![]() This behavior results in firms promoting workers who decrease subordinate performance by 30%, relative to a promotion policy that optimizes match quality.” What encourages the Peter principle? “… we find that firms are substantially more likely to promote top salespeople, even when these workers make worse managers on average and on the margin. Recently, this study supported the principle using a sample of 53,035 employees working in sales organizations. His book, Peter Principle became wildly popular, but until recently, the Peter principle was only a theory. ![]() This phenomenon was put forward by Dr. Laurence J. Peter 1968 (hence, the “Peter” Principle). The Peter principle proposes that companies prioritize current job performance when it comes to promotion decisions at the expense of other observable characteristics that are better predictors of managerial performance (Benson et al., 2019). For that reason, this article will explore what the Peter principle is, what encourages it, how to prevent it, and some differences between the Peter principle and the Dunning-Kruger effect. Regardless, the Peter principle is a phenomenon that can help organizations make better decisions about promotions and performance. The truth is, a balance between these two options is the best option, but the reality is that a top performer who also has strong managerial qualities does not always exist in a given team. It’s difficult for companies to decide if they should select an employee for a promotion to a managerial role based on job performance, to motivate employees and encourage higher performances at work, or alternatively, based on their personality and potential to be a great leader. ![]() ![]() That said, the Peter principle states that many organizations choose to prioritize a person’s job performance over their ability to lead a group and be an effective manager. High performers are not always the most suitable people to move into management positions. ![]()
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