Avoiding the Peter Principle in Succession Planning
Have you ever promoted a star performer, only to find that they are out of their depth in their new role? If so, you may have experienced the Peter Principle in action.
What is the Peter Principle and Why is it Important?
Organisations frequently promote people based on their past performance until they reach a point where they are no longer effective. They get stuck or reach a plateau. This is the crux of the Peter Principle, a management concept proposed by scholar Laurence J Peter.
“In a hierarchy, every employee tends to rise to his level of incompetence.” – Laurence J Peter
It may sound harsh, but the impact of the Peter Principle has been demonstrated both in practice and research. One recent study found a general tendency to promote staff into leadership positions based purely on performance, with the results indicating a high cost to promoting workers with lower managerial potential.
If the best performers are not necessarily the best leaders, why do organisations continue to promote on the basis of performance, loyalty or tenure? One reason could be to maintain an image of fairness – if employees see high performers being rewarded, they too should be motivated to give their best performance.
However, this traditional approach may no longer be effective, particularly considering the high cost of the wrong person in the wrong role.
How do we Counteract the Peter Principle?
A comprehensive succession planning strategy is the core to eliminating the Peter Principle. This strategy should focus on:
Identify what is required from your leadership roles: Profile your management positions in terms of the skills and competencies required. This will allow you to accurately assess candidate-job fit.
Assess leadership potential and Learning Agility when hiring and promoting: Future potential, and the ability to adapt in the face of change, should be emphasised when making these decisions in your organisation.
Build talent pipelines with multiple options: Traditional organisations tended to promote on the basis of tenure, with one person being “next in line” for the role. Modern succession planning emphasises talent pipelines with multiple successors, at various stages of readiness, being developed towards business-critical roles.
Invest in sophisticated performance management processes: A comprehensive 360-degree feedback and performance management programme keeps the lens focused on development, making promotion “mistakes” far less likely.
Explore alternative methods of rewarding performance: If promotions are no longer offered on the basis of performance, it is important to consider alternative methods to keep employees engaged. One consideration is to tie ongoing rewards to performance management programmes.
Coach and mentor future leaders: Keep high performers and high potentials engaged and continually growing their skills by offering them the benefits of ongoing coaching and mentoring.
It Starts with Talent Management
Many companies fall prey to mediocre management, a sign of the Peter Principle in action. However, the points above speak to the new science of talent management, and how an end-to-end succession planning and development strategy can enable you to make effective leadership decisions – based on a view of the future.