Have you ever worked with a manager who seemed completely out of their depth? Or noticed a once-excellent colleague struggling after being promoted? If so, you’ve probably witnessed the Peter Principle in action.
What is the Peter Principle?
The Peter Principle is a concept in management theory, formulated by Dr. Laurence J. Peter in 1969. It states:
“In a hierarchy, every employee tends to rise to their level of incompetence.”
In other words, Peter contends that when individuals are promoted based on their current performance rather than their suitability for the next role – eventually, they reach a position where they are no longer competent, leading to inefficiency within the organisation.
How the Peter Principle Works
The principle plays out in workplaces across industries all the time. Consider an exceptional salesperson who is rewarded with a promotion to Sales Director. However, the skills that made them successful in sales—persuasiveness, networking, and closing deals—are different from those needed to lead a team, such as leadership, strategic planning, and delegation. If they struggle to adapt, they may become ineffective in their new role.
Because promotions made by many companies are often based on past performance rather than future potential, employees continue to climb the corporate ladder until they reach a position where they can no longer perform effectively.
Once they hit this level of incompetence, they tend to remain stuck, as demotion is rare.
The Consequences of the Peter Principle
When employees reach their level of incompetence, it has a ripple effect throughout the organisation:
- Reduced Productivity: Ineffective leadership and decision-making can slow progress and lower morale.
- Workplace Frustration: Colleagues and subordinates may struggle under poor management.
- Higher Turnover: Talented employees may leave due to frustration with ineffective leadership.
- Stagnation: The organisation may struggle to innovate and grow if key positions are filled with underqualified individuals.
This overpromotion has unintended consequences too, as many will either remain ineffective, or leave for another role they feel more comfortable in – as well as leaving a hole in the thing they were effective at, which led to their overpromotion.
How Businesses Can Combat the Peter Principle
Fortunately, organisations can take proactive steps to prevent employees from being promoted into roles where they will struggle:
- Competency-Based Promotions – Instead of promoting solely on past performance, assess whether the individual has the skills required for the next role.
- Leadership Training & Development – Equip employees with the necessary skills before promoting them.
- Alternative Career Paths – Offer lateral moves or expert-track roles for high performers who may not be suited for management.
- Trial Periods & Coaching – Implement temporary promotions or coaching programmes to help employees adjust to new responsibilities before making them permanent.
- Encourage Open Feedback – Create an environment where managers and employees can openly discuss career progression without the expectation that promotion is the only way forward.
Final Thoughts
The Peter Principle should serve as a cautionary tale about the risks of promoting people without considering their long-term effectiveness in a role. Shifting from a traditional promotion-based mindset to one that prioritises skills, training, and adaptability, businesses can ensure that employees thrive at every level—without being set up for failure.
At CJPI, we help organisations uncover their next generation of leaders through succession planning, as well as support well-considered and structured leadership development programmes and executive coaching to ensure that people are developed and ready for promotion at the right time – and which are performed in a way that results in success for the individual and the organisation.
