The Peter Principle is one of those concepts that sounds like it should be the plot of a sitcom but is, unfortunately, real life in many workplaces. You may have had a boss who fits the bill: they’ve got the corner office, the bigger pay packet, and the approval of senior management—all while seeming spectacularly out of their depth. Enter the Peter Principle, which suggests that in a hierarchical company, people keep getting promoted for doing well…until they land in a job that they just can’t handle. Once they reach this ‘level of incompetence,’ they stop getting promoted, and they often stay there indefinitely, much to everyone’s dismay.

Let’s break down how this can look in real life. Imagine an employee in a company who’s fantastic at their current job. They understand the tasks, communicate well, and deliver impressive results. So, the natural next step? Promotion! They move up to the next role, and they do fairly well again—until eventually, they’re promoted to a role that demands a whole new skill set or mindset. Maybe the new role requires strategic thinking, team leadership, or complex project management. Suddenly, they’re not just out of their comfort zone—they’re out of their depth.

And because of this hierarchical system, they stay in this position where they’re no longer thriving but, rather, floundering. From an HR perspective, this is more than just unfortunate; it’s costly. This is how you end up with managers who can’t manage or leaders who aren’t inspiring. When this happens, team productivity dips, staff turnover rises, and everyone ends up working harder just to maintain the status quo.

Examples of the Peter Principle in Action

The Peter Principle is a common challenge when promoting employees without assessing whether they have the skills required for the next level. Here are some examples that might sound familiar:

1. Star Salesperson, Struggling Sales Manager: Imagine a salesperson who’s consistently top of the leaderboard. They know how to close deals, connect with clients, and bring in revenue. Recognising their success, the company promotes them to Sales Manager. However, managing a sales team requires coaching others, setting targets, and dealing with administrative work—all skills that differ from direct selling. Without experience or support in these new areas, they struggle to guide their team effectively, and the department’s performance suffers.

2. Skilled Software Developer, Overwhelmed Engineering Manager: A software developer with years of technical expertise gets promoted to Engineering Manager. They’re brilliant at coding and problem-solving, but management tasks like scheduling, budgeting, and team dynamics are entirely new to them. The transition from writing code to managing people is rocky, and they miss the structure and focus of individual contributor work. As a result, project deadlines slip, and team morale dips.

3. Talented Graphic Designer, Stressed Creative Director: A graphic designer with a keen eye for aesthetics and a flair for innovation gets promoted to Creative Director. However, this new role involves overseeing multiple projects, liaising with clients, and aligning the design vision with business goals. The skills that made them a great designer don’t necessarily translate into leading a creative team, and the pressure to drive company-wide creativity while managing client expectations becomes overwhelming.

4. Dependable Accountant, Out-of-Depth Finance Manager: An accountant known for their precision and reliability is promoted to Finance Manager. In this role, they’re expected to lead budgeting efforts, create financial strategies, and advise on investments. Their previous role involved following guidelines, not setting them, and now they find it difficult to think in broad, strategic terms. The finance team feels the strain as the manager struggles to adapt, and financial planning becomes reactive rather than proactive.

5. Warehouse Worker Turned Warehouse Supervisor: A warehouse worker who consistently meets and exceeds their productivity targets is promoted to Supervisor. Suddenly, they’re responsible for coordinating schedules, managing supply chain issues, and resolving interpersonal conflicts on the floor. They excelled at the physical demands and routine of their previous job, but the soft skills required for managing others are completely new to them. Team communication suffers, and so does overall productivity.

Mitigating the Peter Principle with Effective HR Practices

To avoid the Peter Principle, HR professionals can advocate for the following practices:

• Evaluate for Future Potential
  Rather than promoting purely based on current job performance, consider the skills needed at the next level. HR can use development programs, simulations, and assessments to see if candidates have the skills required for a leadership position.
• Provide Growth Pathways Without Necessarily Promoting
  Not every strong performer needs to become a manager. HR can develop pathways for employees to specialise further or gain recognition through other means, like mentoring or advanced training.
• Offer Leadership Training Before Promotion
  Investing in pre-promotion training, including mentoring, management workshops, and shadowing opportunities, allows employees to develop necessary skills and gives HR insight into whether they’re genuinely ready for the next step.

So, the Peter Principle may remain one of life’s workplace mysteries, but HR has the tools to address it—creating a more competent, effective, and satisfied workforce in the process.