A Management in a Minute Book Overview of The Peter Principle by Dr. Laurence J. Peter and Raymond Hill

Executive Summary

The Peter Principle was first published in 1969 and created quite a controversy.  This book did become a #1 best seller and provides a comical satirical look at organizational hierarchies that explains why employees are promoted into positions where they are incompetent.

The writer Dr. Laurence Peter, a Canadian school psychologist, teacher, counselor, prison instructor, consultant and university professor who obtained his doctorate in education, collaborated with Raymond Hull, an accomplished Canadian born writer.  Dr. Peter did not have time to write this book so Mr. Hull used Dr. Peter’s scattered notes to compose the Peter Principle.   

A hierarchy is defined as an organization whose members or employees are arranged in order of rank, grade or class.  The work is spread out much like a pyramid shape with the regular employees doing the largest amount of work, which represents the bottom rung of the pyramid.  As they advance up the pyramid, there are the supervisors, then management, continuing upward until we reach the top of the pyramid where we find the owner or CEO.

It is stated that many companies would rather promote from within their hierarchy.  But, in theory, the employees that are promoted from within are already familiar with the workings of the company and have a good idea of the company’s goals.  The Peter Principle reveals a problem with internal promotions.

As an employee continues their promotion with the company, they eventually are promoted from a position of competence to a position they are unable to sustain, or in other words, they become incompetent.  An example as stated in the book would be in education.  Dr. Peter (1969) states that incompetence is rampant in the education system.  One high school graduate in three cannot read at a normal fifth grade level.  He states that it is common for colleges to be giving reading lessons to freshman.  In some colleges, twenty percent of freshman cannot read well enough to understand their textbooks.

It is understood from Peter’s analysis that when this level of incompetence is reached, an employee’s promotional tract usually ends.  The employee is stuck in the position where he no longer has the ability and provides less work than before when he was in the position in which he excelled.  The problems that are caused by the promotion create an incompetent employee that will be making incompetent decisions.  The Peter Principle states that the higher levels become populated entirely by incompetent employees.

Once at the level of incompetence, the employee will generally not be fired from the position but will become a mediocre employee.  The employee is able to spend a lot of time covering up his incompetence.  There is not usually something in place to demote the employee.  Therefore, he is either left alone or fired.

Not to worry, it seems the bulk or the productivity within the company is usually carried out by the regular employees who form the base of the hierarchical pyramid.  It is possible for a company to operate indefinitely as long as the incompetent supervisor does not create problems.

A point of interest is that incompetence is not limited to larger companies, or to any one specific company of any kind.  Incompetence is pervasive throughout the professional workplace.  It can be present in a solitary profession as well.  An example could be having your hairdresser, with many years of experience, giving you a terrible haircut.  Therefore, individual incompetence can be found as well as organizational incompetence.

It has been stated that employees gravitate toward professions that allow their incompetence to manifest.

The Ten Things Managers Need to Know from The Peter Principle

1.  Managers need to know about The Peter Principle (Peter, 1969 p.19), a concept that all employees rise to their level of incompetence.  It explains the growth and persistence of incompetence at the top levels of organizations.  The worker, having been hired into an entry-level position, does his job well and will eventually be promoted.  This process is repeated again until the employee has risen into a position where he cannot properly satisfy the responsibilities, thus his level of incompetence.  He will remain there until he retires or is fired.

2.  Managers need to know the existence of a hierarchy (Peter, 1969 p.69).  This as defined is an organization whose members or employees are arranged in order of rank, grade or class.  A hierarchy is one way a company can be organized.  Thereby, the work is spread out as if in a pyramid shape with the top of the pyramid being the owner or CEO.

3.   Managers need to know about an employee’s level of incompetence (Peter, 1969 p.139).  As an employee is promoted within his organization, he will eventually be promoted out of his area of expertise into an area where he is hopelessly incompetent.  Therefore, an employee who had once been good at his job finds himself in a position where he no longer has confidence in his abilities and begins to produce less work.

4.   Managers need to know about manipulation (Peter, 1969 p.64) by the employees thus taking the blame away from management.  An employee can manipulate the reward system to get a promotion.  The employee seeks a larger paycheck, higher status or a corner office and he works extra hard to get that promotion.  After an amount of time, the employee gives himself a break, taking a bit of time to relax.  It can appear as though the promotion caused a decline in work when realistically the work performed before the promotion was artificial.  This is not incompetence but an employee’s desire to work less.

5.   Managers need to know about employee self-sabotage (Peter, 1969 p.36).  It is possible that an employee knows his limits and thus shields himself from being promoted to his level of incompetence.  The employee who is happy in his current position will take steps to make it appear that he is less desirable for being promoted.  This can be a risk for the employee who would not want to get fired from the current position.

6.   Managers need to know that they are hiring the right individuals for the right job (Peter, 1969 p.64). You need to ensure that the person has the desire and ability to be a leader.  It is important that you provide objective feedback along the way.  This can highlight any shortcomings and provide an opportunity for the employee to improve their performance.

7.   Managers need to know that the Peter Principle can be deterred by refraining from promoting an employee until they show the skills and work habits needed to succeed at the next higher job (Peter, 1969 p.91).  Thus, a worker is not promoted to managing others if they do not already display management abilities.

8.   Managers need to know that one suggestion for overcoming the effects of the Peter Principle can be found in the use of contractors (Peter, 1969 p.139).  A contractor can be selected for their experience for a particular position for short periods of time to complete a job.  Certainly if they are incompetent they can easily be laid off or not renew their contract.  The contractor cannot be considered a part of the hierarchy.

9.  Managers need to know that they can consider instituting a policy of demoting employees without the stigma of failure (Peter, 1969 p.66).  An employee can be moved into a position that is more suited to that employee.  If the employee is struggling at the higher position then by allowing him to go back to a position at which he can excel would avoid the effects of the Peter Principle.

10.  Managers need to know that human behavior in the workplace, for the most part, shows that organizations can be quite competent at behavior that is rewarded and realizing that what is broken is the hierarchy structure (Peter, 1969 p.108).  There can be many other explanations for incompetence.   

Full Summary of The Peter Principle

The Peter Principle

Dr. Peter (1969) writes that he was taught that the more you know the further you go.  He began his career as a teacher.  During his first year of teaching he was disappointed to find that other teachers lacked the knowledge of their professional responsibilities and were incompetent to follow through.  He decided to apply elsewhere to teach.  It was during this search that he began seeing incompetence everywhere.   Thus began his serious study of the ways in which employees move upward through a hierarchy and what happens to them after promotions.  He describes three examples and determines that all three have common features.  The employee had been promoted from a position of competence to a position of incompetence in each example.  He determined this would happen to every employee in every hierarchy.

Dr. Peter’s analysis (1969) of hundreds of cases of occupational incompetence led him to formulate the Peter Principle.  ”In a hierarchy every employee tends to rise to his level of incompetence”.  Hierarchy was originally used to describe the system of church government by priests graded into ranks.  The contemporary meaning includes any organization whose members or employees are arranged in order of rank, grade or class.  Peter’s Principle is the key to an understanding of all hierarchical systems.  This explains that a competent employee promoted upward until his final promotion wherein he rises to and remains at his level of incompetence.

The Principle in Action

In every hierarchy “the cream rises until it sours” (Peter 1969).  An example at the Excelsior School System will be used to illustrate.  There are three categories: competent, moderately competent and incompetent.  It is suggested that distribution theory predicts that teachers will be distributed unevenly in the classes with the majority in the moderate competent, minorities in the competent and incompetent classes.  Thereby an incompetent teacher is ineligible for promotion.  The example used is of a competent student in college who always did as she was told, no more, no less.  Therefore, as a teacher her works go fairly well until the school began flooding after a water pipe burst.  She continued teaching.  The principal rushed in to ask why her class was still in session and she stated she did not hear the emergency bell.   She never breaks a rule or disobeys.  She was competent as a student but reached her level of incompetence as a classroom teacher but there she will remain.

Apparent Exceptions

It is stated that many do not want to accept the Peter Principle (Peter 1969) and have tried to find flaws in the hierarchiological structure.  A warning is issued to not be fooled by apparent exceptions.  Many examples are given in this chapter, one of which is called “The Percussive Sublimation”.  The example is that a hopelessly incompetent Mr. Blockett was kicked upstairs by management to get him off of the road.  Therefore, did Mr. Blockett move from a position of incompetence to a position of competence?  No, he was moved from one unproductive position to another.  He has not taken on any greater responsibility and he does not accomplish any more work.  This is a pseudo-promotion.  Some believe they have actually received a promotion.  The main function of a pseudo-promotion is to deceive people outside the hierarchy.  When this is achieved, it is considered a success.  The only move which can be acceptable is a move from a level of competence.

Pull and Promotion

The Peter Principle (Peter 1969) we have seen is immutable and universal but how long will the hierarchical ascension take?  It is first explained as an accelerated elevation through pull.  Pull is defined as “an employee’s relationship, by blood, marriage or acquaintance, with a person above him in the hierarchy”.  It is understood that to acquire pull there are five practical suggestions for the would-be Pullee: 1. Find a patron; 2.Motivate the patron; 3.Get out from under; 4. Be flexible; and 5. Obtain multiple patronage.  It is stated why wait?  Escalate!  By following the hints you can obtain Pull.  It can bring you to your level much sooner.

Push and Promotion

An employee’s promotion rate can be affected by the face of Push (Peter 1969).  There is much that is misunderstood about the function Push.  The fallacy has exploded that in established organizations downward pressure nullifies the upward force of Push.  It is shown that Pull is stronger than Push.  Likewise, Push suggests the following: Signs and symptoms of Push; Perils of Push; The final verdict; An exception that proves the rule; A dangerous delusion; The medical aspect; and, An important distinction.  The last words on Push are: “Never stand where you can sit, never walk when you can ride; never Push when you can Pull”.

Followers and Leaders

The fallacy “nothing succeeds like success” is stated to be misleading (Peter 1969).  The hierarchiology shows that nothing fails like success, when an employee rises to his level of incompetence.  Now it discusses the old saying, “you have to be a good follower to be a good leader”.  This as it is written is also a hierarchiological fallacy.  An example is when the mother of George Washington was asked to comment on how her son achieved his military prowess, she answered “I taught him to obey”.  How ridiculous is this statement.  How can the ability to lead depend on the ability to follow?  You could say then that the ability to float depends on the ability to sink.

Hierarchiology and Politics

The Peter Principle operates in some simple hierarchies such as school systems, factories, auto-repair shops and the like (Peter 1969).  Now we will examine complex hierarchies of politics and government.  It is written that no political theorist has analyzed the government or predicted the political future.  These studies in comparative hierarchiology have shown capitalistic, socialistic and communistic systems are the same incompetent group.  In any economic or political crisis, many learned experts will prescribe many different remedies such as raising or lowering taxes.  Why the confusion?  Those experts have reached their level of incompetence

Hints and Foreshadowing

There is no formal bibliography to this book since this is the first book (Peter 1969).  ”Cobbler stick to your last” refers to the journeyman cobbler to be wary of being promoted to foreman.  ”Too many cooks spoil the broth” suggests that the more people helping to cook, the greater the possibility of one of them reaching their level of incompetence.  Freud came close to discovering the Peter Principle.  He was a satirist at heart choosing to explain this frustration mostly in sexual terms such as penis envy, castration complex and Oedipus complex.  Freud missed the point.  Hierarchiology shows us that frustration occurs as a result of promotion.

The Psychology of Hierarchiology

It is stated that hierarchiology is a social science (Peter 1969).  Therefore, it states objective criteria rather than emotional terms such as loafer or parasite.  The approach to behavioral science is that of an objective observer.  The Peter Principle was discovered through observing overt behavior.  An example:  a competent stock clerk, attended night school to acquire a diploma in warehouse management.  He was promoted to assistant warehouse foreman.  After six years he asked for a promotion.  He was told he lacked leadership ability.  He was not able to make the men in the warehouse obey his command.  It is stated that without understanding the Peter Principle, psychiatry is at a severe disadvantage in trying to treat problems arising from occupational incompetence.

Peter’s Spiral

In most cases of incompetence, there appears to be a definite “wish to be productive”.  The employee would be competent if he could.  Incompetence plus incompetence equals incompetence or, The Mathematics of Incompetence.

The Pathology of Success

It should be clear by now that when an employee reaches his level of incompetence he can no longer do any useful work (Peter 1969).  In most cases the employee still wants to work.  He thinks he is working, yet little that is useful is accomplished.  To that regard, there are many medical issues associated with incompetence such as ulcers, high blood pressure, hypertension, insomnia and much more.  They are labeled as the Final Placement Syndrome or FPS.  An example is a department store executive spent every afternoon at his club rather than returning to his office.  He had an advanced case of FPS.  He was a near-alcoholic and had survived two mild coronary attacks, was overweight and dyspeptic.  His doctor advised him to take up golf.  He becomes obsessed and makes rapid progress only to suffer a fatal stroke while driving the golf cart.  Therefore, his symptoms were not relieved but he was transferred from an FPS case to Pseudo-Achievement Syndrome in relation to golf.  The treatment was considered a success.  In other words, the patient was given the feeling of competence in a non-occupational field.

Non-Medical Indices of Final Placement

How can you tell if an employee has reached Final Placement Syndrome? (Peter 1969).  This is stated as an important piece of hierarchiology.  An example is an employee normally keeps on his desk just the books and papers that he needs for his work.  After Final Placement, the employee is likely to have some unusual and highly significant arrangement of his desk.  He develops Phonophilia rationalizing his incompetence by complaining that he cannot keep in close enough touch with colleagues and subordinates.  To help this, he has several telephones added to his desk, a communication device with buttons, flashing lights and loudspeakers with a voice recording machine.  Soon he forms a habit of using two or more of these devices at the same time.  This becomes a sign of galloping Phonophilia.  This can degenerate rapidly and is usually considered incurable.  A word to the sufficient is wise that you need to look around you for the signs described above.  They will greatly help you to analyze your fellow workers.  But your most difficult task will be self-analysis.  Hierarchiologist Heal Thyself!

Health and Happiness at Zero PQ – Possibility or Pipe Dream

When an employee reaches his Level of Incompetence (Peter’s Plateau) he is said to have a Promotion Quotient (PQ) of zero (Peter 1969).  Employees react differently to this situation.  An employee has realized that he has arrived at Final Placement and reached his level of incompetence.  If the employee is capable of realizing this he will equate incompetence with laziness and will assume that he is not working hard enough, therefore, he will feel guilty.  He will begin working harder to try and overcome his inadequacies.  He begins to skip coffee breaks, work through lunch and take work home.  He quickly becomes the victim to the Final Placement Syndrome.  Many employees will never realize they have reached their level of incompetence.  They will keep perpetually busy and never lose the desire for a promotion and so remains happy and healthy.

Creative Incompetence

Is the Peter Principle a philosophy of despair?  (Peter 1969).  It is quoted “Better to Light a Single Candle than to Curse the Edison Company”.  You may conclude that a person can refuse to accept a promotion and stay working happily at a job that can be done competently.  Refusing a promotion is known as Peter’s Parry.  The author has only found one successful example:  a carpenter was hardworking, competent and had been offered a promotion to foreman several times.  He was happy as a carpenter.  He had no worries and when he left each day he could forget about his job.  The job as foreman, however, would leave him thinking each day about the work to be done.  This carpenter was an unmarried man with no close relatives or friends.  He could act as he wanted.

The Darwinian Extension

This chapter expands on the Peter Principle to a broader issue of life-competence.  Can the human race hold its position, or advance in the evolutionary hierarchy? (Peter 1969).  In the Peterian interpretation of history each promotion has increased his prospects of survival as a species.  Conceited members of the race think in terms of an endless promotion.  Sooner or later, man must reach his level of life-incompetence.  There are only two things that could prevent this.  One is that there is not enough time available, and the other not enough ranks in the hierarchy.  But so far is appears as though we have infinite time and an infinite number of ranks in existence.  As explained, the hierarchical regression through schooling begins to mold and train students.  We look at the school as it affects the pupils.  It is stated that the old-fashioned school system was an extension of the Peter Principle.  If the student failed a grade he had to repeat the grade, in other words he had to remain at his level of incompetence.  Obviously, school officials do not like this system as it shows an accumulation of incompetent students thus lowers the standards of the school.  Therefore, to avoid the accumulation of incompetents everyone was promoted.  The psychological justification of this policy is that it spares the painful experience of failure.  This is what the author calls hierarchical regression.

Lastly, we discuss Computerized Incompetence (Peter 1969, p.155).  Case file no. 11 discusses a founder and managing director who was an inventor-engineer.  He was convinced to get a computer to improve efficiency at the plant and do much of the work of his office staff.  The surplus staff was dismissed.  Soon the work at the firm was not being handled so fast or so well as before.  His business went downhill rapidly and within a year he was out of business.  He had fallen victim to Computerized Incompetence.

The Video Lounge

The following video is a clip about the concepts of the Peter Principle.  It supports the observation by Dr. Peter that in a hierarchy every employee tends to rise to his level of incompetence.  People get promoted for working competently and sooner or later you are left at a position where you are no longer competent.  You will be left there to stay.  In time every position tends to be occupied by an employee that is incompetent.  The work is thus being done by employees who have not reached their level of incompetence.  The military recognizes this principle by allowing a military individual to hold his position only for a certain amount of time. Presented by Bubble Thought 3/29/10.

Personal Insights

Why I think the author is one of the most brilliant people around because:

Dr. Peter has devised an entire language around describing levels of incompetence.  It is written in a fashion that is satirical and makes you laugh.  This idea of being promoted until your last job is your level of incompetence does make sense.  Can all of top management be incompetent?  We learn in this book that if things are being accomplished it is because middle management is doing the work.   

If I were the author of the book, I would have done these three things differently:

1.  I believe the information in this book is older than the 1969 publishing date.  I would have updated the material to make the examples more relevant for today.

2.  Some of the examples seem exaggerated and not believable.  I think that I would have concentrated on providing more realistic examples.

3.  The cartoons used in the book were originally published in Punch magazine.  The original captions were removed and something related to the book was added instead.  I think I would have been more creative in developing my own cartoons with the captions.

Reading this book made me think differently about the topic in these ways:

1.  I now reflect on my past jobs and wonder how or when I had ever been at a level of incompetence.  For the most part, I think I was a competent employee.  There were times that I skipped lunch to work, brought work home, and worked late.  According to the book, these were signs of having to try harder because of being at the level of incompetence.

2.  When I was promoted to my level of incompetence, I reflect on what I could have done to prevent this from happening.  But, according to the Peter Principle it was not possible to prevent this from occurring.

3.  Whether I become a lower level manager or an upper level supervisor, I will be aware of my employees that request a promotion.  I will make my determinations with the relevant facts so that I can ascertain their abilities.

I’ll apply what I’ve learned in this book in my career by:

1.  Making sure that I am qualified for the position I seek.

2.  Assessing my employees to make sure that they are not promoted to a level of incompetence.

3.  Continuing my skills through education or experience on the job to prevent my being promoted to a level of incompetence.

Here is a sampling of what others have said about the book and its author:

Fairburn writes “that the Peter Principle is still accurate and useful today.  Many anecdotes and case studies may remind you of yourself, someone or some people you’ve worked with.  There are illustrations, diagrams, charts, graphs, and the ever-present Bell Curve.  There are too many good things in this book to list.  It’s also a quick and easy-read.”  (2000)

Clark writes “this book’s subject has been described as “satirical sociology”.  It’s a rather short book that consists of made-up stories about administrative and business hierarchies.  Some (if not all) of them are based on true events.  Dr. Peter has given his characters funny names and the stories make you laugh frequently but actually the message of the book is very serious.  Dr. Peter demonstrates that endless climbing higher is bound to lead your life to a dead end.” (Date unknown)

Some of the reviews I read agreed that this book is brilliant in giving the world an answer to a nagging question of why incompetence is so widespread.  This book is considered comic yet classic in defining what Dr. Laurence Peter has written, which is “in a hierarchy, every employee tends to rise to his level of incompetence” (Peter 1969).

Bibliography

Bezroukov, N., (1996-2011).  Retrieved 1/13/12 from http://www.softpanorama.org

Clark, J., (Date unknown) How the Peter Principle Works, Retrieved 3/13/12 from http://money. howstuffworks.com/ peter-principle1.htm

delAlcazar, N., (Date unknown) Retrieved 3/13/12 from mhtml:file//E:MGMT464Bus StrategyReconsideringthePeter Principle.mht

Fairburn, J. A. & Malcomson, J.M., (2000).  ”Performance, Promotion and the Peter Principle,” Economics Series Working Papers 9926, University of Oxford, Department of Economics.

Peter, L.J. & Hull, R., (1969). The Peter Principle, Why Things Always Go Wrong (pp. 1-168). New York: William Morrow & Company, Inc.

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Contact Info:

To contact the author of this article, “A Management in a Minute Book Overview of The Peter Principle: Why Things Always Go Wrong by Dr. Laurence J. Peter and Raymond Hull, please email linda.thatcher@selu.edu or lsthatcher@bellsouth.net.

About the Publisher  

David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Management, can be viewed at http://wyldaboutmanagement.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of his student’s publications regarding:

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