The Peter Principle is a management concept formulated by Dr. Laurence J. Peter in his 1969 book “The Peter Principle: Why Things Always Go Wrong.”
The principle states: “In a hierarchy, every employee tends to rise to their level of incompetence.”
Employees who perform well in their current role get promoted
They continue getting promoted as long as they perform well
Eventually, they reach a position where they’re no longer competent
Once incompetent, they stop getting promoted (they’ve “plateaued”)
They remain in that position, performing poorly
This means that over time, every position in a hierarchy tends to be filled by someone incompetent to do that job. Peter observed: “In time, every post tends to be occupied by an employee who is incompetent to carry out its duties.”
And therefore: “Work is accomplished by those employees who have not yet reached their level of incompetence.”
The key insight is that competence at one level doesn’t guarantee competence at the next level. For example:
A brilliant engineer might be a terrible engineering manager
An excellent teacher might be a poor school principal
A top salesperson might be an awful sales director
The skills required often change dramatically with each promotion.
Organizational inefficiency – incompetent people in key positions
Frustrated competent employees – stuck below incompetent managers
Innovation stagnation – incompetent leaders can’t recognize or support good ideas
Institutional inertia – incompetent managers protect the status quo