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The Peter Principle

by Laurence J. Peter, Raymond Hull (Contributor)
Library Binding (October 1996)
Buccaneer Books; ISBN: 1568491611

Along with Parkinson's Law by C. Northcote Parkinson this is a "satirical sociology" masterpiece. And despite being written before programmers became a mass profession it is perfectly applicable to programming. It's a rather short and easy-to-read  book that consists of fictional stories about results of promotions in a typical administrative and business hierarchies. Must read for any programmer or system administrator with more than two year experience :-). Originally published in 1969 it coined the famous "The Peter Principle"

In a Hierarchy Every Employee Tends to Rise to His Level of Incompetence.

The concept is pretty universal and is related to the regression to the mean. As authors aptly states "Competence, like truth, beauty and contact lenses, is in the eye of the beholder. " In reality the performace always has a transitional (random) component.

The end result is that stable companies are more likely to have incompetent managers at many levels of the organizational structure whereas fast growing companies may avert some implication of this principle at least temporary.  "Employees", as the author points out, "do not want to be incompetent", but when management offers promotions that put the employees closer to their level of incompetence, the employees have no way of knowing that ahead of time. After all, if the offer is made it is because management "knows" the employee can do the job competently on his/her present level. But the interesting side effect observable in large and old organizations is that such decision might be made by  managers who are already at their level of incompetence (Dilbert's PHB).

Another related phenomenon is called Negative selection - Wikipedia, the free encyclopedia

In politics, negative selection is a process that occurs in rigid hierarchies, most notably dictatorships.

The person on the top of the hierarchy, wishing to remain in power forever, chooses his associates with the prime criterion of incompetence - they must not be competent enough to remove him from power. The associates do the same with those below them in the hierarchy, and the hierarchy is progressively filled with more and more incompetent people.

If the dictator sees that he is threathened nonetheless, he will remove those that threaten him from their positions - "purge" the hierarchy. Emptied positions in the hierarchy are normally filled with people from below - those who were less competent than their previous masters. So, over the course of time, the hierarchy becomes less and less effective. As this happens relatively often, once the dictator dies, or is removed by some external influence, what remains is a grossly ineffective hierarchy.

The Politburo of CPSU of the USSR was the impressive example of negative selection.  If Khrushchev was just marginally incompetent, inaptness of Gorbachyov was legendary and his inability to master Russian language rivaled Bush II.  Like Bushisms, "Gorbachvisms" make his a laughing stock for most of the population. 

Some of the short stories are not only funny, they might well be based on true events. Actually the message of some stories is dead serious: pyramid climbing is a dangerous sport and that's is exactly true in computer programming. Incompetent IS managers is too serious problem to ignore. This book also served as a cornerstone for Dilbert series which is a cartoon classic.

The book  helps you to withstand the pressure and the absurd of the software development and IS in general.

Finally understand the roots of incompetence in higher ranks, February 10, 2000
Reviewer: A reader from USA
The author hit the nail on the head when he discovered this principle! After years of pondering whether it's just me or if there really is such a thing as companies with huge percentages of incompetent managers, I finally feel relieved to know that I was not 'just imagining' things. The book made me take a hard look at myself and question whether I had reached my own level of incompetence, and based on the case studies in the book I started analyzing what WOULD make me reach my level. One thing I would have like to read more about is how those of us who have not yet reached their level of incompetence, can better manage the struggle with those who have reached their level and make our work days miserable.

Understanding why we as a nation fail so much, January 22, 2000
Reviewer: Jimmy P Ledbetter (see more about me) from Ridgecrest USA
I read the Peter Principle years ago and have read through it frequently ever since. My first time was while still in the military and it explained to me, a great deal of the things I saw go wrong. It left an impression upon me that lasted throughout my career and which still helps me today. It explained clearly why I was so frustrated with the way things had begun to deteriorate so badly once I was into the second half of my career. And it helped me to make certain career choices that I still believe to day were the most beneficial decision I could have made at the time, and I was glad I had that knowledge to consider.

Dr. Laurence and his associates hit the nail right on the head in describing the failing principles, due to the Peter Principle of our Political system, our Judicial System, and much more. On the whole we do promote to incompetence and it is our number one failing.

From the military point of view there are quite a few additional contributing factors, all Peter Principle related, which resulted in a decline in the American Military. Which include the radical feminist movement, promoting for gender rather than merit, the radical quota promotions, promoting by race, rather than merit, and our leader's failure to stand firm for core values.

The up or out policy is the epitome of the Peter Principle, as is the guaranteed promotion policy, and the reenlistment bonus program which has been a great failure. Of course this book applies to all walks of life and even applies to our Present White House occupant and many of our congressional members. And will apply to many of those running for political office today.

The Peter Principle is a must read for the student of our American social, political and judicial decline and what horror is in store for us in the twenty first century if we do not recognize the beast and kill it before it becomes unstoppable, which it may already be. A great read.

Old News

Solving the Peter Principle One Word Darts By Paul Kedrosky

July 3, 2009  | Paul Kedrosky's Infectious Greed

There is a fun new working paper out from some Italian scientists that models the Peter Principle. The principle says, of course, that people climb in an organization until they reach their level of maximum incompetence.

How would that happen? Well, the authors argue it should be expected in any organization where the following two conditions hold:

1. The best member are rewarded with promotions
2. Competence in a new position is not highly correlated with competence at a prior level

The authors simulated the preceding in a pyramidal organizational form using a mathematical agent model. Here is the outcome:

Here we show, by means of agent based simulations, that if the [above two conditions] actually hold in a given model of an organization with a hierarchical structure, then not only the "Peter principle" is unavoidable, but it yields in turn a significant reduction of the global efficiency of the organization. [Emphasis mine]

Granted, this shouldn't be surprising news, one would think, to anyone who has spent any time around large organizations. A disproportionate number of the positions always seem filled by people who elicit a WTF? reaction from reasonable-minded observers.

So, do we just live with it? After all, we can hardly get around elevating the best people, and it isn't unreasonable to think that one's experience in a former position doesn't adequately prepare for the new one.

Not necessarily, according to the authors:

...the best strategies to improve, or at least not to diminish, the efficiency of an organization, when one ignores the actual way of competence transmission, are those of promoting an agent at random or of randomly alternating the promotion of the best and the worst members. We think that these results could be useful to guide the management of large real hierarchical systems of different nature and in different fields.

Whoa, it turns out calling someone's promotion "random" is a compliment. Who knew darts could be so handy at promotion time?

Source:

The Peter Principle Revisited: A Computational Study
Authors: Alessandro Pluchino, Andrea Rapisarda, Cesare Garofalo

Gregor ·

Sounds like the ratchet, in Parrondo's Paradox. Alternating between winning and losing strategies. Also reminds of AndrewSullivan's recent musings on Hawk, Dove, and Retaliator role-play in game theory. Only the Retaliator alternates strategy.

Admitting we know a lot less than we think we know could turn out to be lots of fun.

Matt

I don't think we spend enough time with people, getting to know them. They are asked to complete a specific set of tasks, and we observe them in that role without further understanding of their abilities. Everyone has underutilized skills and talents that co-workers don't know about: if the time were spent, a complete profile of a person would be integral to maximizing their use to the organization.

Successful promotion relies on knowledge of the unseen talents and latent interests of employees. We have an experience-based business culture that emphasizes the opposite.

fresno dan

Interesting - my own view is that it is an arbitrary construct that a "manager" does something of more skill, or rarer ability, than many of the people the manager oversees. In the sciences, the people being overseen have a lot of knowledge - and typically another scientist ends up managing them. But that scientist manager really has no training, or experience that suits them for that position. I would take it a step further - in most circumstances, the manager should be paid less than the technicians they are managing. Its a holdover from the assembly line that the manager should make more than the workers. They ofter don't have much technical knowledge, and most business theory is too much theory and too little reality.

Carlos666 ·

The problem seems to lay in the fact that many of the entry level hires are incompetent to deliver papers on a newspaper route so the starting level folks are over their competence level from the get go. The Peter Principle is in effect when they walk through the door. Carlos666

Kievite

This is a pretty primitive, abet funny model, that does not capture the reality of the situation. First of all in many cases middle "managers are just a place holders and has very little autonomy being squeezed between despotic higher ups and resentful "people in the trenches". In this case kiss up, kick down" is the most viable strategy and it does not require too much skills just a personal predisposition.

Another problem with that view is that it presuppose that people who are promoted are just passive agents. This is not true in any organization. And this completely opposite of a typical sociopath line of behavior. specifically sociopaths are very actively seeking promotion and that's probably why higher layers on large organization often include them.

I know the case of woman sociopath in IT organization, who threatened to sue the company for discrimination unless promoted.

[May 19, 2003] Talking Shop What the management-level job requires in skills

In his bestseller, The Peter Principle, Dr. Lawrence J. Peter theorized that in a hierarchy, employees tend to rise to their level of incompetence. His view is that you will advance to your highest level of competence and consequently get promoted to a position where you will be hopelessly inept.

If you're a proficient and effective tech support pro, you're most likely demonstrating peak competence in your job right now. Very soon, your boss may commend you for your excellence and valuable contribution to your organization, and, to reward you for your efforts, favorably endorse your promotion to an executive position. But is the managerial level right for you? Or are you getting set up to be a statistic supporting the Peter Principle?

Before you deliberate on which company car will go well with your new upper management title, consider the career shift tips and insights we gathered from three former-techs-turned-managers. Here are the realities you need to consider, along with steps you need to take, to ensure that your promotion from tech to manager doesn't raise you to your level of incompetence.
 

The Peter Principle Proven

In case you've ever wondered why ignorance rises to the executive level, here is a simple explanation that is also a mathematical proof:

Knowledge is Power.

Time is Money.

And, as every actuary (with some physics training) knows:

Work
---------- = Power
Time

So, if
Knowledge = Power
and
Time = Money

then through simple substitutions,

Work
---------- = Knowledge
Money

Solving for Money, we get:

Work
-------------- = Money
Knowledge

Thus, If Work is held constant as a positive number (no matter how small!) Money approaches infinity as Knowledge approaches zero.

What this means is:

All else being equal, the less you know, the more you make

Magellan's Log The Dick Principle by Harold J. Dick, Ph.D.No. 22 in The Idea Man Series.

In 1969, Laurence Peter set the world of management on its ear by announcing a revelation:

"In a hierarchically structured administration, people tend to be promoted up to their level of incompetence. Thus, every position will eventually be occupied by someone who is not quite capable of doing the job."

The Peter Principle quickly entered the curricula of all with-it MBA programs, but also turned out to have such widespread applicability that it became part of corporate folk knowledge. Everybody immediately grasped the principle because everybody recognized that their own boss was an example of the principle in action.

Careers were made and careers were shattered as people reacted, and overreacted, to Dr. Peter's great insight.

Having acknowledged my debt to the past, I now suggest it is time we update the Peter Principle.

The world that Larry Peter occupied and analyzed so cleverly is one that has come to be labeled the "Old Economy," the world of stable companies creating value the old-fashioned way: they worked for it. Such was the stability in that world that employees could actually expect to spend their careers with one company. It is a world that is still studied as the norm in the degree programs of economics departments and business schools.

That old working world still has applicability, but the time has come to question its pertinence in the brave new world of dot-coms.

For, the Old Economy continues to exist side-by-side with the New Economy, just as various cottage industries hummed along in their quaint medieval ways through much of the 19th century as the Industrial Revolution was rapidly rendering the old ways useless.

Brick-and-mortar we shall not always have with us, but probably for a while yet they will continue, including their legions of careers capped off by the unpleasant reality reflected in the Peter Principle.

The New Economy of the cyberworld requires a new theory of mismanagement, a new statement of the dizzying reality behind the glitzy career life in the dot-coms, the awfulness of careers spent surfing wave after tumultuous wave of IPO's. The New Economy is a world not of slow accretion, of gradual promotions, but of incessant and rapid job-jumping.

I give you, then, the Dick Principle:

In a cyber-economy,
people tend to be RE-hired
at their level of incompetence.

I hasten to explain:

Example No. 1 of the Dick Principle in Action:
Joe makes a software breakthrough at Company A, cashes in as the stock skyrockets. Joe is hot. Company B headhunts and hires Joe to oversee their software development team. Joe is brilliant at writing code but has no talent at nurturing others to write brilliant code. In other words, Joe is a lousy manager. Joe has been hired at the level of his incompetence. Joe has been dicked by the Dick Principle.

Example No. 2 of the Dick Principle in Action:
Jack has a conceptual brainstorm for Company C. The resultant dot-com becomes the overnight darling of NASDAQ. Jack cashes in and is hot. Company D lures Jack to be its CEO. Jack is a solitary, maverick thinker and has no talent at management. Jack has been dicked by the Dick Principle.

Example No. 3 of the Dick Principle in Action:
Mary is a brilliant manager with Company E. She is excellent at nurturing people and rises quickly to V-P for personnel and human resources. Company F makes her a huge offer: Come be our CEO and do for our talented team what you did with Company E. Mary quickly discovers that at Company F she has no time to nurture. The company is under tremendous investor pressure and can think only about what the price of the stock will be five minutes from now. Mary has been dicked by the Dick Principle.

Of course, the difference today is that Joe, Jack, and Mary have no financial worries. By the time they are hired at their level of incompetence, they all come equipped with golden parachutes. Thus, they have no personal need to maintain the pretense of competence in their new jobs any longer than they want to.

They have gained a world of wealth and financial security. All they've lost is meaning in their lives. They're no longer doing what they're good at and what they really enjoy.

The more things change, the more they stay the same. In its effect on people, the New Economy then turns out to be only the Old Economy in dot-com clothing. In moving from the Peter Principle to the Dick Principle, we have exchanged one career dead-end for another, one management foundering in incompetence for another also foundering in incompetence.

On the macro side, the Dick Principle means this: We already know that one price of cyber-technology is instability and rapid change (Moore's Law, etc.). Through the Dick Principle, we can see that the instability and rapid change also include the very people who are supposedly guiding and shaping the brave new world. Structurally, we have traded mid-level, stagnant incompetence for top-level, volatile incompetence.

Steve Jobs, with his successful return to Apple, is the exception that proves the principle. For every Steve Jobs, you have a thousand... Well, I don't want to get into naming names. If you are involved in, employed by, or invested in the cyber-world, you can easily supply your own examples of the Dick Principle at work.

Peter's Principle and Education

Recommended Links

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Peter Principle - Wikipedia, the free encyclopedia

The Peter Pyramid - Wikipedia, the free encyclopedia

Laurence J. Peter - Wikipedia, the free encyclopedia

Parkinson's law - Wikipedia, the free encyclopedia

The generalized Peter Principle in evolution systems tend to develop up to the limit of their adaptive competence

The Peter Principle was first introduced by L. Peter in a humoristic book (of the same title) describing the pitfalls of bureaucratic organization. The original principle states that in a hierarchically structured administration, people tend to be promoted up to their "level of incompetence". The principle is based on the observation that in such an organization new employees typically start in the lower ranks, but when they prove to be competent in the task to which they are assigned, they get promoted to a higher rank. This process of climbing up the hierarchical ladder can go on indefinitely, until the employee reaches a position where he or she is no longer competent. At that moment the process typically stops, since the established rules of bureacracies make that it is very difficult to "demote" someone to a lower rank, even if that person would be much better fitted and more happy in that lower position. The net result is that most of the higher levels of a bureaucracy will be filled by incompetent people, who got there because they were quite good at doing a different (and usually, but not always, easier) task than the one they are expected to do.

Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-64, October. [Downloadable!]
Other versions:

• Edward P. Lazear & Sherwin Rosen, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," NBER Working Papers 0401, National Bureau of Economic Research, Inc. [Downloadable!]

Fairburn, J.A. & Malcomson, J.M., 2000. "Performance, Promotion, and the Peter Principle," Economics Series Working Papers 9926, University of Oxford, Department of Economics.
Other versions:

• James Malcomson & James Fairburn, 2000. "Performance, Promotion, and the Peter Principle," Economics Series Working Papers 026, University of Oxford, Department of Economics.
• Fairburn, J.A. & Malcomson, J.M., 1995. "Performance, Promotion, and the Peter Principle," UFAE and IAE Working Papers 304.95, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
• Fairburn, James A & Malcomson, James M, 2001. "Performance, Promotion, and the Peter Principle," Review of Economic Studies, Blackwell Publishing, vol. 68(1), pages 45-66, January.

Baker, George & Gibbs, Michael & Holmstrom, Bengt, 1994. "The Internal Economics of the Firm: Evidence from Personnel Data," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 881-919, November. [Downloadable!]

Joao Ricardo Faria, 2000. "An Economic Analysis of the Peter and Dilbert Principles," Working Paper Series 101, School of Finance and Economics, University of Technology, Sydney. [Downloadable!]

Anderson, Ralph E. & Dubinsky, Alan J. & Mehta, Rajiv, 1999. "Sales managers: Marketing's best example of the peter principle?," Business Horizons, Elsevier, vol. 42(1), pages 19-26. [Downloadable!]

Reviews

Book Review - Peter Principle

Peter Principle

Quotes

• Against logic there is no armor like ignorance.
• America is a country that doesn't know where it is going but is determined to set a speed record getting there.
• An economist is an expert who will know tomorrow why the things he predicted yesterday didn't happen today.
• An intelligence test sometimes shows a man how smart he would have been not to have taken it.
• Bureaucracy defends the status quo long past the time when the quo has lost its status.
• Democracy is a process by which the people are free to choose the man who will get the blame.
• Education is a method whereby one acquires a higher grade of prejudices.
• Equal opportunity means everyone will have a fair chance at being incompetent.
• Every man serves a useful purpose: A miser, for example, makes a wonderful ancestor.
• If a cluttered desk is the sign of a cluttered mind, what is the significance of a clean desk?
• If you don't know where you are going, you will probably end up somewhere else.
• In spite of the cost of living, it's still popular.
• It is wise to remember that you are one of those who can be fooled some of the time.
• Originality is the fine art of remembering what you hear but forgetting where you heard it.
• Psychiatry enables us to correct our faults by confessing our parents' shortcomings.
• Real, constructive mental power lies in the creative thought that shapes your destiny, and your hour-by-hour mental conduct produces power for change in your life. Develop a train of thought on which to ride. The nobility of your life as well as your happiness depends upon the direction in which that train of thought is going.
• Speak when you are angry--and you will make the best speech you'll ever regret.
• The incompetent with nothing to do can still make a mess of it.
• The man who says he is willing to meet you halfway is usually a poor judge of distance.
• There is no stigma attached to recognizing a bad decision in time to install a better one.
• Everyone rises to their level of incompetence.
• Oh, what a tangled web we weave when first we practice to believe.
• Competence, like truth, beauty and contact lenses, is in the eye of the beholder.

    Etc

Just a Bump in the Beltway The Peter Principle

The Peter Principle and the Neocon Coup by Robert Scheer

I'm not referring to the latest attempt to reconquer Iraq, but rather the wholesale political revenge campaign being waged by the hard-liners in the Bush administration against anybody and everybody inside the government who challenged the way the second Persian Gulf war in a decade was marketed and run.

Out: Secretary of State Colin Powell, whose political epitaph should now read, "You break it, you own it" for his prescient but unwanted warning to the president on the danger of imperial overreach in Iraq.

Out: Top CIA officials who dared challenge, behind the scenes, the White House's unprecedented exploitation of raw intelligence data in order to sell a war to a Congress and a public hungry for revenge after 9/11.

Out: Veteran CIA counterterrorism expert and Osama bin Laden hunter Michael Scheuer, better known as the best-selling author "Anonymous," whose balanced and devastating critiques of the Iraq war, the CIA and the way President Bush is handling the war on terror have been a welcome counterpoint to the "it's true if we say it's true" idiocy of the White House PR machine.

Meanwhile, incompetence begat by ideological blindness has been rewarded. The neoconservatives who created the ongoing Iraq mess have more than survived the failure of their impossibly rosy scenarios for a peaceful and democratic Iraq under U.S. rule. In fact, despite calls for their resignations — from the former head of the U.S. Central Command, Gen. Anthony Zinni, among others — the neocon gang is thriving. They have not been held responsible for the "16 words" about yellowcake, the rise and fall of Ahmad Chalabi, the Abu Ghraib scandal, the post-invasion looting of Iraq's munitions stores and the disastrous elimination of the Iraqi armed forces.

BELLACIAO - The Peter Principle and the Bush Administration - villy - Collective Bellaciao

Last night on Frontline they broadcast a biting documentary entitled "The Dark Side", which revealed the truth about how the CIA and the Pentagon were at odds about evidence for going to war in Iraq,etc. These guys emerged as the "Gang that couldn’t shoot staight", and reminded me of Lawrence Peters, who created the "principle" IN ANY HEIRARCHY, PEOPLE RISE TO THE LEVELY OF THEIR INCOMPETENCY AND REMAIN THERE.

Nowhere can I find better examples of this rule than in the Bush administration. To wit:

CONDOLEEZZA RICE: She was a talented pianist, an Oil Executive, a Russian studies expert,etc....but when she was made National Security Chief, she was suddenly clueless. Ditto when she "sidestepped" into her current position as Sec. of State.

COLIN POWELL: Despite having committed criminal acts (Iran-Contra Pentagon arms arrangements), Powell was highly respected worldwide until he buckled under and agreed to make the preposterous UN presentation of "evidence" of WMDs. Now he’s in disgrace and tyring to find someone to blame for HIS inadequacy.

DONALD RUMSFELD: A highly successful businessman and experienced government "servant" in past administrations, when he joined the Bush gang he suddenly "lost it", and made a series of absurd errors which fouled things up in Iraq beyond belief.....and he’s still at it. He refuses to resign.

DICK CHENEY: A long time politician and businessman, he was successful (if not popular) in most undertakings until he became VP (at his own request). He then got caught rigging energy contracts, feeding Halliburton good deals, and making endless false statements about WMDs and Husseins’ "connections" to al Qaeda..despite loads of evidence to the contrary. Now he’s among the most despised people in the entire world!

PAUL WOLFOWITZ: The neocon with offices in the Pentagon, Asst. Sec. of Defense, and professional liar once in the administration. He "knew" that Iraq’s prodigious oil output would "pay for the war", and predicted that we’d be welcomed in Iraq "with flowers and chocolate", and that the war would be a "cakewalk"...NOT!

GEORGE W. BUSH: I must say that Dubya just doesn’t fit here, but had to be mentioned, of course.
Bush was never really successful in his own right, having failed with a sports team (although bailed out), an oil company (bailed out) and as governor of Texas (popular, but what did he actully accomplish?). No, he was just a clown who was a part time drunk and alleged drug user who saw the light and straightened up enough to get "selected" as President...twice. Lawrence Peter would be lost when trying to figure out how one of the dumbest and most ignorant of all candidates could ever have achieved what he did.

What does HE know, anyway?

Bushisms "We are ready for any unforseen event which may or may not happen." ...

• Bushism - Wikipedia, the free encyclopedia

• Bushisms - Funny George Bush Quotes Updated Frequently

• The Complete Bushisms - Updated frequently. By Jacob Weisberg

• The Truth About George W. Bush - Bushisms

• The Complete Bushisms

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