“In a hierarchy, every employee tends to rise to his level of incompetence.” — Laurence J. Peter (1969)
Hello,
How are you all doing? We are settling into autumn now, and there is something about this time of year that makes me want to look back as much as forward. The mornings are cooler, the days are shorter, and it’s about this time that I start to really look forward to winter.
On the work front, I have been thinking and talking a lot with clients about a principle that was first proposed in 1969 and, if I am being honest, describes something I have seen happen in organisations more times than I would like.
It is called the Peter Principle. And if you work with or lead a team, there is a reasonable chance it is quietly shaping what is happening around you right now.
The Problem
In his 1969 book of the same name, Laurence J. Peter proposed something initially satirical: in any hierarchy, people tend to be promoted on the strength of their performance in their current role, and this continues until they reach a role in which they are no longer competent. At that point, the promotions stop. And there they stay.
Peter meant it as a joke about bureaucracy. Fifty + years on, it remains a fairly accurate description of how most organisations make promotion decisions.
I have seen this pattern play out across organisations I’ve worked in and with more times than I would like to count. A highly capable person is promoted on the genuine strength of their individual performance. No meaningful attention is paid to whether the skills that made them excellent are actually the skills the new role requires. And eventually, confronted with evidence that the promotion hasn’t worked, the organisation draws the wrong conclusion: the person wasn’t up to it. They peaked.
The more honest conclusion: they were never set up to succeed.
What the Research Tells Us
In 2019, economists Alan Benson, Danielle Li, and Kelly Shue published research in the Quarterly Journal of Economics that confirmed, at scale, what Peter had argued satirically. Using data from 131 firms, they found that organisations consistently promote top performers into management roles, even when those individuals show lower potential for the specific skills management actually requires. The core problem? Performance in a role and readiness for the next one are not the same thing. But we keep treating them as if they are.
This is also about more than individual outcomes.
Tomas Chamorro-Premuzic, organisational psychologist and author of Why Do So Many Incompetent Men Become Leaders?, Harvard Business Review Press, 2019), found that the traits organisations most often mistake for leadership potential — overconfidence, dominance, self-promotion — predict how well someone can sell themselves upward. They do not predict how well they actually lead. And because these traits are more culturally rewarded and expressed in men, sink-or-swim promotion systems tend to systematically amplify a particular type of leader.
Not the best leader.
The most visible one.
When It Goes Wrong
The pattern rarely announces itself. What we tend to see instead, is quiet erosion:
A specialist who was universally admired becomes territorial
A high performer who was full of ideas becomes defensive
Someone who came to work with energy now arrives looking somewhat depleted
Leaders and colleagues observe that they “struggle to delegate” or “find ambiguity difficult.” The individual at the centre knows something is not working. Their identity was built around being excellent, and now excellence feels unreachable.
The team starts to self-manage around the gap rather than into it. Psychological safety drops. Hard conversations stop happening. Information narrows.
And before long, that person is being quietly moved onto “special projects” or out the door entirely.
A Simple Solution
There is a better way, and it does not require organisations to overhaul their entire promotion process. Three practical shifts can make a real difference:
Separate recognition from advancement
When leadership is the only route to higher pay and status, organisations end up with a management cohort full of people who needed the reward, not the role.
Creating expert pathways (for example: individual contributor tracks) to give exceptional specialists somewhere meaningful to grow without requiring them to become people managers.
This is not just good for them. It is structural protection and recognition for your best technical capability.
Build a transition plan alongside the position description
A position description tells someone what their job is. It does not tell them how to succeed in the first 90 days.
Before any promotion, have an honest conversation about the specific things that will make or break their first quarter: which new relationships matter most, where they will face ambiguity they have not encountered before, what they need to learn and who could help them learn it.
Ask your new hire to write it down. Revisit it at 30, 60, and 90 days. This is not a performance management tool. It is a support structure.
Assign a thinking partner for the first six months
New leaders need somewhere to think out loud, away from the team they are now managing. A peer from another part of the business, a mentor, or a coach fills this gap.
It does not need to be formal or expensive. But it absolutely must be consistent, and the thinking partner must understand their role, which is to challenge and support.
The single most common thing we hear from leaders who made a difficult transition successfully is that they had someone in their corner who helped them process before they acted. Build that in by design, not by luck.
A Question for You
Think about the promotions you’ve given. How many of those people received meaningful preparation for the specific demands of the new role?
If you think there’s room for improvement, you are in good company. The fix is more straightforward than most organisations expect. It begins with a different question: not “Who has earned this?” but “what does this person need to genuinely succeed — and are we willing to provide it?”
If you would like to understand where your team’s capability sits right now, and where the gaps are most likely to show up, the Nimble Index gives you a clear baseline to work from.
Explore the Nimble Index assessment: www.nimbleindex.com.au
Thank you for reading,
Kiri
