Is the Peter Principle undermining your organization?

Two-thirds of frontline supervisors say they were promoted based on job performance or years of frontline experience, while only 30 per cent were placed in their roles because of actual supervisory skills or prior experience leading people. 

Also of concern: less than one-third of those promoted solely because of performance or service time are engaged, finds Gallup, compared with more than 4 in 10 who were promoted for their people management skills or supervisory experience. 

For organizations, that gap plays out in higher turnover, lost productivity and disengaged teams, says Catherine Connolly, professor and research chair in organizational behaviour at the DeGroote School of Business at McMaster University in Hamilton.

Once a culture emerges where “people are just kind of putting in their time” and avoiding discretionary effort, it can be very difficult to reverse, she says. 

“Then there's all the operational decisions that are bad decisions, because a team leader is either making them or not catching bad decisions made by other people,” she says. “It's just such a waste when people have good ideas, but they don't want to contribute them because they don't feel that they'll be respected or listened to — that type of thing leads to a toxic culture.” 

Undermining performance 

Julian Barling, professor at the Smith School of Business at Queen’s University in Kingston, says poorly chosen supervisors undermine both performance and well-being.

“When people rise to that level of ‘respective incompetence,’ their performance won’t be at the levels the organization needs it to be, and their ability to lead others will be compromised,” he says. 

In these situations, organizations can fall victim to the Peter Principle — a concept introduced by Laurence Peter and Raymond Hull in 1969 that suggests employees typically rise to “a level of respective incompetence.” 

Barling says it shouldn’t be surprising that people are promoted into supervisory roles when they may not be prepared to succeed.

“One of the primary reasons people apply for higher positions is because they want an increase in compensation,” he says. “We have to go back to selection and try to make sure that people are applying for the right reason — if you get promoted and you're there for the wrong reason and you start to realize how tough it is, not a surprise that people become less engaged if there are few resources and supports. The process doesn't stop when you think you've got the right person.” 

Barling also points out that when a leader isn’t performing well, the effects on others could be more concerning.

“They're supervising and responsible for teams, and it spreads to those teams, so it's a greater number of people throughout the organization who can be affected,” he says. “We know that when people receive poor leadership, there are performance problems, their commitment goes down, their turnover goes up, and their satisfaction goes down — the effects of the poor supervision or leadership are just too widespread.” 

Hard skills don’t indicate leadership effectiveness 

The criteria many organizations use also work against effective selection. Barling notes that “organizations typically tend to use hard skill criteria and hard skill performance for leadership positions,” largely because such data is easy to obtain. “It's really difficult to assess those soft skills, the skills that are much more likely to make someone be an effective manager or leader,” he says. 

He also believes that focusing on visible signs of performance and leadership can fuel bias.

“Because we're looking for visible signs of what we think is performance, we also then make the mistake of looking for what we think of as visible signs of leadership,” he says. “And it's part of the reason why we’re more likely to promote more men over women, because there’s an assumption that men are managers, they have what it takes to be leaders, they take charge, and so forth.” 

Connolly says HR can reduce the risk of mediocre frontline leadership by defining what frontline leaders actually need to do, then promoting for people skills as much as technical competence.

“Ideally, what people are looking for when they're deciding who to promote would be that interpersonal warmth, as well as the competence, but someone who can really listen and seek to understand the strengths of others, and be able to adapt their own style to support somebody in that role,” she says. 

She recommends a consistent, structured process for assessing and promoting supervisor candidates. “You should be very clear about the actual job that really needs to be done, not just the old job description,” she says. “And you're very clear in your analysis of the knowledge this person has to have, what skills do they need to bring to the table, and then develop your protocol to assess that.” 

Tools to assess leadership capability 

Structured hiring should begin with a current, job-specific analysis of the supervisor role, then use evidence-based tools to assess candidates. That can include situational questions and psychometric assessments, but also realistic opportunities to test leadership potential in low-risk assignments, such as having high-potential employees supervise summer students before giving them full responsibility for a permanent team. 

The Gallup study warns that promoting great frontline workers without assessing their leadership capabilities helps embed the Peter Principle in an organization, leaving people stuck in jobs where past success no longer translates. 

Connolly says many organizations still lean on intuition, even when senior leaders believe they’re being objective. “Gut feel is a terrible indicator, but I consistently talk to top people who really believe they can go with their gut, and they look for the person who reminds them of them at that age,” she says. 

Training gap 

At the same time, the Gallup data highlights a significant development gap. Only 45 per cent of frontline supervisors say they took part in supervisor training or education in the past year, and nearly a quarter say they have never taken part in training. Those who have taken part in training specifically focused on becoming a better supervisor are 79 per cent more likely to be engaged and 19 per cent less likely to feel burned out at work very often or always. 

Is this a recipe for employees rising to “relative incompetence”? Both Connolly and Barling say organizations too often treat promotion as the end of the process rather than the beginning. 

According to Barling, leadership training should ideally happen before someone moves into a supervisory role, not months later when damage has already been done. “We wouldn't promote somebody in finance if they didn't have the qualifications. We wouldn't promote somebody to surgery if they didn't have the qualifications, but it seems in leadership, that's okay,” he says. 

Connolly points out that many new supervisors also lack basic HR knowledge, especially in smaller organizations without dedicated HR teams.  

“Every manager should have at least a rudimentary understanding of the nuts and bolts of the HR role, especially since not every organization has an HR department,” she says. “There are so many unforced errors that companies make where it comes to managing personnel, and if you're going to get sued, it's probably because of a personnel issue — just some very rudimentary training along those lines would go a really long way.”