Let’s say you’ve been managing an extraordinarily competent employee for over a year now. As a marketing associate, she always follows the correct procedures, takes ownership and works incredibly well with clients.
So, what do you do? You promote her to marketing manager. It seems like the natural next step for her career progression, and she deserves it for all that hard work.
But, in her new role, she rarely interacts with clients, she must create rules rather than follow them, and she’s often unable to take creative risks. You quickly realize she’s unqualified for this role, which surprises you. She was so great in the other one — what went wrong?
This scenario is an example of The Peter Principle, a term first coined by Lawrence J. Peter. Peter studied organizational hierarchies and condensed his research into a 1969 satirical novel, written with Raymond Hull, called The Peter Principle: Why Things Always Go Wrong. Essentially, Peter states, “in a hierarchy, every employee tends to rise to his level of incompetence … [and] work is accomplished by those employees who have not yet reached their level of incompetence.”
What is the Peter Principle?
The Peter Principle is the theory that competent employees get promoted for their skills, but are eventually promoted into a role for which they’re unsuited. Once they’ve reached this role, they won’t get promoted again — they’re too incompetent — but won’t be demoted, either. Instead, an organization becomes filled with employees who’ve reached roles for which they’re unqualified, and the organization only continues to succeed based on the employees who have not yet reached their own incompetence level. The Peter Principle points out the problem with progress for progress’s sake.
What does this mean? Simply put, it means promotions don’t always equate to progress. Just because someone is a great teacher, doesn’t mean he’ll be equally competent as the school principal. And just because someone is a fantastic tennis player, doesn’t mean she’ll make a great coach.
Unfortunately, in the corporate world, this is a harder pill to swallow — if we’re unsuited for a role directly above us, where should we direct our ambitions instead?
The Peter Principle doesn’t just impact individual employees. It can also hurt the organization as a whole. Think about it: Not only have you placed an employee in a role for which she’s unqualified, but you’ve also taken her away from a role in which she was performing exceedingly well.
This isn’t just a satirical observation, either — at least, not anymore. Researchers Alan Benson from the Carlson School of Management, Danielle Li of MIT Sloan, and Kelly Shue from the Yale School of Management studied the career paths of more than 53,000 salespeople at 214 United States companies between 2005 and 2011. Their findings, published for the U.S. National Bureau of Economic Research, support The Peter Principle.
Ultimately, their research found a negative correlation between the best salespeople and the worst managers — the better someone was at sales, the worse they were as managers. And yet, the best salespeople were 14% more likely to earn that promotion.
The teams with the best salespeople as their managers saw an average 7.5% decline in sales. Meanwhile, average and below-average sales performers were undeniably the best managers.
So, now what? Is your organization doomed to promote all your best players into badly-suited positions, until you’ve eventually pushed all your employees to their own levels of incompetencies? Should you just stop promoting all together?
Not quite. Here, we’ll explore four different tactics you can use to ensure The Peter Principle won’t destroy your business.
How to Fight the Peter Principle
1. Create Opportunities for Employees to Grow Within Their Current Roles
As humans, we are always striving for more — more prestige, more money, more responsibility. As Peter writes, “As individuals we tend to climb to our levels of incompetence. We behave as though up is better and more is better, and yet all around us we see the tragic victims of this mindless escalation.”
Knowing this, we can combat the Peter Principle by creating different opportunities for our employees, besides a typical promotion. If your marketing associate is doing really well, ask her where she’d like to expand. Perhaps she simply wants more writing tasks. You can mold a position on your team to fit her strengths, without necessarily following a typical promotional path.
You can also offer your employees annual raises, without needing to shift them to a new position. Or you might offer other incentives, like additional vacation time if your employee meets X goals.
It’s equally imperative to recognize and applaud individual contributors. Perhaps you want to create an award for the employee with the most team spirit. Maybe, in an email, you simply need to congratulate your employee for her impressive strategy with a client. Whatever the case, a promotion shouldn’t be the only way employees can earn prestige and additional responsibility.
2. Assess Internal Hires Against the New Role’s Qualifications — Not Their Performance in Their Current Role
In the U.S. National Bureau of Economic Research, there was a reason the worst salespeople became the best managers — often, the worst salespeople would rather work as a team player than competitively strive for their own personal best. While these traits aren’t necessarily helpful in a sales role, they’re undeniably critical in a manager’s position.
When you’re interviewing for a new leadership position, you’ll want to identify the traits necessary to exceed in that role, and then find the employee who possesses them. You might be surprised when your top candidate isn’t the employee with the most impressive numbers, but that’s the point.
You shouldn’t promote an individual based on how well they’re performing in their current role. You should only promote them if you believe they showcase the critical skills necessary to perform well in the next one.
3. When an Employee Begins a New Role, Encourage Open Feedback
The Peter Principle isn’t to say someone can’t grow and become competent in a role for which they’re largely unprepared. If you’ve promoted your best marketing associate but she’s fumbling as a manager, it doesn’t mean you need to immediately demote her.
In her prior role, perhaps she was given constant praise for her quick-decisions, independence and ability to offer harsh criticism. These traits made her exceptional previously, but now she struggles to figure out why her team seems disheartened.
As her director, you might want to encourage her to openly ask her team, “What kind of manager do you want? How can I help you do your job?” Perhaps she finds out her quick decision-making skills are perceived as close-minded to her team. Or, maybe her independence makes her seem inaccessible.
By opening herself up to honest feedback, she can focus on improving traits within herself that will most help her team. It isn’t that she’s an incompetent manager, it’s that she needs to recalibrate her strengths and weaknesses in light of this new role.
A version of this article originally appeared on HubSpot. It is reprinted with permission.