Do you suffer from the Peter Principle?

Today is July 3 and the Navigate the Chaos question to consider is “do you suffer from the Peter Principle?” If you attend a yoga class do you think that makes you a yogi? If you have the corner office does that make you a leader? If you go to church does that make you a Christian? If you answered yes to any of these questions you most likely suffer from the Peter Principle. Those who navigate the chaos have a strong sense of self-awareness and can recognize when they are fooling themselves by elevating their significance without any evidence.

Canadian educator Laurence Johnston Peter said "Going to church doesn't make you a Christian any more than going to a garage makes you a mechanic.” Peter became widely famous in 1968, on the publication of The Peter Principle: Why Things Always Go Wrong. The Peter Principle is a special case of a ubiquitous observation: Anything that works will be used in progressively more challenging applications until it fails.

This is the "generalised Peter Principle." Peter noted that there is a strong temptation for people to use what has worked before, even when this might not be appropriate for the current situation. In an organizational structure, assessing an employee's potential for a promotion is often based on their performance in the current job.

This eventually results in their being promoted to their highest level of competence and potentially then to a role in which they are not competent, referred to as their "level of incompetence.”

As Rodd Wagner wrote in Forbes “The book sold over one million copies and stayed on the bestseller lists in the United States for 33 weeks. It did not achieve that level of success strictly for its humor. Yet “principle” was too strong a word. Dr. Peter’s observation, although it had a certain amount of what researchers call “face validity,” was at best a theory.”

Recent research conducted by three professors - Alan Benson of the University of Minnesota, Danielle Li of MIT and Kelly Shue of Yale – suggests the Peter Principle may indeed have some data analytics to supports its theory. The researchers analyzed the performance of 53,035 sales employees at 214 American companies from 2005 to 2011. During that time, 1,531 of those sales reps were promoted to become sales managers.

The data show that the best salespeople were more likely to a) be promoted and b) perform poorly as managers. Their conclusion: the Peter Principle is real.

“Consistent with the Peter Principle, we find that promotion decisions place more weight on current performance than would be justified if firms only tried to promote the best potential managers,” the researchers concluded. “The most productive worker is not always the best candidate for manager, and yet firms are significantly more likely to promote top frontline sales workers into managerial positions. As a result, the performance of a new manager’s subordinates declines relatively more after the managerial position is filled by someone who was a strong salesperson prior to promotion.”

The starkness of the results took Dr. Benson by surprise. “I expected that the best salespeople would become merely-good managers: some skills translate to management and others don’t,” he said. “To see that the best salespeople were becoming the worst sales managers was surprising.”

Dr. Benson, Dr. Li and Dr. Shue cannot say how often companies stumble into the Peter Principle and how often they deliberately live by it. Some firms may promote great salespeople “to encourage workers to exert effort in their current job roles and to maintain norms of fairness,” they speculated. Counting sales is easy compared to “other, more subjective or fungible employee characteristics in promotion decisions.” This new information, Dr. Benson said, “suggests firms were willing to lower the bar to promote the best salespeople.”

As Ayn Rand wrote in The Fountainhead:

“It's easy to run to others. It is so hard to stand on one's own record. You can fake virtue for an audience. You cannot fake it in your own eyes. Your ego is your strictest judge. They run from it. They spend their lives running. It is easier to donate a few thousand to charity and think oneself noble than to base self-respect on personal standards of personal achievement. It is simple to seek substitutes for competence--such easy substitutes: love, charm, kindness, charity. But there is no substitute for competence.”

How often do you reflect upon the Peter Principle and if you suffer from it?