What is the Peter Principle? image

What is the Peter Principle?

Staff Squared date icon19th November 2021

Tag iconManaging staff

First identified by sociologist, Dr. Laurence J Peter, in his 1968 book of the same name, the Peter Principle states that “in a hierarchy every employee rises to their level of incompetence.”

What this means is that if you work hard and perform well at your job, you are more than likely going to be promoted up the ladder. Generally speaking, internal promotions present a win-win scenario. Why? Well, because quite simply, the employer gets to get the most out of their best staff members without having to take on the cost of going through an external hiring process while the employees being promoted are made to feel valued, accomplished and, in most cases, will also be offered a nice little pay bump to boot.

What is the Peter Principle?

While internal promotion absolutely has it’s positives, there are also some downsides to this method of filling positions. This is because with promotion, there will naturally be an increased level of responsibility put on the employee. This comes in the form of more work, and perhaps more complex work. So it stands to reason that if somebody receives enough promotions (and assuming they don’t reach the top of the hierarchy!) they will eventually fail at their job as they become unable to handle the additional responsibility.

Below is a very simple illustration of a career path where success is rewarded with advancement until the employee is promoted above their level of competence – where success is replaced by failure. Thus, defining the Peter Principle.



It’s easy to question how or why people are ever put in a possition where they lack to competency to do the job given to them. Below, you will see some of the features of a hierarchical organisation that allow the Peter Principle to occur.

  • Entry-level jobs are often technical or specialised. For example, developers in a software company, or administrators in local government.
  • Internal promotion is common and people may not just be attracted to a company because of the nature of the work or the company culture, but also by the prospect of rapid career advancement.
  • Promotion tends to be based on your performance in your current role, rather than your suitability for the next one.

The first two points are not necessarily a bad thing. However, where coupled with poor performance review and promition processes, businesses risk the possibility of putting an employee in a position where they lack competency to successfully and responsibly fulfil their role. There are many reasons why this is an undesirable situation, for instance:

  • Anxiety, frustration and confusion in the employee/s placed in those positions.
  • Individuals, teams or, at worst, the entire company will be negatively impacted by the lack of competency of the employee. This may include a decrease in targets, lack of efficiency or even company wide mediocity .
  • Reduced productivity, morale and innovation.

How are Employees Affected?

If an employee is offered a promotion you should take in to consideration what their new role will involve.  Will they still be using the same skillset they currently have? Maybe they will need to learn new or develop existing skills in order to perform well in their new role. Or… will they need a whole new skillset altogether?

You should always consider what the new role will involve, and whether your staff member will need to attend additional training so that they can excel in their new role as well as they do their current position.

If you are considering promoting an existing employee and you feel that their new role might be outside of their comfort zone, then perhaps it might be best to pass the promotion to an alternative employee, or recruit someone with the right skills.  Remember most employees who are promoted are never demoted, which means that this would likely result in them leaving the company.  Can you afford to lose that valued member of staff?

How do you Ensure your Employees don’t Fall into the Peter Principle Trap?

There are various ways a company can try to avoid any risks associated with the Peter Principle, namely:

  • Avoid promoting employees based on their current performance along. They need to have demonstrated their ability to succeed in the new role before any changes are made to their terms of employment.
  • Provide your employees with in-house training if they are being considered for a new role. If you are set on a specific employee taking a new position, ensure that they are provided with the right support to get them to where they need to be in order to perform well in the new role.
  • Alternatively, consider offering your employees a parallel career path with an offer of additional pay and recognition without them having to be promoted to management.

Most importantly, if this scenario has happened within your company, don’t give up on your employee without first trying to help them to succeed. With the right training and mentoring, there is still a strong chance that they will be able to adjust to the role and its requirements. Hanging in there and putting the time in will benefit both the company and the employee.




Written by Clarisse Levitan

Marketing and Customer Relationship Advisor - Staff Squared

Clarisse works as the Lead of our Customer Care Team to provide our customers with the very best care and guidance when using their HR software and is responsible for our day-to-day marketing activities and strategies.

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