There’s a paradox at the heart of most modern organisations. The “Peter Principle”, named after the Canadian psychologist Laurence Peter who first observed this phenomena in 1969, states that “in a hierarchy, members are promoted so long as they work competently. Sooner or later they are promoted to a position at which they are no longer competent (their “level of incompetence”), and there they remain, being unable to earn further promotions.”
The actual work of an organisation is carried out by those employees who have not yet reached their level of maximum incompetence. Over time, this indicates a tendency towards senior posts being held by employees who are in fact not capable of carrying out their duties.
Despite its apparent irrationality, the Peter Principle has been found in many organisations where:
- the mechanism of promotion rewards the best members at each level in a hierarchy, and
- where the performance at their new level in the hierarchical structure does not depend on the competence they had at the previous level, because of how different the task at each level are from each other
Researchers at the Universita di Catania have recently used agent-based simulations – a key tool of complexity science – to show that if the above two assumptions hold in an organisation with a hierarchical structure, then not only is the Peter principle unavoidable, but also it yields in turn a significant reduction of the efficiency of the organisation in question.
Is there evidence that the Peter’s Principle is playing out in the aid sector? And will any organisation will be brave enough to name it, and do something about it?
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