The Peter Principle Is Alive and Well (Unfortunately)

 

Disclaimer:

The concepts and critiques discussed in this article about the Peter Principle are intended for general reflection on organizational dynamics and are not a reflection of Sanjay’s current workplace. In fact, Sanjay is fortunate to work in an environment that values readiness over reward, invests in leadership development, and thoughtfully avoids the traps outlined here. Any resemblance to real-world incompetence is purely theoretical, and hopefully found only in case studies, not current colleagues.

Why Climbing the Corporate Ladder Still Lands Too Many on the Wrong Rung

Let’s begin with a scenario you’ve likely witnessed or lived. Take Steve. Steve is a killer software engineer, the go-to guy for debugging complex concurrency issues, who can write clean code in Vim while half-listening to a podcast on Gödel’s incompleteness theorem. Naturally, management does what they think is best: they promote Steve to lead a team. Fast forward three months, and Steve’s sprint planning sessions are a chaotic mess, his team morale is plummeting, and no one has received constructive feedback since the Bush administration.

What happened?

Enter: the Peter Principle.

Meet Peter (No, Not That One! The Principle)

Coined in 1969 by Canadian educator Dr. Laurence J. Peter and playwright Raymond Hull, the Peter Principle was originally intended as satire. Their cheeky thesis? “In a hierarchy, every employee tends to rise to their level of incompetence.”

It was a corporate comedy with a punchline that stung. The central idea is deceptively simple: people are promoted based on how well they perform in their current role, not based on whether they have the skills to succeed in the next one. Promotions reward past performance, when what we really need is future potential.

Funny at first. But then you realize. It’s not just funny. It’s true.

It’s 2025. Has Anything Changed?

Not really. Actually, in many places, it’s worse.

Consider the numerous books, HR seminars, LinkedIn thinkfluencers, and management consultants who charge by the syllable; the Peter Principle persists, much like that one office chair nobody wants but no one gets rid of.

In large corporate cultures, especially those with rigid hierarchies, the principle remains painfully relevant. Why? Because the promotion machine still runs on autopilot. The best salesperson becomes the sales manager. The most productive engineer becomes the engineering manager. And then the department quietly implodes while HR wonders why employee engagement scores are down again.

You’d think we’d have learned by now. But as of July 4, 2025, evidence suggests that our beloved Peter Principle is as relevant as ever. Just dressed in smarter-looking HR dashboards.

Don’t Just Take My Word for It

Let’s talk data, shall we?

A 2018 Forbes article by Rodd Wagner dove into the mess of promoting top salespeople into management. The result? These newly minted managers often underperform. Turns out, hitting quota and leading a team are two entirely different games. Think of it like handing the best violinist in the orchestra a conductor’s baton and wondering why Beethoven now sounds like elevator music.

Over at Stanford Graduate School of Business, a paper called “The Peter Principle: A Theory of Decline” gave the idea a statistical veneer. They argued that promotions naturally lead to a regression to the mean. Translation: If someone performs spectacularly in one role, it’s statistically likely they’ll perform closer to average in the next. That’s not necessarily incompetence. It’s math. But it still doesn’t mean they’re fit for the role.

Meanwhile, folks on forums like Indeed.com talk candidly about the morale crisis that follows promotions-gone-wrong. Employees feel the pressure to climb even if they don’t want the next job. Why? Because it’s the only way to be “recognized.” The Peter Principle, in practice, has become a rite of passage in many companies — like awkward happy hours or performance reviews that use more buzzwords than verbs.

The Real Cost of Getting It Wrong

When Peter strikes, he doesn’t just bruise egos. He sabotages entire teams.

Let’s revisit Steve, our gifted software engineer-turned-unintentional-team-slayer. When employees like Steve are promoted beyond their competency, the ripple effects are massive:

Poor decision-making (hello, roadmap delays). Declining productivity (half the team is job hunting). A culture of disengagement (“I guess this is just how it is here.”)

According to the Professional Leadership Institute, the long-term consequence is organizational inertia. When too many people hit their ceiling, the whole ladder becomes shaky. The result? Mediocrity becomes institutionalized.

Big Think hit the nail on the head when they described the Peter Principle as a slow drift from competence to chaos. You start with excellence and, over time, reward it right out of existence.

But It Doesn’t Have to Be This Way

Thankfully, Peter isn’t destiny. Organizations that are awake to the danger can sidestep the worst outcomes. The question is: how?

Let’s take a look at some practical ways companies are mitigating the Peter Principle in 2025 (no time travel required):

1. Promote for Potential, Not Past Performance

This seems obvious, but it’s surprisingly rare. Too many orgs still treat promotion as a gold star rather than a skill alignment exercise. The sales wizard might be better off mentoring junior reps than managing a pipeline. The engineer with deep architecture knowledge might thrive in an IC+ path, not as a people wrangler.

MasterClass notes that promotions should reflect readiness, not resume highlights.

2. Provide Training Before Promotion

You wouldn’t send someone to climb Everest without oxygen. Why throw someone into management without prep?

Leadership programs, mentorship, and role shadowing can make a huge difference. Campus LEAN’s work on training as a response to the Peter Principle shows that preparing someone for the job is often better than promoting and praying.

3. Use the Team Competency Matrix

This simple but powerful tool from Management 3.0 lets managers evaluate skill levels across a team. It offers a snapshot of who’s ready to level up, and who might need more seasoning. Unlike gut feelings and vibes-based decision-making, it gives HR a structured way to spot potential.

4. Prioritize Feedback Loops

Let’s bring back the radical idea that employees should get regular, useful feedback. Performance reviews once a year won’t cut it. Continuous feedback helps employees grow into roles instead of growing resentful.

Feedback also surfaces early signs of trouble. Is the new manager struggling with delegation? Are they avoiding tough conversations? Address it early, and you may just prevent a full-blown Peter crash landing.

Promotion vs. Elevation: Not the Same Thing

One of the biggest philosophical shifts we need is redefining what a “promotion” really means. In a mature organization, there should be multiple ways to grow — not just vertically.

Not everyone wants to manage people. Some want to go deeper, not higher. Think of architects, researchers, principal scientists, and staff engineers. These paths need to be as celebrated as traditional managerial tracks.

This is where companies often get it wrong. The message becomes: If you want more money or status, go manage something. And when that “something” is a team of humans, and you’re a systems thinker with zero interest in HR drama. Everyone loses.

The Curious Case of External Hires

Here’s where it gets even more interesting.

According to a ScienceDirect article, employees who have advanced internally may be less likely to be promoted again compared to fresh external hires. Why? Because internal candidates are already “known quantities.” Their strengths and limitations are visible. External candidates, meanwhile, are shiny unknowns who haven’t failed yet.

That dynamic reinforces the Peter Principle from the outside in. Organizations bring in outsiders to shake things up, but often do so without real vetting, only to find themselves caught in the same trap, just in a different accent.

Promotion Shouldn’t Be a Trap

So here we are. The Peter Principle is still doing its rounds, wearing a slightly more expensive suit and operating behind HR software that generates pie charts. But underneath the tech and strategy decks, the same story plays out. We still mistake competence in one role as a sign that someone is ready for the next.

It doesn’t have to be this way.

We can build better ladders. Ladders with offramps, support structures, and signage that reads: Are you sure you want to go up? Maybe sideways is the smarter move.

If we care about competence, culture, and long-term success, we must stop treating promotion as a reward and start treating it as a role change. Because the cost of getting it wrong isn’t just one disengaged employee. It’s a culture of quiet quitting, avoidable chaos, and org charts that look more like warning labels.

Peter warned us. Maybe it’s time we started listening.

Postscript: If you’ve ever found yourself promoted into misery, or watched someone else flounder in a role they didn’t ask for, know this — it’s not a personal failing. It’s often a systems design flaw. And like all good systems, it can be debugged.