The Peter principle states that workers get promoted until they reach their level of incompetence. This week’s Bartleby column in The Economist, revisits this principle to show why promotions (often leading up to a managerial role from being a functional specialist) may not necessarily be the best thing to happen to you from a career progression perspective. Nor is it ideal from an employer’s perspective to reward every top performer with a move up into a supervisory role without considering the relevance of the said individual’s skills for the new job. Of course with investments to upskill and training on behalf of the employee and the employer, it is very much possible for people to grow into larger roles but the article points to the norm that is prevalent in today’s organisations, which does create a sub-optimal outcome for both the individual and the organisation.
“…If you are good at your job, you rise up the career ladder. Eventually, there will be a job you are not good at and at that point your career will stall. The logical corollary is that any senior staff members who have been in their job for an extended period are incompetent.
There is another problem with chasing the promotion chimera. In a recent article for VoxEU, the records of almost 40,000 salespeople across 131 firms were studied by Alan Benson, Danielle Li and Kelly Shue. They found that companies have a strong tendency to promote the best sales people. Convincing people to buy goods and services is a useful skill, requiring charisma and persistence. But, as the authors point out, these are not the same capabilities as the strategic planning and administrative competence needed to lead a sales team.
The research then looked at what happened after these super-salespeople were promoted. Their previous sales performance was actually a negative indicator of managerial success. The sales growth of workers assigned to the star sellers was 7.5 percentage points lower than for those whose managers were previously weaker performers.
Scott Adams, the cartoonist, described this problem in his book, the “The Dilbert Principle”. In his world, the least competent people get promoted because these are the people you don’t want to do the actual work. It is foolish to promote the best salesperson or computer programmer to a management role, since the company will then be deprived of unique skills. That’s how the workers in the Dilbert cartoon strip end up being managed by the clueless “pointy-haired boss”.
People get promoted until they reach a level when they stop enjoying their jobs. At this point, it is not just their competence that is affected; it is their happiness as well. The trick to avoiding this curse is to stick to what you like doing. If you enjoy teaching, don’t be a headmaster or college principal. If you like writing articles and columns, editing other people’s work may not give you the same degree of satisfaction (let alone conducting career reviews).”
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Note: the above material is neither investment research, nor financial advice. Marcellus does not seek payment for or business from this publication in any shape or form. Marcellus Investment Managers is regulated by the Securities and Exchange Board of India as a provider of Portfolio Management Services. Marcellus Investment Managers is also regulated in the United States as an Investment Advisor.
Copyright © 2022 Marcellus Investment Managers Pvt Ltd, All rights reserved.
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