The Peter Principle in Management

Dear Students,

The Peter Principle formulated by Dr. Laurence J. Peter and Raymond Hull is the principle that "In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence."

It holds that in a hierarchy, members are promoted so long as they work competently. Sooner or later they are promoted to a position at which they are no longer competent (their "level of incompetence"), and there they remain. Peter's Corollary states that "in time, every post tends to be occupied by an employee who is incompetent to carry out his duties" and adds that "work is accomplished by those employees who have not yet reached their level of incompetence".

One way that organizations attempt to avoid this effect is to refrain from promoting a worker until he or she shows the skills and work habits needed to succeed at the next higher job. Thus, a worker is not promoted to managing others if he or she does not already display management abilities. The corollary is that employees who are dedicated to their current jobs will not be promoted for their efforts but might, instead, receive a pay increase.

Peter pointed out that a class, or caste (social stratification) system is more efficient at avoiding incompetence. Lower-level competent workers will not be promoted above their level of competence as the higher jobs are reserved for members of a higher class. "The prospect of starting near the top of the pyramid will attract to the hierarchy a group of brilliant (higher class) employees who would never have come there at all if they had been forced to start at the bottom". Thus the hierarchies "are more efficient than those of a classless or equalitarian society".

In a similar vein, some real-life organizations recognize that technical people may be very valuable for their skills, but poor managers, and so provide parallel career paths allowing a good technical person to acquire pay and status reserved for management in most organizations.
Interesting, isn't it ?

Best wishes,

Prof.D.P.Chattopadhyay
(Globsyn Business School)