The Peter Principle – How Will It Affect Employee Performance?

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Despite our tireless efforts of covering every and all topic regarding staffing, employee performance, and the everchanging (and ever-terrifying) job market, we decided to take a detour from the norm. Though we will always focus our discussion upon something in the realm of employment, as we are today, we decided to step back from the normal newsworthy information. Unfortunately, as trending terms and newly-found statistics waver toward the negative and overall possibility of a recession, we continue to find ourselves speaking of negatives after negatives. Regardless, we decided to delve into a brief and lightened history lesson. Today, we will discuss the Peter Principle.

What sounds like a comedy sitcom on your local television channel, the Peter Principle is anything but. In fact, the Peter Principle is a fairly serious workplace observation, despite its somewhat whimsical title. It involves the importance of approved and observed hierarchy, and the negative effects rushing promotions can have on a workplace. Though we shall approach the topic with lighthearted prose, the Principle is fairly serious in concept, and if ignored, can create troublesome workforces.

Therefore, let’s discuss the history of the goofily-named idea, its actual relevance to staffing, and how it can affect employee performance.

Once Upon a Time… In Canada

The Peter Formula doesn’t involve picking pickled peppers. It also doesn’t involve learning how to fly by the sprinkling of pixie dust. But, it does involve a mystical and magical place… Canada.

In 1968, Dr. Laurence J. Peter, an educational scholar and sociologist, published his book The Peter Principle. And, if you are anything like the majority of readers at the time, you scoffed at the outright flippant or downright braggart title of the thought.

Naming your book after you is one thing. Outright naming your workplace theory is another.

Jokes aside (and the method behind the ostentatious naming aside), Dr. Peter provided a reasonable and noteworthy idea. In his principle, he created an overall twist on the old adage that “the cream rises to the top” by stating that “the cream rises until it sours.” In this, Peter meant that excellent employees are often promoted up until they are no longer excellent or cut out for their higher position.

Not making 100% sense? Let’s break down the core concept. Onward, Peterites!

The Core Concept

Overall, the Peter Principle is simple. After observing a number of corporate hierarchies, Dr. Peter noticed that a good worker will always end up promoted. If the worker continues to be excellent at motivation and effort, they will continue to rise. Eventually, they will hit a point where they have gone past their skill limits, being in a position that’s too far past their limits. Therefore, the cream has risen until it sours.

According to the Peter Principle, every position in a given hierarchy will eventually be filled by employees who are incompetent to fulfill the job duties of their respective positions.

If an employee is moved up to a point of being unable to perform their current position with satisfactory results, it does not necessarily show badly on the employee. In the principle, Dr. Peter blames the concept less on the inabilities of the worker, but on the idea of the employer to move the worker up to a role they are not yet ready for (or may never be).


An employer must understand the skills and limitations of their workers. Though we have established an overall ladder that involves the need to promote and award great workers, we have to step against it at times, deciding if the promotion is through a need to reward or an actual idea of possible movement.

On the contrary, great workers may not be satisfied with working and hard and not receiving a ladder jump. This is an understandable situation, but must be remedied through the act of carving a less-familiar path. A promotion into a role that directly suits the skillset, not the ‘natural next step’.

Luckily, Gen Z employees want the ability to grow in their place of employment (as do all ages and generations), but they do not see the employment ladder as vertically as those before them. Moving up to a managerial role with the opportunity to lead, but still be led from above, is not as much of a win as it used to be. Younger workers want the opportunity to be creative, be a leader, and collaborate on something that matters.

Overall helping to avoid the pitfalls of the Peter Principle.

Laurence J. Peter–who developed The Peter Principle 40 years ago–states that, “[i]n time, every post tends to be occupied by an employee who is incompetent to carry out its duties.” and that “work is accomplished by those employees who have not yet reached their level of incompetence.”

For example, let’s say there are two workers, John and Jill. Both of these employees are reporters for a magazine.

John and Jill are both promoted from reporter to managing editor. Each becomes a supervisor over their own team of reporters. John remains spending most of his time writing, not learning or using management skills. Jill, on the other hand, splits her time, focusing the majority of her efforts on managing correctly.

John’s subordinates grow to dislike him due to his hands-off approach. John’s department’s performance drops significantly.

On the other hand...

Jill’s team loves her managerial style, and their performance soars. Therefore, Jill is eventually moved up the hierarchy to the head editor of the publication.

Jill now has plenty of new responsibilities and cannot focus her full time on managing as she used to. She begins to falter, unable to keep up with all of the duties. This overwhelming nature makes her unhappy, lowering her performance. Now, not only is she a bad supervisor like John, but she’s in a higher role, making her a bad supervisor over more employees.

Henceforth, because of great work ethic (and not necessarily great executive skills), both employees were pushed up to higher positions they weren’t ready for. One, this happened because the company thought it was what they were supposed to do. Two, it happens because humans continue to desire progression and promotions until they hit a point they can’t handle as an individual. Three, it may be due entirely to poor training, not the lack of intangible skills.

Peter and Dilbert, Friend or Foe?

Dilbert, the comic strip created by the artist Scott Adams, involved an office worker named… Well. Dilbert.

In the comic, Dilbert often dealt with various stereotypes and problems of the white-collar working world (with humor to boot). Adams and his beloved creation eventually coined the term the Dilbert Principle in the book of the same name.

Despite being made from a newspaper funny, it is a valid observation akin to the one Dr. Peter so famously named.

The Dilbert Principle states that corporations promote bad workers up to supervisor roles in order to keep them from negatively affecting production. They are out of the way, kept in superficial roles that involve ‘commanding’ everyone else. It’s a very ‘just get him out of the way so we don’t have to legally fire him‘ affair.

Peter says employees are promoted until they become incompetent.
Dilbert says employees are promoted because of their incompetence.

Though the Dilbert Principle is ultimately a work of satire, it’s impossible to say situations defined by the principle haven’t happened over thousands of years of work.

Is It True?

So, is the Peter Principle true? Is there any evidence backing it up? Yup, there totally is.

In 2018, economists Alan Benson, Danielle Li, and Kelly Shue analyzed sales workers’ performance and promotion practices at 214 American businesses to test the Peter principle. They found that companies did indeed tend to promote employees to management positions based on their performance in their previous position, rather than based on managerial potential.

And, in theory, it makes complete sense. Employers see their employees as hardworking and think that the intangible attribute of ‘hardworking’ will help the candidate adapt to any position, regardless of the other skills involved.

It happens all of the time.

How the Peter Principle Affects Employee Performance

Now that we have broken down the definition of the Peter Principle in full detail (if I say so myself), it’s important to note how the concept can affect your employees’ performances. As a company (and as a staffing agency), it’s crucial to make sure your staff is at its highest potential while maintaining effectiveness and productivity. Right?

The problem with the Peter Principle is fairly obvious: an employee is in a position they aren’t good at. Therefore, the performance of the individual employee will falter.

But what about the rest of the team?

Bad Leadership Equals Bad Culture

It’s important to remember what exactly bad leadership or management does to the rest of the team. Henceforth, if you place a worker into a leadership role based on working merits and they are not fit for the role, the manager’s production drops and so does the team they manage.

If the Peter Principle put a great worker but a bad leader into the position, you are faced with bad leadership effects.

According to a Deloitte Development study, leadership quality is viewed as high by 48% of leaders in their current organizations, up from 34% in 2011. And, on the other hand, 79% of employees will quit after receiving inadequate appreciation from their managers. Therefore, if your leaders are not great at leadership, you are facing a workforce that will quickly lose production or outright leave.

Bad leadership from inadequate managers can quickly create a place of bad culture, ruining work production for every employee involved. Employees will become unhappy with their jobs and management, not providing the best work they can.

Furthermore, the unprepared supervisor may be incapable of training correctly, creating a new workforce that is also inadequate. The Peter Principle can trickle down in that regard.

Not only does a strong and positive culture affect current employees, but it is a top priority for new ones, too. TeamStage has stated that company culture is important for 46% of job seekers. Therefore, bad leadership and culture can hurt your recruitment chances, too.

The Peter Holds Out

If a worker is good enough (or dedicated enough) of an employee to raise up to a higher position via the Peter Principle, it is likely they have significant motivation. In that case, they may be either unwilling to step down or tell others they are in over their head.

This creates an issue with how to approach the situation.

If the employee really is spectacular as an overall worker, it may be hard to outright demote them. They have busted their tail to get to their position, anyway. But they will need a significant amount of extra resources and time to become adequate for the position. If you do not have the right people in place to train them, you may need to bring in an outside source. Overall, this may become a situation that’s more expensive or cumbersome than the outcome is worth.

On the other hand, if the supervision of the new manager is not close-eye, you may never notice the problem until it has already negatively affected the entire workforce. The hard worker may not be willing to openly state they have an issue or are in over their head, leaving the solution far from the minds of those in charge.

Consequently, identifying (therefore, solving) the issue may not be easy, allowing for more time for chaos to consume the workforce.

Lower-Level Employees Lose Faith

It’s important the employees, regardless of their ladder level, will see the worker get a promotion and be unworthy of the position. Despite great work ethic, they will quickly notice that the employee should not have been promoted, sometimes quicker or more thoroughly than the higher-ups that approved the promotion.

This creates a sense of unpreparedness and distrust in the employee’s mind. If the worker sees that your company doesn’t know who to promote for the right position, they may see you as too hands-off or oblivious to what the lower level needs. Henceforth creating a workplace that believes those in charge are unworthy and inadequate in their position, too.

Ultimately, having a promoted employee crash and burn drastically causes the rest of the workforce to notice. Once they realize what has happened, they may no longer have faith in upper management. This can efficiently create a work culture that is afraid of promotion or doesn’t believe that training is worthwhile. If employees don’t want to be promoted or don’t think they can be, they are liable to quiet quit.

It’s setting a bad example for everyone at the company.

Avoiding the Peter Principle Is Key

So, how does a company avoid the Peter Principle?

At the end of the day, creating a guide to avoiding the Peter Principle is an entirely different subject. Overall, it starts with understanding the necessities of leadership and the skills required for higher positions.

Sure, a promoted employee should be great in their current position and have a fantastic work ethic, but you need to know what skills the next level takes. Do they have those skills?

Take the basic example of going from an engineer to a managing engineer. You know the worker is great at engineering, but do they have the skills to cooperate, communicate, and lead a team of engineers? Knowledge is important, sure, but other factors are at play.

Then it’s important to understand the foundation you have established. It’s possible that the engineer isn’t ready to lead, but could be with the right training. Do you have the correct employees and resources to properly train the engineer to become a managing engineer?

It’s not the point that a great employee must have the skills to move up to the next position. It’s the point that the employee must have the ability and willingness to learn the skills. On the other side, the employer must have the patience, understanding of the needed skills for the position, and trainers in place to teach the new employee.