putting the peter principle to the test

Yes cubicle dwelling engines of the corporate world, your complaints about bosses who seem totally unable to comprehend how to run their departments and why you think that’s the case, really have sound science on their side. According to a statistical simulation by a social scientist and a duo of astronomers who decided to apply their math to business organizations rather than the stars, promoting people based on their tenure and success in their current position significantly hurts the efficiency of the company. Just as the infamous Peter Principle would suggest, expert salespeople don’t necessarily make good sales managers or executives as time goes on because management requires a different set of skills than direct execution.

In fact, the model says that you’re better off promoting employees at random or alternating between promoting the most competent, then the least competent workers because there’s a chance that you’ll place people with the right skills in the right positions either by luck or by keeping more competent employees where they could help maintain the organization’s balance. The theory makes perfect sense on paper, but to put it into practice would require a major overhaul of today’s corporate structure and the goals for those who enter the business world. Rather than strive to be promoted, employees should aim to be highly compensated experts or learn the skills that will land them in the C-suite. And rather than reflecting the corporate hierarchy, their pay should be based primarily on expertise and experience.

Of course we have to ask how a culture used to seeing promotion as the ultimate reward for work well done would treat the idea of a sideways career path for the vast majority of workers. After all, promoting people on a random schedule would reward workers on being lucky rather than being good at what they do, and giving the least competent employees a shiny new office to chain experts to their current positions would be a crippling blow to company morale. However, just promoting workers because they “earned it” and neglecting to teach them the skills they’ll need to exceed in their new position just sets them up for failure and hurts the company as a whole in the process.

See: Alessandro Pluchino, et al, (2009). The Peter Principle Revisited: A Computational Study. Submitted to Physica A arXiv: 0907.0455v2