The Peter Principle: Why Promotions Can Lead to Failure

Confirmed by Science

“People may spend their whole lives climbing the ladder of success only to find, once they reach the top, that the ladder is leaning against the wrong wall.”

Thomas Merton

The Peter Principle is a concept that has long been debated in the business world. First introduced in a book by the same name, written by Laurence J. Peter, the principle states that people are often promoted based on their success in their current position, rather than their potential to succeed in a higher role. As a result, employees may eventually be promoted to a role that is beyond their abilities, leading to poor performance and even failure.

The idea of the Peter Principle has been around for decades, but it wasn't until recently that it was put to the test. A study conducted by 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 results of the study showed that the best salespeople were more likely to be promoted and perform poorly as managers, confirming the Peter Principle. The researchers concluded that promotion decisions often prioritize current performance over potential management skills, leading to the promotion of workers who may not have the necessary skills to be successful in a managerial role.

So, what can be done to avoid the Peter Principle? Some experts suggest promoting carefully and ensuring that employees are prepared for the next move. This can be done by onboarding new managers with the necessary competencies to succeed in their new role. Employers should not assume that their top performers will automatically be successful in a higher role and should watch for early warning signs that an employee may be struggling.

If an employee is struggling in a new role, there are several steps that can be taken to help them succeed. These include coaching, training, and frequent check-ins. It may also be helpful to give employees the opportunity to "try on" a new role through projects or temporary assignments to gauge their potential success.

However, if an employee is truly unable to succeed in a new role, demotion may be the best course of action. While this can be a difficult decision, it can be beneficial for both the employee and the company. Demoted employees may be happier and more productive in a role that better suits their skills, and the company can avoid the negative effects of an underperforming manager.

It's also important to note that the Peter Principle is not always a bad thing. Some argue that it can be a natural part of career progression, allowing employees to learn and grow in their roles until they reach their peak. It's obviously important to recognize when an employee has reached their limit and take appropriate action to ensure their success and the success of the company.

The Peter Principle is a real phenomenon that can have negative effects on businesses if not addressed properly. Employers should be careful when promoting employees, ensuring that they are prepared for their new role and monitoring their performance closely. If an employee is struggling, coaching, training, and other support can be provided to help them succeed. However, if an employee is truly unable to succeed in a new role, demotion may be necessary.

With careful planning and consideration, the negative effects of the Peter Principle can be minimized, and employees can continue to learn and grow in their careers.

Talk to us to find out how a fractional or interim sales leader may be able to help.