For those of a certain “maturity”, and who remember watching the event “live”, it is a sobering thought that in a year’s time we shall be celebrating the 50th anniversary of the first manned landing on our Moon. Perhaps less noticed, will be the 50th anniversary of a book that was supposed to be satire, but then created a term of art- The Peter Principle by Laurence Peter (an academic) and Raymond Hull (a playwright), with Hull the primary author using Peter’s research.
The Principle states: “In a hierarchy every employee tends to rise to his [or her] level of incompetence.” In other words, at the heart of organizational management lies a paradox: people who are perceived as the best in a particular role tend to be promoted until they no longer perform well in a subsequent role- at which point they become stuck (in their Final Placement, having reached Peter’s Plateau). Less often quoted is Peter’s Corollary: “In time, every post tends to be occupied by an employee who is incompetent in carrying out its duties.” One can see the consequences of such an eventuality!
What was not expected to be taken too seriously has become (albeit sotto voce) almost dogma in certain quarters. Any laughter will have an edge of knowing acceptance. However, like dogma, belief is not the same as evidence. In reality, the heart of the issue is the extent to which skills which engender success in one particular role or function are transferable and applicable further up the hierarchy (and most large, complex organizations are hierarchies)- can specialists become managers?
The authors also created other terms. How about “percussive sublimation” (a.k.a. being “kicked upstairs”) or a “lateral arabesque” (being moved “out of the way” and given a longer job title- or perhaps, in the current age, a meaningless one); or “hierarchical exfoliation”- a fate destined to befall those who are either super-incompetent or super-competent- who are fired. Such actions are clearly intended to preserve an organization’s Bell Curve of mediocrity!
So, when 3 researchers (economists Alan Benson, Danielle Li and Kelly Shue) recently published the results from a study of 53,000 employees working in sales environments, across 214 companies, and involving over 1,500 promotions, the key question was whether or not their research would confirm the thesis of the original book.
In short, it did.
The best sales people were likely to be promoted to managerial roles; yet, once they became managers, the teams they were managing performed more poorly. All this begs the question of how to stop the rot and how to design processes that are not counter-productive. One approach posited by the study’s authors would be to reward those who are excellent in their existing roles with greater pay, rather than promotion. Another, as at Microsoft, for example, would be to create dual tracks (with equal compensation potential and prestige) for technical and managerial roles. Of course, the classic corporate progression (at least in Western managerial practice), for those deemed to have “potential”, is to move them from role to role with increasing levels of responsibility until finally they realize that “potential”. However, more rarely is this combined with “up or out”. As Peter and Hull predicted, people become “stuck”, creating bottlenecks. Even fewer organizations appear to practice an approach in which promotion followed by “failure” is followed by a suggested re-assignment to the prior role in which competence was demonstrable.
Interestingly, in “the old days”, a number of financial institutions actively to try to develop individuals who would become “general managers”, running the institution as part of a team. Such an approach appears to have fallen victim to the rise of the hyper-specialist.
Where does all this leave the art (science still smacks of far too much “certainty”) of management? Perhaps at the start of a cycle of deciding that was old is new again! After all, we have not even mentioned the management consultants…!
The Awbury Team