In this zone, we critically discuss the concept of the Peter Principle and determine whether factors, other than espoused incompetence, are the root cause of poor performance and organisational ineffectiveness.
The concept of the Peter Principle has been caricatured, satirised, refuted and ignored by organisational theorists.43, 44 Five decades after the theory was first proposed, opinion appears to be divided as to whether it is a myth, parody or organisational reality, with which managers in bureaucracies still wrestle. According to Madden,45 the theory has ‘become a hotly debated human resource phenomenon,’ despite its original presentation as a ‘sort of absurdyettrue comic relief to the overworked.’ Regardless of the apparent ridicule surrounding the concept, Romaine44 highlights that theorists have sought to investigate, empiricise and validate the Peter Principle and thus demystify the promotion process and the current and future performance expectations required of promotees, who have been elevated to positions at higher levels in the organisation.
The concept of the Peter Principle was developed by Canadian academic, Dr Laurence J. Peter and coauthor Raymond Hull. Described as the ‘Dilbert of its times,’
the book, ‘The Peter Principle: Why Things Always Go Wrong,’ posited that in hierarchies, ‘incompetence’ is an inevitable byproduct of promotion. Individuals are appointed to positions for which they are qualified or have the potential to develop and grow in the role. As they achieve success in that role, they are promoted to higher level positions, each of which presents them with a new set of challenges. In due course, they are promoted to roles in which their previous ‘competence’
or ability is no longer sufficient to sustain them. While their performance continues to decline, any future promotions cease from that point onwards.43, 46 Peter and Hull47.thus concluded ‘given enough time and enough ranks in the hierarchy each employee rises to, and remains at, his level of incompetence.’ Their theory infers that all managerial positions in organisations are tenured by individuals who are already incompetent or are approaching their level of incompetence to deal with the increased demands of the job. Beeman46 describes this reasoning as ‘spurious.Œ.Œ.Œlogic’ and proffers that other factors contribute to organisational ineffectiveness following promotions are discussed below.
According to Kane,48 time is an essential prerequisite for new promotees to develop and optimise their performance.
He suggests that if incumbent individuals have been in post for several years, they may have strengthened their capability to perform the job through experiential learning and qualifications. They may thus feel more confident, comfortable and settled in that role. In contrast, those who gain promotion face fresh challenges in, and must learn new things for, their elevated role, which may, arguably, be outside their existing knowledge base, skills set and comfort zone. They might also feel somewhat unprepared and inefficient, but one could argue, not necessarily incompetent. In his 1976 article ‘The Real Peter Principle: Promotion to Pain,’ Hess,49 an occupational psychologist, contended that incompetence was not the root cause of poor performance.
He noted that people are ‘often promoted, not to their level of incompetence, but to their level of anxiety and depression.Œ.Œ.Œit is anxiety and depression, not incompetence, that causes inability to do the job’ He suggests that new promotees are often left on their own to cope with the job and its increased demands, without appropriate support from their line managers. This leads to further nonperformance, which may eventually end their careers or lead to demotion.
However, in many large organisations or bureaucracies, Hess outlines that underperforming individuals may continue in post in a ‘semifunctioning capacity’
and ‘wring little fulfilment from their jobs’.
Chan50 advocates that the promotion system, which is managed by the HRM function, is a key contributor to suboptimal promotee performance. He proposes that many organisations make promotional decisions based on current performance rather than expected performance in the higher role. In this instance, the ‘best’ performer may not necessarily be the ideal candidate for the promotion. Chan therefore caveats that promoting someone based on their current job performance may run the risk of the promotee being unsuitable for the new role; thus, one could argue, catalysing poor performance. In a similar vein, using microdata from research undertaken with a sample of the salesforce in 214 firms, Benson et al.51 found that promotion decisions privilege current performance over best potential performance to undertake a higher role. They state, ‘the most productive worker is not always the best candidate for manager and yet some firms are significantly more likely to promote top frontline sales workers into managerial positions’. Not only does the new promotee’s performance deteriorate but so does their staff. Thus, Benson et al. caveat ‘promoting based on lowerlevel job skills, rather than managerial skills, can be extremely costly.’ Finally, Beeman argues that the notion of ‘incompetence’ is created and perpetuated by organisational culture and political interplay. He counsels ‘incompetent persons are often promoted (or not demoted) for political reasons.Œ.Œ.Œfor fitting in and not making waves.’ He also contends that it is the socalled ‘old boy network’ or the ‘politics of the ‘ole buddy’ system of family connection’ that is the ‘root of the incompetency problem’ in organisations.
To conclude, the arguments presented suggest that the Peter Principle has less to do with ‘incompetence’
and more to do with poor performance that has been catalysed and exacerbated by a litany of factors, many of which, it could be argued, are outside the promotee’s control. Beeman and Hess feel strongly about the original premise of the Peter Principle, which evidence suggests is still being disputed fifty years after its first espousal. Beeman caveats that it has ‘nothing to do with reality’.while Hess suggests that ‘it must be seen for what it is – a gag’. Other views advocate that it is the organisation’s culture, political objectives and behaviour, along with HR systems and policies that are perpetuating the situation and letting many promotees down by not providing them with the support they need to develop, perform and succeed in their elevated role. Such support may include preparing potential junior, middle and senior managers to step into higher positions through succession planning52 and providing mentoring and appropriate learning and development programmes for aspiring managers, especially if their current performance, as Chan and Benson et al. espouse, does not make them the best candidate to take on the higher role and they suffer anxiety and depression as a result. With that in mind, Hess concludes that the real Peter Principle should state ‘a person can be promoted to the point where his psychological problems cause him enough pain to neutralise or exceed his ambition and desire for mastery’.

1.The Peter Principle was espoused in 1969, amid controversy that it parodied, among other things, the promotion process in bureaucracies. Using reference to theory and practice, critically examine the relevance of the concept to contemporary organisational practice.

2.Theorists suggest that there is a plausible explanation for individuals who experience a reduction in performance following their promotion to a higher level. Identify these issues and explain the implications for organisational behaviour in the workplace.

3.What strategies can the HR function implement to

a) counter the potential negative effects of selection decisions that are made during the promotion process, and

b) support new promotees to higher positions?