40 Years After Peter Principle, Promotions Still Aren’t a Science


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In 2008, Business Pundit posted an article outlining the classic “Peter Principle.” The Peter Principle says that in hierarchical organizations, workers will be promoted to their level of incompetence.

In essence, the Peter Principle lends credence to everyone’s niggling suspicion that management doesn’t know what they’re doing. According to the principle, promoting someone based on outstanding work has only marginal returns.

If your corporate scheme rewards good employees with promotions to another position, those employees will rise through the ranks until they reach a job at which they max out their level of competence. At that point, they can’t be promoted anymore, because they’re too incompetent to keep climbing the ladder. Those employees who haven’t yet reached their level of incompetence are the ones actually doing all the work.

When Do Promotions Make Sense?

Dr. Lawrence J. Peter and Raymond Hull first popularized the Peter Principle in their classic book The Peter Principle: Why Things Always Go Wrong nearly forty years ago. The book’s most recent reissue was last year. Meanwhile, several researchers have continued to probe within organizational structures, attempting to find a solution to Dr. Peter’s dilemma.

The most recent research, published last year and awarded the Ig Nobel Prize in management science in September, was conducted by three Italian scientists from the University of Catania Sicily. By using computational models, the researchers determined that the most efficient promotion scheme was a random one.

The Italian team of researchers concluded their findings, published as “The Peter Principle Revisited: A Computational Study,” by noting:

“…we obtained the counterintuitive result that the best strategies for improving, or at least for not diminishing, the efficiency of an organization, when one ignores the actual mechanism of competence transmission, are those of promoting an agent at random or of randomly alternating the promotion of the best and the worst members.”

If random promotions give managers the shivers, researchers have posited other solutions over the years. One is to delay a promotion until a worker demonstrates the skills necessary to succeed in the higher position. Another strategy is simply rewarding outstanding work with simply a higher salary. A third, while more radical, is also timely: More IT companies are making use of contractor work, which avoids incompetence by taking on short-term employees. Those contracts can easily be terminated if workers demonstrate ineptitude.

In response to the research conducted by the Italian team, Phedon Nicolaides, a professor at the European Institute of Public Administration in Maastricht, Netherlands, noted that while the research is interesting, it isn’t practical, simply because promoting the worst members of an organization randomly would decrease morale and breed resentment among other members of the organization.

Nicolaides takes into account office politics, and how nepotism can poison an organizational structure. In a recent Cyprus Mail article, Nicolaides notes:

“Instead of promoting staff randomly, it should be the selectors and evaluators that should be identified through lottery from a larger pool of candidates. If their names are drawn randomly, say, the day before any hiring or promotion assessment, it will be very difficult for any political party to influence the outcome. The outcome should be fairer at hardly any additional bureaucracy.”

This guest post is contributed by Kate Willson, who writes on the topics of top online colleges. She welcomes your comments at her email Id: katewillson2 (AT) gmail (DOT) com.