While browsing this year’s list of Ig Nobel awardees (improbable research is so much more fun than the kind that wins Nobels), I stumbled across a quirky little study on The Peter Principle. What’s The Peter Principle? I’m glad you asked.
In 1941, a man by the name of Laurence Peter became a teacher. He noticed almost immediately that his supervisors were ignorant boobs (ok, he may actually have used the word “incompetent”). This seemed paradoxical. “When I was a boy, I was taught that the men upstairs knew what they were doing,” he later wrote. Yet in the school where he worked, it seemed they did not. What’s more, the epidemic appeared to be widespread. Peters found numerous examples of top positions filled by blundering dum-dums who weren’t doing their jobs—or at least weren’t doing them well. Peter pondered this phenomenon, and then he came up with a theory—”The Peter Principle.”
The Peter Principle states that men and women in hierarchies climb the professional ladder until they reach the level of maximum incompetence. Sounds crazy, right? Let me explain. Picture a Web site design company. In the basement, there’s a coder—let’s call him Frank. He likes working alone, he likes staring at a computer screen, and he really likes writing code. Frank does his job so well, in fact, that he gets promoted to team leader. He accepts, of course, because the promotion comes with a hefty raise. Unfortunately, the skills required to be a team leader are different than the skills required to be a good coder. Now Frank has to deal with people, office drama, and timesheets. He spends less time coding and more time at meetings.
Still, he manages to hold his team together. And eventually he gets promoted to senior manager. Now he’s responsible for the whole department. Frank was never a people person, and now he has to deal with people all day long. His inbox seems to constantly overflow with paperwork that he has no idea how to handle. Frank has reached his maximum level of incompetence. He can’t move up because he’s doing a terrible job. And he can’t move down without taking a pay cut.
Peter published The Peter Principle in 1969. In the book, he argues that Frank is the norm, not the exception. “In time, every post tends to be occupied by an employee who is incompetent to carry out their duties,” he writes. “Work is accomplished by those employees who have not yet reached their level of incompetence.” This is obviously a bad way to promote efficiency.
In 2009, a trio of Italian scientists decided to conduct a little experiment. They created a model organization with 160 employees and six hierarchical levels. The organization was shaped like a pyramid, with one person at the top and 81 entry-level positions. To begin, they randomly assigned each employee an age and a competency level. The model assumes that employees retire at age 60 and get fired if their competency drops below 4 (on a scale of 1 to 10). When a position becomes vacant, the model promotes an employee from the level below to fill it. Under The Peter Principle, different positions in an organization require different skill sets. So the researchers randomly assigned employees a new competence level after each promotion.
Hard work and skill should, of course, be rewarded. The study shows that using promotions as rewards, however, may not be a good business strategy. When the researchers assumed that promotions would go to the most competent employees, the average efficiency of the organization fell by 10%. For fun, they also looked at what would happen if the organization promoted the worst employees. Efficiency rose by an astonishing 12%. Even randomly promoting employees was a better strategy than promoting the best performers, raising average efficiency 1%.
On September 30, this work earned the Italians an Ig Nobel Management Prize. Congratulations, Alessandro Pluchino, Andrea Rapisarda, and Cesare Garofalo. May you have many productive years before you reach your own level of incompetence.
Photo credit: Ol.v! [H2vPk]
Interesting stuff! So what’s the explanation for efficiency rising when you promote the worst employees?
That’s marvellous, thankyou for sharing. Not only does it appear to vindicate the Peter Principle–i. e. the people who are best at their jobs should be left to do them–but it also confirms that in the best-run organisations it is inevitable that management are idiots…
Luckily, people are incapable of learning and so many are born with the incredible talent it takes to keep us all alive. Otherwise this model would be in real trouble.
I was a programmer (a good one) working in the basement. They promoted me to project manager. I was good at being a manager, but the stress was killing me.
Took an early retirement and my health much improved.
I should point out that these numbers are only true if you assume that Peter was right – that a promotion means that someone is moving into a job that requires a different skill set. The researchers also ran a version of the model where they assumed that employees’ skills carry over into the new job. In this “common sense” model (their name for it), efficiency increased when you promoted the best people.
What they ultimately conclude is that if you aren’t sure what model is applicable in the real world, it’s better to promote randomly or to alternate promoting the best and worst people. Both increased efficiency by 1% or more.
khan – you bring up a good point. My dad went through something similar when he was promoted to manager. He has stuck with it, but I think he probably enjoyed being an engineer much more than he enjoys managing engineers.
Virginia – no clue why promoting the worst people would lead to an increase in efficiency. Here is the only explanation I can think of: So say you have someone who is really bad at his or her job. If you promote that person, he or she may end up in a position that is a much better fit. A person who is already doing a good job, on the other hand, seems more likely to end up in a position that is a worse fit. But that’s a pretty weak explanation.
In organizations in which it is nearly impossible to fire someone, incompetent (or obstinate or mean or lazy) people often get promoted simply because their bosses don’t want to deal with them anymore and are more than happy to recommend them for other jobs. That’s more or less the same as promoting the worst people. I wonder: Did they model the civil service?