Tag Archives: Edward P. Lazear

The Peter Principle

The Peter Principle says: “In a hierarchy, every employee tends to rise to his level of incompetence“.

The Peter Principle.

The book, by Laurence J. Peter, is a hilarious account of situations that arise in companies and institutions of why and how people are promoted, cornered, etc., or in his words is a treatise on hierarchology.

You probably have heard about the principle at some time. The author exposes a lot of other related concepts with invented jargon, including plenty of examples that we may have seen in our companies. The account of those seemingly contradicting, irrational, incomprehensible situations but which are so familiar to us is what makes the book hilarious.

Some of those other concepts and ideas introduced by the book:

  • The percussive sublimation: when someone is kicked upstairs to get him out of the road and unblock other promotions.
  • The lateral arabesque: when an incompetent employee is given a new and longer title and is moved to an office in a remote part of the building (easier in larger hierarchies).
  • Peter’s inversion: when internal consistency is valued more highly than efficient service (“xxx is methodical, consistent, he co-operates, is steady…”).
  • Pretty pass: getting out from under an incompetent to go up the ladder in a parallel circumvallation.
  • Flying T formation: organizations with plenty of VPs with few workers at the bottom… (I’m sure you can picture the T in your mind… and your organization).
  • Occupational incompetence is everywhere (a universal phenomenon).
  • In time, every post tends to be occupied by an employee who is incompetent to carry out its duties.
  • Work is accomplished by those employees who have not yet reached their level of incompetence.
  • You be the judge. Look at the mirror and ask whether… (there are no exceptions to the principle).

Years later, professor Edward P. Lazear, from Stanford Graduate School of Business, published the paper “The Peter Principle: A Theory of Decline“,  where he analyzed the principle and substantiated it with mathematical formulae. As he describes in the abstract of the paper:

Some have observed that individuals perform worse after being promoted. […] Being promoted is evidence that a standard has been met. Regression to the mean implies that future ability will be lower, on average. Firms optimally account for the regression bias in making promotion decisions, but the effect is never eliminated. Rather than evidence of a mistake, the Peter Principle is a necessary consequence of any promotion rule. […] Usually, firms inflate the promotion criterion to offset the Peter Principle effect, and the more important is the transitory component relative to total variation in ability, the larger the amount that the standard is inflated.

If your promotion has been reject, you find yourself overwhelmed with your current job, you have consciously decided to go along in the office with minimum effort trying to be unnoticed, are happy with your current job and do not wish to be promoted by any standard… go and read the book 🙂


I have already mentioned sometimes in the blog that every time that I pass by an airport (and that is often) I try to go to the book shop to see if I can grab something interesting. I was after this book since I read about it in another book “Management gurus” in 2010 (of which I already wrote a review – in that post I remarked 4 punching books I wanted to read, one was this) and found it two years later at Dubai International airport, this only reinforces that habit :-).


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