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The Peter Principle or Regarding the Ascent of the Incompetent

Have you already wondered about the personnel decisions that have been made? Or about your boss’s practices when it concerns promotions?

Have you already found it to be strange what decisions have been made at your company or at other companies? Were you not even considered in the final selection process? Although you had much better qualifications?

You were angry and could hardly believe it? How does it occur that not always the employees who are the highest-achieving and the highest-motivated hold the best jobs?

Have you already asked yourself these questions in your life?

Then you have perhaps already heard of the Peter Principle?

The two Economists Laurence J. Peter and Raymond Hall described the following phenomenon in their book “The Peter Principle” which was published in 1969. The book is among the classics in North American management literature and initially was published in 1970 under the title “The Peter Principle or the Hierarchy of the Incompetent” by the Rowohlt Publishing House upon the German book market.

Therefore What is This Peter Principle?

The theory is the following one:

The situation in the hierarchical company is broken down as follows: Each member of a sufficiently-complex hierarchy is promoted as long as he is successful in his current position. The promotions end when the requirements of the new position exceed his abilities. Conversely, members whose abilities would be suitable for a higher position already remain stuck in the lower levels in which they have been less successful: Thus, an employee obtains a promotion until a job position is attained which demands other abilities than those which the promoted person can prove.

This has to do with the fact that, in the new job position, qualitatively new tasks correspond to new requirements. Thus, the promotions continue until this job position has been attained. Then the promotions come to a stop and the promoted person can now no longer fulfil the requirements.

Peter postulates: “After a certain period of time, each position is held by an employee who is incapable of fulfilling his job tasks.”

Simply put, that means: Each person ascends in a hierarchy until he has reached the level where he is incompetent.

This provocative, ironic theory certainly triggers astonishment – and perhaps also discomfort. Too often, one enters into situations in which the Peter Principle appears to be confirmed. What if one is mistaken there? Or acts and makes assumptions owing to a self-imposed feeling of having been treated unfairly?

Both can certainly have their justification and are worth considering.

Nonetheless, the Peter Principle appears to offer a certain degree of credibility and plausibility. In the globalised business world and a levelled society as is the case today, most people now strive for recognition, business success and the related financial prosperity.

Often, the fight for job positions chooses candidates whose abilities and qualifications remain far behind those of the candidates not selected. Furthermore, in a highly-complex economic system, many aspects and justifications also certainly play a big role regarding which one may enjoy a spirited debate. Moreover, it is not always the case that conclusions influence the decision-making of a Personnel Director because the highly-complex actions in the business world has since become a psychological and dispositional matter in some work segments and positions. Certainly. But sometimes the plausible arguments also fail to be made. Then one can’t get any further with the customary explanatory models and concepts. One then asks oneself how the wrong decisions could have been made.

In addition, one sometimes also asks oneself in general – thus also in everyday life – how personal decisions are made.

In this article, we are initially only concentrating on the economic aspects of this phenomenon.

In this case, it is sometimes advisable to remember the Peter Principle because the Peter Principle contains a true essential point as it shows that an employee’s past performance constitutes no basis for predicting his future performance in a hierarchically higher-level job position.

Even the question of how I can react to such a wrong decision sometimes arises. Then one ponders how one can handle such flawed assessments, false hopes and incorrect observations which occur. How, for example, why the Branch Manager makes wrong decisions, or a Manager could ruin the company or even why an Administrative Clerk provides false information…

Whoever is familiar with the Peter Principle no longer wonders about it.

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