Random vs. The Peter Principle, or not.

Clive Thompson reports in The New York Times 9th Annual Year in Ideas, on a study completed by three Italian scientists on The Peter Principal. This study is published in the journal Physica A.

They found that employees who were promoted at random, or alternating promotions between the best and worst performers, had higher rates of success in their promotions than did those whose promotions were based on competence in their current job, thus supporting “The Peter Principle.”

The Peter Principle is a term coined by the psychologist, Laurence J. Peter.  It refers to promoting based on an employee’s competence in their current job.  This process takes place when individuals are promoted until they are incompetent in their new role.  The company then suffers because it is bogged down with too many of these promoted, albeit incompetent employees.  A once stellar employee becomes a mediocre employee – at best.

This happens a lot in businesses – an employee is doing a really good job so it seems like a good idea to promote them.  The employee flounders and we wonder why.

I have a three part suggested solution.

Step One: Training.  In a recent Bureau of Labor Statistics (BLS) Survey of Employee Training (SEPT 09) during personal visits to more than 1,000 private establishments with 50 or more employees, it was found that employers provided an average of 50 minutes of management training.

Management training is training in supervising employees and in implementing employment practices.  Examples include training in how to conduct employee appraisals, managing employees, resolving conflicts, following selection/hiring practices, and implementing regulations and policies.

Most of the time when an employee is promoted they are given supervision and management responsibilities.  However because the employee is so competent at their current job, the employer may not see the merit of providing training specific for the new position.

We could call these new skills “process skills”, training directed at the process of having a team meeting, managing employees, and resolving conflict.  I challenge you to think how much money an organization could save if it invested in training process skills prior to a promotion. Or, require that an employee possess these process skills as a requirement for promotion.

Step Two:  Develop your employee’s social-emotional intelligence.

Characteristics of Social Intelligence include: empathy, attunement, social cognition and self presentation, synchrony and influence.

Characteristics of Emotional Intelligence include: self-control, zeal, persistence in spite of challenges, and self-motivation.

Companies could continually train employees in the development of their social-emotional skills.  They would then be better prepared for a promotion, or at least  have the assertiveness to turn down the offer of a promotion for a job they knew they were not prepared to do well.

Studies by Daniel Goleman and Martin Seligman have demonstrated that social- emotional skills increase net profits, build employee efficacy and reduce turnover.  Promotion or not, social-emotional skills increase the strength and producing power of an organization.

Step Three:  Give pay raises to employees who stay put, but don’t get promoted.  This idea is a little… well a lot against the status quo.  What if you paid someone to stay right where they were at, especially if they were really good at their job?  They won’t feel the pressure to get more money through a promotion.  They could depend on their pay increases being tied to staying put and staying proficient.  We could call this an income promotion for proficiency and competence or “Pay to Stay.”  Think how much pressure that would take off on an employee and their company.

It would also take the pressure off of someone accepting a position, or applying for a position they are not qualified for.  This could also aid in having only those qualified applying for those promotions.  I have a hunch that this would also reduce turnover as individuals become more satisfied with where they are, and with how they are doing.

The three steps I propose are: Process Skills Training, Social-Emotional Skills Training and Pay to Stay.

Or you could promote at random – it beats The Peter Principle.

- by Jeff King

Links to further reading referenced in this White Paper:

http://www.nytimes.com/projects/magazine/ideas/2009/#r-2

The Peter Principle: Why Things Always Go Wrong, by Laurence J. Peter, Raymond Hull, HarperCollins Publishers, Pub. Date: April 2009  ISBN-13: 9780061699061

http://www.bls.gov/news.release/sept1.t01.htm

www.time.com/time/classroom/psych/unit5_article1.html