Are all Leaders Incompetent? Beating the Peter Principle

Episode #50 Are all Leaders Incompetent? Beating the Peter Principle

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Hey there, and welcome to Episode 50 of the No Bullsh!t Leadership Podcast. This week’s episode: Are All Leaders Incompetent? Beating the Peter Principle. Many of you will have heard of the Peter Principle. It was first conceived in 1969 by Dr. Lawrence J. Peter and Raymond Hull, with the release of their book of the same name. The central concept of the Peter Principle is that every employee in a hierarchy rises to their level of incompetence. And so anyone who’s been in the same role at the same level for an extended period of time is by definition incompetent.

Although the book was intended as a satirical look at leadership, the concept managed to take hold of people’s imaginations and it became an oft quoted truism with conventional wisdom like acceptance. So today we’ll start by exploring what the Peter Principle actually is. We’ll then move onto an interesting perspective on the Peter Principle that I recently came across in an article from the Economist. We’ll take a brief tour through Elliot Jaques’ stratum theory, and then I’ll finish by translating these viewpoints into the No Bullshit Leadership paradigm in which I’m going to outline in simple terms why leaders succeed or fail as they move up an organisational hierarchy. So let’s get into it.

Before we get started, if you learn nothing else from the No Bullsh!t Leadership Podcast, I hope that you’ve learned by now that it’s critical to always question, take nothing for granted, even when it sounds like it should be true because either it appeals to your common sense chip or it conforms with your own worldview. Always remain curious, always test assumptions, and always challenge the so-called conventional wisdom in your own mind. Let’s start by examining the Peter Principle a little more closely. Now, to explain the Peter Principle, I’ve gone to the most reliable website in the world, Wikipedia. And Wikipedia says, “The Peter Principle states that a person who is competent at their job will earn promotion to a more senior position, which requires different skills.”.

Okay, so I’m completely on board with this. Every time you get a promotion, if you’re in an organisation that’s structured properly, when you go to a new level, it will have a unique purpose that you will have to adapt to. So that’s a good principle. However, if the promoted person lacks the skills required for their new role, then they will be incompetent at their new level and so they’ll not be promoted again. Now this is sort of interesting because it ignores the concept of on-the-job learning and it ignores the role of the leader in helping people to transition as they bring them through the different layers of the organisation. Now if a person is competent at their new role, then they’ll be promoted again and they’ll continue to be promoted until they eventually reach a level at which they are incompetent.

So this is like a ceiling on promotion. You’ve got to ask yourself the question, why do people stop to grow? If they’d been promoted successfully a number of times, what is it that’s going to hold them back from being promoted yet again? Being incompetent, The Peter Principle says, people don’t qualify to be promoted again and so they remain stuck at that final level for the rest of their career, which is known as the final placement or Peter’s Plateau. Although this makes sense. I would argue that any person who ends up in a role that they can’t perform and is beyond them should be performance managed by their leader so that eventually they either are up or out. In other words, they meet the requirements of the role and they can perform in the role competently or they have to go and find another role that’s more suited to them.

So the conclusion of the Peter Principle is that the outcome of having an incompetent person at a particular level in a particular role is inevitable because given enough time, and assuming that there are enough positions in the hierarchy to which competent employees may be promoted, someone is going to end up in a role they can’t do. Thus, you will hear the catchphrase, “In a hierarchy, every employee tends to rise to his or her level of incompetence.” And of course, this leads to Peter’s Corollary, which says, “In time, every post tends to be occupied by an employee who is incompetent to carry out its duties.” Thus, the title of the episode, Are All Leaders Incompetent, by definition.

I mentioned the article I came across in the Economist recently, and just a side note, if you’re not yet subscribing to the Economist, then you’ve got to ask yourself why not? And I’ll tell you why it’s the thing that I must read religiously every week. Number one, it is the best, most balanced journalism in the world today, bearing in mind though that it is both socially liberal and economically conservative. Number two, it covers politics, economics, business, science, the arts, it’s a holistic read, it covers all sorts of ground. Number three, it’s really easy to read. And the thing about that is that if you want to learn how to write better then you need to emulate these journalists because you could do a hell of a lot worse than following their example. And finally, as I like to say, if you’re an Economist reader, you will undoubtedly be the most interesting and informed person at any barbecue or cocktail party.

But I digress. Now, back in June, there was an article in the Bartleby column entitled ‘The Promotion Curse’ and it sought to update the Peter Principle. It made some excellent points. The main thrust of which was this, first of all, the quest for greater money and status pushes people to pursue promotions, but they are ultimately unhappy where they land. He then makes the point that former track record is no indication of future success. And I’m sure you’ve heard me say, “What got you to here won’t get you to there.” So for example, high performing sales people get promoted because they can sell stuff. So they may have charisma or persistence, but often they totally lack the skills required in senior management: strategic planning, leading and motivating others, administrative competence and so forth. So Bartleby came up with a modern look addendum to the Peter Principle. People get promoted until they reach a level where they stop enjoying their jobs.

He tagged this as the Bartleby Curse. Now the solution is stick with what you like doing. It’s a rare individual who chooses this over the money and the status of a promotion, but you need to be aware of the curse of overwork and dissatisfaction that comes with being promoted to a position where you don’t enjoy what it is you have to do at that new level. This is definitely worth more than a passing consideration. Is there a path that you can create that lets you move forward to do what you truly love and make money? Now, I believe the answer to that is always, “Yes.” However, it may take a journey down the road less travelled, which is often risky, daunting and uncertain. However, if you do choose the conventional climb up the corporate ladder, the trick is then to become competent enough at the profession of leadership that you do enjoy your work at every new level that you go to.

Let’s take a quick look at stratum theory by Canadian psychologist Elliott Jaques. Now, the level of incompetence is actually a real thing. In his research, Jaques talks about the requisite organisation, so he’s highly positive in his use of how and why organisational hierarchies work so well and how people fit into them. He believes that people are continually drawn into positions that fit them well, so they are neither too simple nor too challenging for their level of capability. It’s not all about ambition, but it’s about the innate capability of individuals. However, having said that, Jaques did think the conventional management approaches were, “Abusive and dysfunctional.”.

Now Jaques described a number of different strata or organisational levels. He defined up to nine, but for practical purposes, the first six levels cover most organisations. Each higher stratum level has a longer time horizon and requires a different level of cognitive ability. So for example, at stratum six you’re looking at CEOs of companies with 20,000 people or so and a time horizon of 10 to 20 years, which is where they put their focus. Obviously this is good in theory, but we have to give consideration to the fact that most CEOs of large companies are pushed by investors to deliver the next quarter’s earnings guidance. A far cry from the 10 to 20 year horizon described by the model. I’ve had many discussions with my good friend and mentor Danny Hovey about the differences between us.

Now he’s pretty much the best I’ve seen at what he does, leadership, talent and culture, but Danny was the first to tell me that he could never operate successfully at the level I operated at as a CEO. The Jaques theory of the six plus levels assumes that everyone has a peak level or ceiling for the amount of complexity that they can deal with. A CEO has to join complex dots in highly ambiguous environments, in everything from finance to people, to economics, to politics, to marketing. Not everyone has the innate capability to do that. Some people are only endowed with the innate horsepower to be frontline workers and these people, too, need to be respected and nurtured for what they bring to the table in a large organisation. If you recognise that limitation for yourself, it’s one sure way to avoid the Peter Principle and stay a lot happier.

Let’s bring all these loose ends together and get down to the No Bullsh!t Leadership interpretation of all this good stuff. I’ve got half a dozen things here and I’ll create a downloadable and free PDF that you can take from the Your CEO Mentor website. So just go to www.yourceomentor.com/freebies, F-R-E-E-B-I-E-S, and you’ll find it there along with some other really good stuff. So number one, understand the two key career transitions. There are two transitions you have to make in your career that I talk about and of course it gets a lot more complex when you start talking about the levels of competence, the levels of complexity and so forth. But really the capabilities you need as a leader come in two forms. When you first start in the workforce, whatever your job is, you are what we call an individual contributor.

You rely only on yourself and your own strengths to get the job done. Your first promotion from being an individual contributor normally takes you to a position where you have a small team to run. So you’ve become what we call a leader of others. And as a leader of others, you’re responsible for the output of that small team. But guess what? You can really compensate for the people in your team who aren’t performing by rolling your own sleeves up and because you’re close enough to the action, and remember no one can do it as well as you, you have every opportunity to dip down and do the work of your team. So you can get outcomes pretty easily. It’s the next level that creates the most problems for leaders and that’s getting promoted out of that first team leader role into a role which is a leader of leaders.

So in other words, you have multiple teams with other leaders in between you and where the work is getting done on the frontline. This is much more difficult because by rights you should have much less opportunity to dip down and do the work yourself. You absolutely have to get your results through other people and this requires a completely different skillset. Now, obviously, as you go up the different layers above that, so even the different strata of the organisation, you will have different challenges, but fundamentally working at how to get results through other people is the challenge that most leaders never master. If you want more on this one, it might be worth going back and reviewing episode seven of this podcast series, which is called Working at the Right Level.

Number two, know your strengths. Now you’d be surprised, everyone thinks they know what they’re good at, they know their strengths, but not many people do. And your strengths are the intersection of two things. The first thing is what are you really good at, and the second thing is what do you really enjoy doing? I can’t count the number of people I know who are really good at something that they don’t enjoy or who really enjoy something that they’re not good at. So the challenge for you is to find the intersection of those things and make sure that that actually feeds into your career ambitions and goals because that’s the way you’re going to be truly successful. Something you’re really good at and something that you also really enjoy. That’ll make your day go a hell of a lot faster and you’ll get the rewards that come from doing a really good job.

Number three, know what’s important to you. And once again, this sounds like it’s almost too simple to say, but you’d be surprised how many people don’t actually know what’s important to them when they try to consider a new role, a new company or a new job. What’s important has to be from your heart of hearts, not what’s important to your spouse, not what’s important to your kids, not what’s important to your boss, but what’s important to you. So for example, what place in your list of importance does money come? For me, it’s about number four. It comes after impact. It comes after working for people who I respect and admire. It comes after having talented, capable people around me. So I know where these things sit, but most people actually don’t and they chase after things that are probably in reality three, four or five on their list.

Where does health rate on that list for you? Think really carefully about what’s important to you and put it all into perspective before you actually match that up with a career goal. Number four, think really carefully about your ambition, ability and personal drivers. So taking into account the things we’ve just spoken about, your strengths and the important things that you hold dear in your life, also think about what you’re capable of doing and be realistic about those ambitions. If you think carefully about this, you’re much more likely to find your sweet spot. And if you operate in your sweet spot then by definition you’re much more likely to be successful. Number five, and this is where the leadership comes in for you and for your leaders, as a leader you need to know that everyone is incompetent to some extent when they land in a new role.

They’ve never done it before. They don’t know what that new level entails. So guess what? As a leader, you have to help people make that transition. You also have to realise that some people can’t, and that’s why we spent some time talking about Elliott Jaques. You need to work that out and you need to help people either get up to that level or help them come to the realisation that that’s not the level for them. And of course, most importantly, you need to eat your own dog food. So you need to be very aware of your own transition and new levels and make sure that you’re handling those with grace and competence. Finally, number six, once you decide on where it is you want to be, commit to it. And when I say commit, I mean do the work that it takes to really be good at the level you’re going to.

Don’t take any excuses for yourself and make it your business to keep learning and growing to ensure that you’re competent at whatever level you’re at. And I think that’s enough said. Alright, so that brings us to the end of Episode 50.

Thanks so much for joining us and remember at Your CEO Mentor, our purpose is to improve the quality of leaders globally. So if you’re enjoying the podcast, please share it with the leaders in your network as this is how we improve the world of work. I look forward to next week’s episode, The Millennial Dilemma.

Until then I know you’ll take every opportunity you can to be a No Bullsh!t Leader.