One HR manager says the Peter principle is ‘scarily accurate.’ Here’s how HR can address it

Hop aboard the corporate escalator to professional advancement, which will inevitably lead to your “respective level of incompetence.” If the last phrase in that sentence triggers a chill or sounds eerily familiar, you’re probably at least somewhat familiar with the Peter principle, a management theory that asserts that in corporate hierarchies, employees are promoted until they achieve a position where they don’t have the skills for the demands of the job.

The concept was coined by Laurence Peter, a teacher who claimed he was surrounded by such gross professional incompetence that he was inspired to examine the phenomenon, publishing The Peter Principle: Why Things Always Go Wrong in 1969. It has since become a touchstone in corporate management circles and beyond. At its core, the Peter principle adheres to a simple notion: Employees are promoted into managerial positions based on their performance in previous roles, rather than their aptitude for leadership. Eventually, the theory goes, every leadership position will be held by a promoted employee who is ill-suited to the role.

As the BBC reported in 2020, the theory wasn’t immediately tested by academics and only really began to pique researchers’ interest in the last decade or so. In 2018, a group of researchers for the National Bureau of Economic Research scoured the sales-performance data of workers at 214 firms, finding that “Firms do promote top performers into managerial positions for which they’re not particularly well-suited,” according to Kelly Shue, a Yale finance professor who was one of the leads on the study.

Although The Peter Principle has a satirical bent, the theory still proves “scarily accurate in many ways,” said Jon Thurmond, an HR manager with 22 years of experience in the construction industry. “I’ve seen people who get promoted, who should not be…then they literally exit the organization in a period of months” due to the overwhelming nature of new responsibilities, he explained to HR Brew.

Upskilling and more exhaustive vetting of candidates’ leadership skills could prevent the Peter principle from taking root in your organization, Thurmond explained.

Don’t just go with the numbers. Resist the urge to solely rely on hard data, like sales numbers or marketing metrics, when vetting candidates for leadership promotions and assess the whole employee, argued Thurmond. “I’ve seen people get promoted to leadership because they’re good at whatever they do…but it doesn’t make them a good leader.”

It’s incumbent on HR departments to understand who possesses innate leadership abilities, rather than just promoting employees who excel in one particular area. Thurmond said  that “people have inherent leadership abilities,” but noted, “there’s some people, personality-wise, who would never be successful at it. Part of it is a lack of interest.”

Talking to candidates about some of the stickier dilemmas that can arise when managing teams may weed out aspirants. “It is not fun when you have to deal with the performance issues,” he said, “or you’re dealing with performance reviews and merit increases and you have a bucket of money that you have to spread out amongst your team.”

Skill up. It is perhaps possible to fine-tune leadership skills, even if they’re only visible in glimmers. But if a candidate has the special sauce and wants the challenge—even better. “Upskilling, particularly in the market that we’re in now, is critical,” he noted. “Why wouldn’t I invest in the people that have been with me and continue to help them improve and improve the organization? From a cost perspective, it’s a lot more palatable” than letting people leave.

Another tip: Encourage employees to be honest if they don’t want to make the leap to leadership. “I’d rather have somebody tell me up-front than have that one [employee] who isn’t quite sure or takes [a promotion] because it’s a pay raise and the title sounds good, and then all sudden they’re the person who exits because it’s not working out.”—SB

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