How to Avoid the Pitfalls of the ‘Peter Principle’

The manager who leaves you shaking your head after every call, wondering how they ever gave ‘that guy’ so much responsibility. The colleague who seemed like a do-it-all superstar right up until their last promotion, but now can’t organize their own inbox. The team leader who calls endless meetings, but always seems more than a little confused about the big deliverable.

Sound familiar?

If you’ve worked in corporate America you’ve probably encountered the ‘Peter Principle’- though perhaps you didn’t realize it.

What is the ‘Peter Principle’?

Named after Canadian sociologist, Dr. Laurence J. Peter, the ‘Peter Principle’ holds that a competent employee will move up in an organization until promoted into a position for which he or she isn’t qualified. And that, while some people do a great job rising to the occasion, the majority will simply struggle along as middling to poor managers, supervisors, and directors.

Let’s look at an example. BigCorp needs a new Regional Sales Director and wants to hire from within. Lee, the best performer in the company’s biggest territory is promoted to the top slot. However, they barely meets their targets for three quarters before moving on under a cloud of disappointment.

What went wrong?

While Dr. Peter presented the Peter Principle as satire, studies have shown that he was on to something. Companies tend to promote the wrong people. Rather than assessing candidates on the skills and traits needed for the open position, HR professionals focus on a candidate’s performance in his or her current role – whether or not the positions have much in common.

In our example above, the attributes that made Lee a great salesperson – charm, spontaneity, and a big appetite for socializing – didn’t do much to help them deliver in a role that required spending hours alone analyzing market data and reviewing strategy memos.

But the problem doesn’t stop with Lee. Their whole team suffers, along with the company’s bottom line. Turnover increases, morale drops, and the balance sheet reflects big losses in productivity.

Avoid the Peter Principle with AI

Artificial intelligence can identify the best internal candidates and evaluate potential external hires based on the actual requirements for success. Ensuring that you hire the best candidate for the open role.

To revisit our example, what if instead of relying on past performance BigCorp had pre-hire assessment data on every employee? HR would have flagged immediately that Lee’s low score didn’t support moving them up and would have learned why from the reporting.

On paper, Maya, a marketing manager for a company in an unrelated sector, would seem an odd choice. But their AI-based assessment results show they has both the practical know-how and the emotional intelligence required to manage effectively, so the choice to interview them would be clear. Under Maya’s leadership turnover would drop while morale and profits soar.

Why? Because AI identified that Maya, not Lee, had the right building blocks for success.

The takeaway?

Whether your aim is an internal promotion or to source external talent, AI can help you objectively evaluate which candidates best suit your open role.

Want to guarantee you’re hiring for success? Cangrade’s AI-based Pre-Hire Assessments help ensure you identify the best candidate for the job. Find out more.