6 Ways to Avoid the Peter Principle

Al Schnur
by Al Schnur

Al has personally conducted more than 5,000 high-level evaluations during his career, and is particularly proud that more than 250,000 candidates have participated in assessment programs he designed. At present, Al focuses on C-level succession planning and assessment in support of CEOs, Boards and other high-level stakeholders.

Leadership is often a reward for doing a good frontline job—so much that most employees expect to “move up the ladder” and become a manager someday.

But promoting employees can get you in trouble.
The “Peter Principle” is a management theory created by Laurence J. Peter. It postulates that employees promoted on achievement, success and merit—not leadership potential—will eventually rise to the level of their incompetence.
In other words, they’ll keep getting promoted until they’re pushed too far and start to harm your company with their incompetent leadership.
How do you keep from falling victim to the Peter Principle?
Here are six strategies you can use to create a pipeline of leaders who will flourish in their leadership roles.

1. Identify the skills needed for each position

You can’t expect employees to seamlessly jump from one position to another. Different roles require unique skills—just because someone’s a good manager, for example, doesn’t mean they’ll make a good director.
Identify what unique skills are required by each position before you make a new hire or promote an existing employee. This will help you do a better job of identifying who is the best fit for the position.

2. Test your employees’ leadership abilities

One of the best ways to see if an employee has what it takes to lead is to try them out in a temporary leadership role. Giving an employee additional responsibilities outside their usual tasks can help them uncover new abilities—and help you identify strengths and weaknesses in their leadership skills.

If a trial run isn’t practical, consider an employee assessment process that helps you hire future leaders from the start.

3. Mentor future leaders

You can’t learn to cook a new meal without first following a recipe. Similarly, potential leaders need training to understand how to function effectively in a new leadership role.

Working with a capable mentor and receiving sound coaching or training can help a leader-to-be fully realize their leadership potential.

4. Stay away from effort-based promotions

Hard work deserves to be rewarded, but basing promotions on effort can be disastrous if the employee isn’t qualified to move up the ladder. Results mean everything—an employee who can’t develop the right skills for a leadership position shouldn’t be handed the reins just because they’ve hung around long enough.

5. Build your pipeline before you need it

When you identify star performers who have potential to be excellent leaders, do everything you can to retain them within your organization. Create a development plan that will let them mature and grow to their full capacity—so that when you need them, they’re ready.

6. Use employee assessments

It’s not always your employees’ fault that they rise to the level of their incompetence. For example, a star employee may have the cognitive skills to succeed at one level but simply “no gas in the tank” when problems become more complex and the answers more ambiguous.

A robust employee assessment program, however, can reveal your employees’ strengths and limitations before the demands of the job do it for them. By spending some time up front, you can avoid costly mistakes later. After all—unlike performance ratings or observations about what someone has already done, an employee assessment is the only way to look into the future and predict what an employee has yet to do.

The Peter Principle is everywhere

60 percent of companies rate the quality of their leadership as less than high. That’s a startling statistic. It also spotlights just how much of an impact the “Peter Principle” has had over the years.

Correctly identifying the skills needed for leadership positions, then cultivating employees who demonstrate leadership potential, is smart business.

More importantly, it will help keep the Peter Principle something you simply read about.

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