Organizational Thoughts

In the 1960s, Dr. Laurence Peter formulated the Peter Principle, which states that in hierarchical organizations people are promoted to their level of incompetence. Basically, the principle means that people will do a good job at every level until they are eventually promoted to a position for which they are incompetent. It sounds funny – a Dilbert-like sentiment – but the idea has been the subject of serious research. Experts have proposed numerous reasons for the existence of the Peter Principle, many of them diving deeply into psychology and sociology.

Smart organizations build safety barriers to counter the effects of the Peter Principle. The higher the position, the more the firm will inflate the prerequisites for promotion into that position. The more the firm inflates the requirements, the less likely it is for the Peter Principle to take hold.

Personal observation tells me the Peter Principle is right on the money. I was thinking about it this morning, and I found a couple extensions to the Peter Principle. At first I thought they were exceptions to the rule, but now I realize they are just further validations of the Peter Principle.

First, the Peter Principle doesn’t account for people being promoted well beyond their level of incompetence. We all know someone who was incompetent from the moment they walked into the office, yet they find their way to the highest levels of the company. Maybe this could be termed the Brown Nose Effect, or maybe it's just poor judgment on the part of management. Either way, it’s simply a matter of those who are walking proof of the Peter Principle not being able to correctly evaluate the people they choose to promote.

Second (and this one might be worth studying), is that I think the Peter Principle is subject to itself. In other words, the Peter Principle has done its work so completely in an organization that people can no longer be promoted to their level of incompetence. The Principle itself becomes incompetent to carry out its effect. For example, a person is passed over for a promotion because they are deemed too valuable in their current position. In this case, management, probably with the intent of softening the blow by affirming a person’s importance, is really admitting that in order to be promoted you need to be incompetent in your current position. When management uses this reasoning, it is a sign either of insecurity on the part of the manager or of the fact that the Peter Principle has so saturated the organization with incompetence that the principle itself no longer works.

Either of these two instances, but particularly the second, may be a sign of rough roads ahead. Major reconstruction may be necessary to eradicate the workings of the Peter Principle.