Peter Principle – Definition

Cite this article as:"Peter Principle – Definition," in The Business Professor, updated December 3, 2019, last accessed October 20, 2020, https://thebusinessprofessor.com/lesson/peter-principle-definition/.

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Peter Principle Definition

The Peter Principle refers to an observation that the likelihood in most organizational hierarchies, like that of a corporation, is for all employees to rise in hierarchy via promotion until they attain a level of respective incompetence. Thus, a front-office secretary with expertise at her job might get promoted to executive assistant position to that of the CEO for which she’s not qualified or trained for – meaning that her productivity to the company would have been greater if she hadn’t been promoted.

Thus, the Peter Principle is based on the logical concept that qualified employees would keep on being promoted, but at some point would be promoted to levels for which they are not qualified, and they would remain in such positions because they don’t show any further competence which would help them attain recognition for additional promotion. According to the Peter Principle, all positions in a specific hierarchy would over time be filled by employees that are unqualified to fulfill their respective positions’ job duties.

Most people don’t reject a promotion, particularly if a greater remuneration and prestige accompany it – even if they know they are incompetent for the position.

A Little More on What is the Peter Principle

Canadian educational scholar and sociologist, Dr. Laurence J. Peter, laid out the Peter Principle, in his book titled “The Peter Principle” published in 1968. In his book, he stated that an employee’s failure to fulfill the requirements of a specific position that he’s promoted to might be because the position requires various skills different from those possessed by the employee.

For instance, an employee who follows rules or company policies strictly might get promoted to a position of rule or policy creation, even though following rules strictly does not mean that an employee is fit to be an excellent rule creator.

Dr. Peter concluded the Peter Principle with a twist on the ancient adage that “the cream rises to the top” by stating that “the cream rises until it sours.” This means that good employee performance is always promoted until the performance of the employee is not flawless or satisfactory anymore.

Based on the Peter Principle, promotion is the reward of competence because competence, in the form of employee output, is evident, and thus always noticed. However, once an employee attains a position where they are unskilled, they won’t be examined based on their output but are examined on input factors, like getting to work in a timely manner and having a good attitude.

Dr. Peter further argued that employees are likely to maintain positions for which they are incompetent because just incompetence is hardly enough to cause the employee’s dismissal from the position. Usually, only extreme incompetence results in dismissal.

The Peter Principle refers to an observation that the likelihood in most organizational hierarchies, like that of a corporation, is for all employees to rise in hierarchy via promotion until they attain a level of respective incompetence.

According to the Peter Principle, all positions in a specific hierarchy would over time be filled by employees that are unqualified to fulfill their respective positions’ job duties.

A likely solution to the problem which the Peter Principle posed is for companies to give adequate skill training for employees getting a promotion, and to make sure the training is fit for the position to which they’ve been promoted.

Overcoming the Peter Principle

A likely solution to the problem which the Peter Principle posed is for companies to give adequate skill training for employees getting a promotion, and to make sure the training is fit for the position to which they’ve been promoted.

However, Dr. Peter did a pessimistic prediction that even quality employee training cannot overcome the general possibility of organizations promoting employees to incompetent positions, which he terms as positions of “final placement.” promoting people randomly has been a different proposal, but one that doesn’t always make employees happy.

Evidence for the Peter Principle

The Peter Principle becomes intuitive immediately the concept is understood, and models can be built which would predict the event. Still, it’s arduous getting realistic evidence for its vast occurrence.

In 2018, economists Alan Benson, Danielle Li, and Kelly Shue examined the performance and promotion practices of sales workers at 214 American businesses in order to test the Peter Principle. They discovered that companies indeed were likely to promote employees to management positions based on how they performed in their past position, as against being dependent upon managerial potential.

Consistent with the Peter Principle, the researchers discovered that sales employees with higher performance were more likely to be promoted and also more likely to perform poorly as managers, bringing about considerable costs to the businesses.

References for “Peter Principle

https://www.investopedia.com/terms/p/peter-principle.asp

https://en.wikipedia.org/wiki/Peter_principle

www.businessdictionary.com/definition/Peter-principle.html

https://whatis.techtarget.com/definition/Peter-principle

https://www.hrzone.com/hr-glossary/what-is-the-peter-principle

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