It simply states that in a hierarchy, individuals tend to rise to their level of incompetence.
Put differently by Laurence J. Peter (the principle is named after him, based on his research) – “The cream rises until it sours.”
Little wonder, Warren Buffet once famously said – “You should invest in a business that even a fool can run, because someday a fool will.”
It is safe to assume that as you travel up hierarchies, incompetence increases. Interestingly, authority and responsibility for decision making also increases. This is probably why business cycles of boom and bust exist.
How do organisations manage the pitfalls of this principle? By listening to the level of highest competence (by engaging the Shopfloor), by reducing hierarchies and by 360 degrees relief programs.
The major characteristic of a boom is when leaders listen and are connected to the area with the highest competence.
The major characteristic of a bust is when leaders speak over and are disconnected from the areas with the highest competence.
The Peter Principle happens, and it can be managed.
– Osasu Oviawe