What are some of the effects of the Peter Principle on businesses?
Prime the pump
September 13, 2022
What are some of the effects of the Peter Principle on businesses?

Welcome back and thank you for joining us for Part 2 of the Peter Principle. If you missed last week’s article, check it out on Searchlight’s website.

Today we look at some of the effects of the Peter Principle on businesses. An article titled “What is the Peter Principle? (And How Can Your Business Avoid It?) shares four negative impacts that the Peter Principle has on businesses and other organizations.

They are:

Less effective leadership.

While not everyone who is promoted ends up in a supervisory role, organizations that practice the top-down management style and are falling prey to the Peter Principle will eventually end up with less effective leaders as they pull high performers into management or even executive positions. According to the Peter Principle, this would result in managers and leaders who frustrate their direct reports and retard progress because they are unable to make the best decisions for their departments and teams.

Trickle-down effect. Poor leadership trickles down the ranks and causes decreased productivity and reduced revenue as processes, departments and individual employees fail to function at their maximum potential. Trickle-down effect from the Peter Principle can also lead to people being pulled inappropriately from lower ranks as those above them move up. Eventually, several layers in an organization can be filled by people who are not able to do their jobs appropriately.

Greater potential for error.

There is a greater potential for error when positions are filled with people who are not skilled, experienced, or qualified to do them. This leads to loss in revenue, poor customer experience and defective products.

Poor employee morale.

One of the Peter Principle’s biggest victims is employee morale. Employees may see people being promoted who can’t really do the job they’re rewarded with, and that can cause negativity in the workforce. In some cases, it’s because another employee (or employees) may feel they’re more qualified and wonder why they didn’t get the position. Even more commonly, someone who steps into a leadership role and can’t perform well in it can negatively impact the job and work environment of everyone else.

It may not be so easy to avoid the Peter Principle all together in your business if you have been practicing the principle for years. However, here are some tips from ‘Indeed’ for employers that you can begin to employ to reduce its negative impact going forward.

Understand the position requirements: Firstly, you should have a good understanding of the requirements of the position that needs to be filled. If the position is a leadership one, ensure that the successful candidate is experienced in encouraging and managing team and possesses organizational interpersonal and teamwork skills. On the other hand, the priority for a senior technical position may not be people management skills but instead, someone who is experienced in managing complex technical processes.

Ensure to revert to the job description specific to the vacant position and assess the potential successor’s skills and experience against the requirements of the job. The key should be to find someone who matches the requirement of the job instead of trying to promote someone into the position because they are doing well in their current position.

Don’t automatically hire from within: while internal hire reduces training and onboarding time and is good for employee morale. Referring to internal hire as an organization’s first option to fill vacancies is not always the best for the organization. The priority should always be to explore who is the best fit for the position as it relates to skills and experience instead of forcing an inhouse hire as this person might very well be promoted to his/her incompetence.

Assume you need to provide training at every level: Training should be made a priority at every level within the organization. Don’t assume that an employee will automatically perform at the same level of excellence in their new role as he/she did in their previous role.

Encourage employees to be honest about how they’re doing: Finally, foster open, honest and supportive communication. Make employees to feel comfortable expressing concerns about onboarding into their new position and about the prerequisite knowledge, skills and training needed to be successful. They should be comfortable asking for help without fear that the opportunity would be taken away.