suite. Employees find themselves in over their heads because they haven’t kept up with the evolving demands of a position, or they’ve been “promoted” into a position that doesn’t align with their strengths, or they’ve landed in the “Final Placement” of the company. And even though this is one of the most well-known management concepts, it seems that employers and employees can’t avoid it.
Here are two of the most prevalent ideologies that make up The Peter Principle:
For example, let’s say you are awesome at sales. You are a total “people person.” Nothing excites you or motivates you more than connecting with others outside the office, and closing a big deal. You exceed all of your sales goals and quotas. You are king of sales. Your leadership team sees this and says, “You should lead the sales team!! We are going to take you out of the field, and promote you to VP of Sales. You will get this beautiful corner office, and you will get to manage an entire team of sales people. Your individual success now depends on the performance of others.” THAT is a recipe for disaster. These two positions are vastly different. A top-performing sales exec will likely crumble in a management position that takes him/her away from the customer.
2: Once you’re promoted, you’re stuck as a non-performer and will likely not get fired. Congratulations! You’re a [INSERT NEW TITLE HERE]. You’re now “above” people that were previously your peers and friends. You’re privy to a new level of confidential information about the inner workings of the company. You get the inside scoop. And since you’re in management or leadership now, you can’t share it with anyone. Your loyalty to the organization has made you practically irreplaceable. You hold way too much institutional knowledge for the company to release you, even if your output is minimal. You’ve proven to be trustworthy and ethical. Competency is over-rated! You’re stuck in a position that doesn’t suit you… unless you quit. You have reached what’s known as “Final Placement” in the organization.
The Peter Principle also applies when the demands of a position evolve beyond the person in the position. This frequently occurs in start-up and high-growth organizations, where growth is occurring at an accelerated pace.
It also happens when employers make rushed decisions based on what the organization needs now, rather than what it will need later. Reactive hiring for “now,” without considering an organization’s growth trajectory, will ultimately create a team that lacks the skills needed for growth.
One of my clients is currently experiencing the Peter Principle with a long-time, highly paid IT manager. My client’s organization has grown and evolved a lot, and so have her IT needs. Her requirements have moved from being largely administrative to being much more strategic and creative. Her current manager lacks the skill set and thought process to become what my client needs. The skill set is not trainable or coachable. One solution may have been to split the required skill sets into two positions. However, because this employee is over-paid and will not take a salary cut or demotion, my client has no choice but to terminate her.
It’s a difficult situation for everyone but she’s been forced into incompetence by the company’s growth, and by her own salary level. We are mapping out my client’s long-term IT needs and required skill sets next week, and will then map her existing team to the requirements. We will try to put everyone in the right seats. If there fails to be a match, we won’t force a square peg into a round hole to protect the employee because that doesn’t serve anyone well. Everyone deserves to be in a position where they can grow and succeed. We’ll need to put a plan in place to terminate.
The Peter Principle also occurs in the C-suite, but you don’t hear much chatter about that. I speak from experience. The average tenure of a CEO from the time of company inception is 7 years. After that time, the company is usually vastly different from when the Founder first opened its doors. Revenue has increased, employee headcount has increased, and there are systems, processes, & infrastructures to manage workflow. Customers, and the solutions the company provides, have likely evolved as well.
I chose to leave my first company, Information Experts, in its 15th year. The company had changed a lot, and there were also significant changes in the way our largest customer (the federal government) engaged with its vendors that left me questioning whether I was still the right person to lead the firm. This was a very introspective, complicated time that filled me with feelings of self-disappointment and questions of my overall purpose.
I had led the company through many ups and downs, but this was different. My personal core value system of high value, deep relationships, and transformation didn’t align with the government’s core value system of lowest-priced solutions. The government’s move to the Lowest Priced Technically Acceptable (LPTA) mandate forced us to lay off employees that had been with me for many, many years. The impact the new environment had on my company was a deeply personal psychological bloodbath. In one sweeping mandate, the culture I personally had established over 15 years was demolished. Consequently, I no longer fit my own company.
The supporting leadership was much better suited to lead the company through the tumultuous change that resulted from the new government environment, and establish a different culture. Since I’ve left, they have done an amazing job of right-sizing the company, cutting overhead, and performing well in an insanely competitive environment. I was a casualty of the Peter Principle… I rose to my highest level of incompetence in my own company.
However, my situation is a shining example of how important it is to “trust the process” – especially in the midst of chaos – and to never undermine your own achievements and capabilities. Everything I had experienced, built, and learned until the day I opened Successful Culture 4 ½ years ago prepared me for my success – and happiness – today. And it is all of my collective experiences, through 20 years of entrepreneurship & business building that has empowered me to bring such transformational value to my clients.
There is life after the Peter Principle! I have never been happier. I have never been more aligned with my passion, my purpose, and my potential. Experiencing The Peter Principle was the best thing that has ever happened to me in my professional journey, even though I had to painfully walk away from something I built. So often in life, we may be fooled into thinking an ending, or an unexpected outcome, or a closed door is the culmination of the most significant aspect of our journeys. In reality, they are merely stepping stones to something spectacular.
If you find yourself in the position of rising to your highest level of incompetence – or if you have an employee that is following this path – embrace the circumstance as an opportunity to step into something better that will lead you to tremendous growth, or to graciously lead them away from your organization and into something better.
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CEO, Successful Culture
“Taking Leaders from Triage to Transformation.”