The Peter Principle in Action

Almost half a century ago, in 1969, Laurence Peter published what’s known as the Peter Principle. The principle, originally formulated to explain the dynamics of hierarchical organizations such as firms, is applicable broadly across many domains, including governance.

The principle notes that people tend to get promoted till they reach a level which they are not qualified for and at which they are incompetent. “In a hierarchy, every employee tends to rise to his level of incompetence, … and in time every post tends to be occupied by an employee who is incompetent to carry out its duties.” 

It makes sense that someone who does a good job at one level should be promoted to a higher level in the organization. But what if the higher level requires skills that were not required at the lower level?

In the context of public institutions José Ortega y Gasset (who died in 1955) recommended a possible way out of this trap (years before Peter formulated his eponymous principle in 1969). “All public employees should be demoted to their immediately lower level, as they have been promoted until turning incompetent”.

Imagine a job that requires excellent managerial skills but not great leadership skills. There is a difference between managers and leaders. Managers know how to build while leaders know what to build; managers can figure out a path to a destination but leaders choose the destination. One can be a poor manager but a good leader — and conversely one can be a good manager but an incompetent leader.

Promoting a manager to the job of a leader can end up badly. Perhaps that is the problem with India. Politicians are good managers at winning elections but may not be qualified to make those policy decisions that demand excellent leadership.

Maybe a demotion is in order.

3 thoughts on “The Peter Principle in Action

  1. I am always fascinated by the veracity of something like Peter Principle. Many people in bureaucracies seek promotion for higher salaries. What the organization should consider is reward financially equal to a promotion for good performance and not change the work description of the employee.


  2. Atanu,

    I reader one of your Quora answers recently where you mentioned “RATIONAL PEOPLE THINK AT THE MARGIN”. Could you please write a more elaborate post about this ?


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