6th January 2023

What Is the Peter Principle and How to Prevent It

How to Accurately Evaluate Employee Skills Before a Promotion

Promotions can be stressful, whether you’re the one waiting to be promoted or the one making decisions about who to promote. After all, with a new position comes new responsibilities, new expectations, and new relationships. It’s understandably intimidating for everyone involved.

Unfortunately, a lot of companies promote employees based solely on the employee’s competence in their current position, and though this is important, it’s also crucial to consider if they have the necessary skills to excel in a higher role. Otherwise, the company risks promoting someone who is not cut out to handle the new challenges they’ll be faced with – and suddenly, the newly promoted employee, everyone underneath them, and the company as a whole may suffer.

Promoting people who aren’t ready to take on their new position is what’s called “The Peter Principle,” and it can be quite harmful to all involved. So, how can we, as leaders, avoid this principle, and what does it look like to accurately evaluate your employees before a promotion?

What Is the Peter Principle?

The Peter Principle is named for Dr. Laurence J. Peter, the scholar and sociologist who coined the term. Dr. Peter’s theory is pretty simple; he explains how companies tend to reward employees with promotions until they are eventually promoted to a level of incompetence, meaning they’re put in a role they aren’t prepared for. This is not the fault of the employee; rather, it falls on the leaders of the company who are only promoting based on the employee’s performance in their current role, rather than their readiness for the next one. 

Consider, for example, a cashier who is very good at their job and gets promoted to assistant manager. The cashier may have been very effective at working with customers, had a great attitude, and was trustworthy and punctual, but this in no way indicates whether or not the cashier is ready to be a leader responsible for managing others. Thus, because the cashier wasn’t trained with the necessary skills, he or she may be incompetent as an assistant manager no matter how effective they were in their previous role. This is the Peter Principle in motion.

The Peter Principle can become a paradoxical loop; if competent employees are continuously promoted and not trained for the next position, they’ll all eventually reach a point where they are in a role they are not skilled at, and they’ll stay there indefinitely because they cannot prove the necessary competence to move up further. As you can see, this does nothing to help the company or the team members involved.

How Does It Impact Businesses?

Though the consequences of the Peter Principle will vary based on the situation, the most obvious and consistent issue will be poor leadership. Whether the newly promoted leader manages other people or quality control, it’s only natural to expect errors or inefficiencies if their skill level is not properly aligned with the expectations of the role. As other employees continue to experience ineffective leadership, they may begin to get frustrated and lose motivation and morale, both of which will hurt overall productivity

How Can the Peter Principle Be Prevented?

Common though it may be, the Peter Principle can be prevented in several ways; retaining competent, high-performing employees is both possible and even straightforward when you implement a few simple strategies. 

One strategy is to train your employees for a position when you intend to promote them. If you have a candidate you believe would make a great leader, take the time to invest in them by offering training to hone their skills before you ask them to take on greater responsibility. Providing opportunities for advancement and providing continued education are two great employee engagement strategies, so not only will you avoid the Peter Principle, but you’ll engage and empower your team members at the same time.

The second helpful strategy is to rework your performance evaluation for promotion. Take a look at which factors you’ve been using to make promotion decisions and consider how you can adjust them so they reflect both how an employee is performing in their current position and how they would perform in the new position. An accurate employee skill evaluation can transform your promotion system for the better.

How to Accurately Evaluate Employees

When it comes to eligibility for promotion, there are a few key factors to consider. Take a look at your current employee performance evaluation and see if the following are included:

  • Job Satisfaction – How well is your employee performing in their current position? Are they on time? Do they have a good attitude? Can they meet deadlines? Do they demonstrate consistent performance? Whether someone is satisfactorily performing their job or not is a great place to start when looking for promotion candidates.
  • Skill Level – This is where you look ahead at what the new position would require. Does the person you’re considering have the necessary education, experience, and skills to do what will be required of them in the future? Can they work under pressure? Are they willing to learn new skills? Remember, they may need certain skills their current position doesn’t utilize.
  • Being a Team Player – Someone who wants to work on their own all the time may not be a good fit for a leadership position. Leaders are often required to step in and help their teams in various ways; they must be willing to collaborate and do some of the hard work themselves. It’s important to consider a candidate’s level of commitment to the team. Look for how they demonstrate this quality in their current role and even consider asking them what they think it looks like to be a team player as a leader.

These criteria can be extremely helpful when considering who could be a good fit for an open position at your organization. However, it’s important to remember some training may still be necessary to avoid the Peter Principle – even the best candidates can benefit from extra learning to ensure competency! 

If you or others on your team feel like you could use some help gaining skills to enhance your competency as a leader, feel free to check out some of the training we offer, including productivity training, team building training, and even executive coaching for in-depth, one-on-one guidance.