How to Avoid the Peter Principle

3 min read
Peter Principle

a barrier between human figures with the Peter Principle on it

Promoting internally benefits organizations in multiple ways. Many companies find that employees who they promote from within reach productive states more quickly than external hires, and the costs for hiring and recruitment are often lower. Yet, promotions also present certain risks—one of which is the Peter Principle.

What Is the Peter Principle?

Set forth in the 1960s by Canadian educator Dr. Laurence J. Peter, the Peter Principle posits that most employees in traditional hierarchical corporate settings eventually get promoted to one level beyond their competency. Known as their “final placement,” this new role can leave formerly successful employees overwhelmed, causing them to underperform. Peter further theorized that employees who reached final placement would often stay in these positions because they’d be evaluated on factors such as attendance and attitude, rather than measurable outputs for which they’d be insufficiently skilled to deliver.

Examples of the Peter Principle

There are many ways the Peter Principle can come into effect in an organization:

  • An engineer was hired for their technical skills, only to be promoted to a managerial role for which they were not skilled or experienced enough.
  • An administrative assistant was hired to support one department but eventually got promoted to executive assistant for the CEO.
  • A manager gets promoted to a senior level position due to their demonstrated ability to lead their team successfully.  

In each of these examples, the employee may have excelled in their original role and were promoted based on their performance. Yet, once they enter the new position, they’re expected to perform beyond what their current capabilities allow.

How to Avoid the Peter Principle

If the Peter Principle were always true, it would mean that every non-entry-level position in a company would ultimately be filled by incompetent employees. That’s a pretty dismal way to look at the corporate structure—and fortunately, it’s entirely avoidable.

We’re decades past the inception of the Peter Principle, meaning we’ve come a long way in our management practices. Today, it seems obvious that throwing an employee into a new role without the proper training would lead to less-than-ideal outcomes, regardless of how well they performed in their previous position.

With that in mind, here are a few steps you can take to prevent the Peter Principle from taking hold in your company.

1. Assess Candidates Thoroughly

When an employee has performed well and a position above them opens up, promoting them may feel like a logical progression. Stop to consider whether it’s the best move for them and the company. Strong performance in one role doesn’t guarantee success in a different position. Use a competency-based screening process to assess skills and be sure to consider both internal and external candidates.

2. Use Other Rewards for Stellar Performance

Promotions aren’t the only way to show an employee you value their hard work and dedication. When an employee consistently meets or exceeds expectations, consider rewarding them with motivators other than promotions when it makes sense to do so. Aim for variety, offering praise and accolades alongside more tangible rewards, such as pay raises or bonuses.  

3. Provide Training and Development

In situations where a promotion appears to be right for both the employee and the company, be sure to provide ample resources to help newly promoted workers succeed in their next position. This could include a structured training program with clear objectives, as well as less formal strategies, such as mentorships. Ensure that training focuses on developing the core skills the employee will need in the role. You might also consider promoting the employee on a trial basis and reevaluating the fit from both their perspective and the company’s after a defined period, such as 90 days. If the new role isn’t working out, allow them to resume their previous position.

While proper training and development can help your organization avoid the Peter Principle, effective employee coaching isn’t always simple or straightforward. It’s important to empower your employees to reach their full potential through targeted coaching that emphasizes personal and team-based development. 


Casey Schmalacker

Casey Schmalacker, Vice President at New Frontiers, is a seasoned leader in marketing, sales, and business development. With a dual degree in Government and Law and Economics from Lafayette College, he has spent the past 10 years coaching students, adults, and organizations to improve executive functions, soft skills, and workplace performance. Casey’s approach is rooted in strategic development and a passion for personalized coaching, emphasizing a culture of continuous improvement.

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