From the Sunday Times:


People are still being promoted beyond their abilities, 40 years after a book highlighted the problem, writes John Cradden

It’s hard to view the Zune as anything other than a product of Pointy-Haired-Boss thinking.

The timing is probably a coincidence, but it’s remarkable all the same. Just as we are witnessing the fallout from a prolonged period of disastrous financial management, a ground-breaking business book about incompetence has been republished in a 40th anniversary edition. The Peter Principle, written as a satire by Canadians Laurence Peter and Raymond Hull, argued that in a typical workplace hierarchy, most people will advance to their highest level of competence and then be promoted to and remain at a level at which they are incompetent. The implication of this is that productive work is only ever managed by those who have not yet reached their full potential.

“People have been poking fun at the concept of the worthless boss for a long, long time,” said Rowan Manahan, a consultant and founder of career management firm Fortify Services. “I’ve seen cartoons from the Victorian era in Punch deriding the uselessness of the top-hatted factory manager. Peter’s genius was that he took a commonly observed problem, gave it a memorable name, and built a following for the concept on that basis.”

Since the book was first published, the corporate world has changed beyond recognition and management structures are far more flexible that the old, rigid hierarchies of the 1960s, but it is widely agreed that the book is actually more relevant today than ever.

… Manahan says the job of management has evolved into a role that also requires leadership, team-building and coaching – skills that are hard to measure. In terms of explaining how financial institutions around the world lost the run of themselves, management experts agree that straightforward incompetence was a factor, but not the only one.

… Manahan says it was likely that many in senior management positions simply did not understand the complex financial instruments that brought about the troubles in the banking sector, but felt under pressure to “join the race” anyway. “The Peter Principle had a role in all this, but greed and fear were probably larger contributor than simple incompetence,” he said.

… Manahan says competency-based interviewing techniques can help to weed out unworthy candidates. “Modern behavioural interviewing techniques, particularly when built from the ground up for each defined role, are far better at eliciting a candidate’s mindset when it comes to the typical tasks and problems they will face in the new role,” he said. “For example, it is amazing how few people provide a good answer to a basic question about how to deal with an underperforming employee.”

Although it has stood the test of time over 40 years, The Peter Principle may be in danger of being usurped by The Dilbert Principle, in which cartoonist Scott Adams states that organisations promote their least competent employees into management, “where they can do the least harm.”

“I think Adams has taken on Laurence Peter’s mantle very comfortably,” said Manahan. “He holds up a clear mirror to modern corporate life and I’m sure I could run very effective management seminars using only Dilbert cartoons as my teaching tools.” He says the former CEO of General Electric, Jack Welch, seemed to accept The Dilbert Principle because of his ‘Rank & Yank’ approach to culling middle management. This involved replacing 10% of the employees in an organisation every year as a matter of course. “If those middle managers had been truly competent, GE should have collapsed. Interestingly, it did quite the opposite,” said Manahan.

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