Fifty Years of the Peter Principle and the New Path to Competence
Growth Concept

Fifty Years of the Peter Principle and the New Path to Competence

Widespread incompetence is “why things always go wrong” – claims the landmark 1969 book “The Peter Principle”. Fifty years ago, Laurence Peter offered a unique cause and a dysfunctional solution.

The cause – Peter Principle: “Scarcely an employee is content to remain at his level of competence: he insists upon rising to a level that is beyond his powers. Many may win a promotion or two, moving to a higher level of competence. But competence in that new position qualifies them for still another promotion. The final promotion is from a level of competence to a level of incompetence. So, given enough time – and assuming the existence of enough ranks in the hierarchy – each employee rises to, and remains at, his level of incompetence.”

The dysfunctional solution Creative Incompetence: “Create the impression that you have already reached your level of incompetence…[by choosing] an area of incompetence which does not directly hinder you in carrying out the main duties of your present position.” Pointing that directly refusing promotion has “disastrous” consequence, Peter emphasized “the paramount importance of concealing the fact that you want to avoid promotion!” So, to prevent the indecent proposal, Laurence suggested occasionally parking your car in the space reserved for the company president.

But is there a solution from the organizational, system setup, or leadership perspective? What could HR departments and decision makers do to prevent the inadequate rise and support the climb to the highest level of competence?

The Competence Proposal In a Nutshell

To counter the Peter Principle, prevent incompetence, and stimulate rise to competence:

  1. Base leadership on talent (not on performance in a previous role) and setup the promotion system that makes the expert roles, not management, a prestige;
  2. Base leadership on unconditional self-acceptance and clear perception of reality, rather than on biased self-overestimating high self-esteem;
  3. Evaluate leadership and management promotion based on regular, frequent, and transparent feedback from peers and subordinates, rather than on high level corporate decision makers’ ‘gut’ feeling.
  4. Enact the inverted pyramid’s system of “checks and balances” that empowers value generating employees to make decisions and openly rate management, rather than keeping the rigid conventional top-to-bottom information and decision flow.
  5. Encourage talented employees, unaspiring due to various inhibitions, to reach highest competence level by enabling opportunity testing, coaching them to overcome low frustration tolerance and fear of change, etc.

Next section elaborates each point in more detail and concludes this article.

Underlying Causes and Related Solutions

Below (in bold) seem to be the underlying causes behind the Peter Principle, together with the non-bold solution proposals.

Cause 1: Employees’ overambitious drive is approved by the corporate “more is better” signals that reward excellence in one role by promoting person out of it.

Solution 1: Per Gallup’s studies of best managers, base leadership on talent and enact a sound promotion system that spreads money and prestige laterally too (to recognize and stimulate expertise), not just vertically. Celebrating and paying the experts more than the managers sends message that the top is not the only success parameter. Establish talents needed for each role, place people in roles where their talents will flourish, and do not select leaders based on success in lower level roles.

Cause 2: Supported by many famous psychologists (Maslow, Branden), the business world has established high self-esteem and boosting self-confidence as key leadership traits. But those who have it not only overestimate their capacities and can behave arrogantly, they “insist upon rising to a level that is beyond [their] powers” – to requote Laurence Peter.

Solution 2: As REBT founder Albert Ellis stated, most established and aspiring managers lack the core prerequisite for leadership success: full self-acceptance & clear perception of reality. Hence, corporations and governments should base leadership on emotional stability and rationality. Unconditional acceptance of self and others is at the cornerstone of mental maturity and is a healthier alternative to self-esteem, which Ellis treated as “sickness”. To learn more, reference the article “Fifty Years of the Self-Esteem Movement – The Anatomy of the Pandemic”. To review your self-acceptance level click here.

Cause 3: The high-level corporate decision makers easily misread destructive actions as leadership potential. “Some companies view[ing] executives [with many psychopathic traits] as leadership potential, despite negative performance reviews and low ratings on management by subordinates, is evidence of their ability to manipulate decision makers [with] their excellent communication and convincing lying skills. Even severe lack of remorse/empathy can be put into service where being ‘tough’ (making hard decisions) can work in their favor.” (Babiak, Neumann, Hare)

Solution 3: To counter the “kiss up and kick down” advancement strategy, HR departments should establish impartial evaluation of leadership that is not based on decision makers’ ‘gut’ feeling but on a regular, frequent, and transparent feedback from both subordinates and peers.

“Kiss Up & Kick Down” Source: Eggert, A. Max “Deception in Selection: Interviewees and the Psychology of Deceit,” 2014.

Cause 4: The conventional organizational structure with the rigid top-to-bottom information & decision flow and non-transparent performance reviews maintains the status quo – as pointed by management expert Gary Hamel. Further, the management principles valid during the 3rd Industrial Revolution are not all applicable or optimal in the 4th Industrial Revolution.

Solution 4: Solution: Per Vineet Nayar, former CEO of HCL Technologies, organizations should implement Reverse Accountability: a system where management must actively service its value generating employees and is rated on that service. This requires (i) radical transparency, (ii) an open 360-Degree Review where all affected employees can access the result of that manager’s review, and (iii) system for escalating problems between enabling functions (HR, management, etc.) and value generating employees, with the latter being encouraged to escalate issues to higher level if not resolved quickly.

Cause 5: Per clinical psychologist Dr. William J. Knaus, “many people fail to rise to the level of their competency due to misconceptions, lack of information, psychological inhibition, failure to see opportunities, failure to test out new opportunities, self-doubts, low frustration tolerance, fear of change, and so forth.” A study states that about 70% of successful professionals have at some point experienced “Impostor Phenomenon”, the feeling of being a fraud despite having real achievements (Gail Matthews).

Solution 5: Corporations can ensure that employees not only see but also test out the opportunities by allowing them to return to their original role if “things don’t work out”. Firms could also provide the “corporate coach” services to the identified talented employees to help them increase frustration tolerance and decrease inhibitions and fears. HR could administer Impostor Phenomenon tests like the one created by Pauline Rose Clance, and so on.

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©2021 Gordan Dzadzic, Coach and Management Consultant,, All Rights Reserved

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About the Author

Gordan Dzadzic is a Coach who applies Cognitive Behavioral Coaching, Transactional Analysis and NLP to help professionals achieve their business and personal goals. Gordan is also a Management Consultant with previous experience in Lean Startups and Executive Board membership; international donor projects on government policy, institution building, and public & investment finance; SAP & Oracle ERP agile implementations; Information Technology consulting.


  • Babiak, Neumann, Hare, “Corporate psychopathy: Talking the walk,” 2010.
  • Buckingham, Marcus, “First, Break All The Rules,”  – a summary of Gallup studies, 1999.
  • Eggert, A. Max “Deception in Selection: Interviewees and the Psychology of Deceit,” 2014.
  • Ellis, Albert, “Executive Leadership: A Rational Approach,” 1978.
  • Knaus, J. William, “How To Conquer Your Frustrations,” 1983.
  • Matthews, M. Gail, “Impostor Phenomenon: Attributions for Success and Failure,” 1984.
  • Nayar, Vineet, “Employees First, Customers Second”, 2010.
  • Peter, J. Laurence, Hull, Raymond,“The Peter Principle: Why Things Always Go Wrong,” 1969.

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