Most people are familiar with the Peter Principle. This principle was first published in a 1969 book, The Peter Principle, by Laurence Peter and Raymond Hull. The Peter Principle observes that people in a hierarchy tend to rise to their own level of incompetence. That is, people are often promoted based on success in a previous position, until they reach a level at which they are no longer competent. Most often this is because the skills that they used to prove their competency at one level do not translate or stretch to the requirements at the next higher level.

Often the reason for reaching the Peter Principle position of incompetency is that the organization has promoted a person, who was very capable in a technical or functional role, into a management or leadership position. For example, a company might promote their best salesperson to a sales management position, such as regional manager or director of sales. Or, an organization moves their best engineer into an engineering management role. Or, the firm moves a successful accountant into a controller or other supervisory position.

The problem in these types of career moves is that the skills necessary to be successful in a functional or technical role are only a small part of the skillset needed at a higher, managerial level. Organizations often rely on the fact that the person has been successful in a functional role as one of the most important criteria for promotion. The promotion might be viewed as the reward for excellent performance at the previous level. In doing so, organizations often neglect to assess whether the candidate has the necessary capabilities to perform at a supervisory level or they fail to provide the training and development resources to prepare the candidate to be successful.

The cost of making such mistakes can be large. Take the example of promoting the best salesperson into a sales management role. Relationship skills are needed in both positions, but the relational skills needed to deal with customers can be quite different from the relational skills needed to lead a sales team. If the person fails at the higher level, the organization will frequently have lost both the best salesperson and the potential sales leader, meaning that the organization now needs to fill two important roles.

Part of this problem can be that firms have defined career paths in which the only way to move up to higher responsibilities and higher compensation is to move away from functional roles into managerial roles. Not everyone desires or is suited for such a move. Sometimes organizations have developed parallel career tracks, offering the option of moving higher in a functional role or moving into more managerial responsibilities. For example, a firm might have an engineering career track in which the highly-qualified and experienced engineers could have the option of moving into a role such as an engineering sage, in which the person becomes an internal technical consultant or resource for the engineering function.

For those star functional performers that desire moving into a managerial role, the Peter Principle highlights the need for assessment and training. The organization has a responsibility, and is a good steward of their people, when they make every reasonable effort to assure success at the next level. This means clearly understanding the capabilities of promotion candidates and comparing with the criteria for success at the next level. An important part of a leader’s responsibilities is preparing people for future success. The Peter Principle can be averted when organizations are aware and proactive in developing their people.

Does your organizational adequately invest in the future success of its people?