Peter principle

The Peter principle is a concept in management theory formulated by Laurence J. Peter and published in 1969. It states that the selection of a candidate for a position is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and "managers rise to the level of their incompetence."

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 "generalized Peter principle". There is much temptation to use what has worked before, even when this might not be appropriate for the current situation. Peter observed this about humans.

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". The employee has no chance of further promotion, thus reaching their career's ceiling in an organization.

Peter suggests that "In time, every post tends to be occupied by an employee who is incompetent to carry out its duties" and [the corollary] that "work is accomplished by those employees who have not yet reached their level of incompetence." He coined the term hierarchiology as the social science concerned with the basic principles of hierarchically organized systems in the human society.

He noted that their incompetence may be because the required skills are different, but not more difficult. For example, an excellent engineer may be a poor manager because they might not have the interpersonal skills necessary to lead a team.

Rather than seeking to promote a talented "super-competent" junior employee, Peter suggested that an incompetent manager may set them up to fail or dismiss them because they are likely to "violate the first commandment of hierarchical life with incompetent leadership: the hierarchy must be preserved".

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