The Peter Principle: Are You Giving Your New Leaders the Best Chance For Success?

We operate with the presumption that if someone is great at their role, we should promote them to a higher one.

And yet, one recent study found that while high-performing salespeople have a higher chance of moving into management, their prior success in sales “negatively predicts managerial performance, even after accounting for selection into the sample of promoted workers.”[1]

The study analysed 214 client firms across several industries. Their analysis indicated that managers who performed well as salespeople “have lower value added from the perspective of increasing the average sales performance of their subordinates”. Of course, we can look at a number of variables that make a good “manager” beyond this key indicator, and the researchers note the limitations and possible alternative explanations for the study.

Still, it’s concerning to think that there are so many people who are promoted to management, only to perform at a lower level than one would expect.

The researchers relate this to the now-famous “Peter Principle”. You may be familiar with the phrase, ‘that person has been promoted to the point of incompetence’ — the idea that people move up in a corporate hierarchy until they are not doing a good enough job to move up anymore. A manager has been promoted to manager because they are a high performing salesperson. Still, because they aren’t a particularly good manager, they’ll stop there…