In 1968, Dr. Laurence J. Peter published a book (
The Peter Principle) in which he humorously outlined a dismal assessment of human resources and management inside a hierarchical organization. In doing so, he formulated the following principle:
In a hierarchy, every employee tends to rise to his level of incompetence.
What does this mean? Let’s say I join an organization at an entry-level position: serving up smoothies at a juice bar, for instance. I quickly prove myself at the job. I am great with the customers, operate the machines efficiently, and am an honest & friendly employee. But then something happens. Naturally, a business might try to reward my efforts and skill. But rather than simply giving me a raise, they decide to give me a more “meaningful” reward by promoting me to shift manager. With the new position come new tasks. Suddenly, I have to learn how to deal with other employees, manage the store, et cetera. Despite the leap into the unknown, I eventually prove myself as a competent shift manager. But just as I am getting the hang of the new position, the powers that be decide (once again) to reward my skill by promoting me a second time. Now they want me to be a store manager and to manage my own franchise. At this point, I am utterly out of my league; I know absolutely nothing about what it takes to run this operation.
Once I have reached a level at which I am no longer competent, I can go no further in the organization. Since businesses do not smile upon the practice of demoting good workers, there is no way that I can return to my former “humble” positions. Thus, I remain a store manager. I have finally reached the level of my “incompetence.” Since I will never prove myself at this level, there are no further promotions in my future.
The net result of this practice is that (eventually) the higher levels of the organization will be filled with incompetent workers. The irony of this situation is multifarious. First, given the problems of “demoting” workers, individuals in upper management are prevented from descending the ladder where they would often be much happier. Second, the situation arises because of the common practice of using “promotions” as a reward system. As soon as someone proves herself a good worker, she is immediately promoted out of that position to a higher one, despite the fact that she has just learned the ropes.
You’re a great typist, Jill. In fact, you’re so good at typing that we’ve decided to promote you to office manager. You’re going to manage a team of typists and it will be your job to act as a liaison between the typists and upper management.
Sorry Jill. I guess you should never have proved yourself to be a good worker. In fact, this is something that Peter himself recognized. An employee, for various reasons, might pretend to be incompetent in order to prevent being promoted to management. Suppose I know that management position offers a very slight increase in pay, outweighed by the increase in responsibility associated with the job. The employee actually has an incentive in such a situation to engage in what Peter called “creative incompetence.” In a related point, employees also have an incentive to under perform in an effort to create low expectations and keep quotas low.
But now the rubber hits the road. I once worked as a produce clerk for a local grocery store. The job was about as entry-level as it gets. My job was to walk out into the produce department with a notepad, make a list of items whose stock was running low, go into the freezer and load up with those items, return to the produce department, and place the fresh stock on display. Of course, there were other associated duties: taking out the trash, breaking down boxes, and sweeping the floor every hour.
I got the job the summer before entering college. The manager hated that fact. As soon as he found out I was going to college, I never heard the end of it. Every time I asked for help (say, to learn a new skill), I would be made fun of. Ha…the college boy doesn’t know how to prepare radishes. Needless to say, it got rather old after a short while. Perhaps the most annoying aspect of the job was that the Peter Principle was on display. At least, the negative effects on the employees was on display. There was absolutely no incentive to work very hard at your job. In fact, there was negative incentive. My first week on the job was hectic. I was so concerned about doing a great job. I wanted to excel. I practiced talking to the customers, I read an entire manual on fruits and vegetables so that I wouldn’t be caught off guard by questions…I even threw myself into the garbage and sweeping duties.
But probably the “worst” thing I did was to try and make the re-stocking process more efficient. The standard method for re-stocking the product was ludicrous. An incompetent produce clerk would walk out onto the floor, make a mental note of (at max) two items that needed re-stocking, and then carry on with the process of filling it. After retrieving the two items from the freezer, he would proceed to slowly re-stock the product over the course of a half hour. Rinse and repeat. Of course, by day’s end, the product would be barren in many places, requiring the “closer” (that was me) to work his butt off trying to get things fully stocked so that the morning crew would have an easier time.
I think that this behavior was motivated by a few things. First, the produce clerks wanted to appear busy. Despite the fact that they were working terribly slowly and hardly keeping up with the work, they certainly “appeared” busy. As long as there was an appearance of work, the manager was happy. Second, by working at such a slow rate, a low standard was set for the work. This discouraged anyone from trying to work above that level and also prevented anyone from ever being promoted. Indeed, if one has already achieved their level of “incompetence” at the entry level, then there is nowhere to go.
My “solution” to this work environment was to try and bring innovation to the process. Here it is: a notepad. What would happen if I wrote down EIGHT items that needed re-stocking instead of just making a mental note of TWO? Further, suppose that one worked as quickly and as efficiently as possible to re-stock the product, managing to re-stock eight items in that same
thirty minutes. What’s the end result? You got it. Rather than have a produce department that is constantly missing items, in two or three rotations (about three hours of work), one could restock 24 items and have a fully stocked store.
This led to a serious problem. If one worked hard, there would soon be no work to do–certainly not enough for two or three produce clerks to handle. Hence, I ended up spending a lot of time in the back, waiting for the items to need re-stocking. Of course, I did not “appear” to be working and was not out (visible) on the floor. The manager wanted me out on the floor more. But this meant, literally, working less hard and less efficiently. It bothered me to no end. How could one leave the produce department radically understocked when a simple efficiency change could alter the entire system? The management wanted me to be incompetent.
Indeed, in an environment where there is little (if any) chance for promotion, then there is no incentive to work hard. Indeed, there is incentive to do just the opposite. In such a position, all worker creativity is stifled and only those who are “detail” oriented and relatively incompetent to begin with will survive. While not necessarily a direct result of the “Peter Principle,” it is an interesting outcome of the natural movement inside of an institutional hierarchy.
