We take it for granted that, when we ask for advice, the person we are asking should be knowledgeable because he holds the position which entitles him to give it. This should be all the more true because, the higher this person is in the hierarchy, the more competent he or she should be. After all, wasn’t he or she promoted to this position? What if we’re wrong about that from time to time?
The Peter Principle holds that each employee tends to rise to his or her level of incompetence, and, over time, every position will be filled by someone who is incompetent to carry out his or her duties.
But does this well known management principle apply only to employees, or are entrepreneurs also victims?
Statistics show that 70% of family businesses do not survive into the second generation and 90% do not make it into the third. This phenomenon could be partly explained by the Peter Principle. But how?
Two important points show how a business may theoretically reach its level of incompetence, one day or another.
- The Peter Principle applies to consultants: If we assume that certain “experts” have reached their level of incompetence and that these same experts have advised entrepreneurs on their development, it is easy to understand how they have contributed to entrepreneur incompetence and have led them to make poor business decisions.
- The Peter Principle applies to the entrepreneur: The director of a business will also tend to rise to his level of incompetence, because it is human nature. We humans suffer from an “egocentric bias,” a concept which makes us think we are better than we actually are. In order to feed and protect the ego, humans generally tend to overestimate their skills and, at the same time, underestimate their weaknesses. Everyone who starts a business is convinced it will succeed and 100% of people who get married are also convinced of the success of their marriage. To succeed, some self-assurance is needed, but when it becomes unrealistic, it leads inevitably to a fall. A balanced assessment of strengths and weaknesses is indisputably the best measure of success.
What is the secret to protecting yourself from the Peter Principle and controlling the damage it can cause?
Peter Principle protection for yourself:
- Surround yourself with devil’s advocates, people who are able to confront you and challenge your ideas.
- Regularly ask for feedback on your strengths and weaknesses.
- Accept constructive criticism.
- Limit the amount of risk in a project.
- Have a plan B.
- Ask others: How can I be a better manager, leader, boss or associate?
- Accept that you cannot know everything and that, from time to time, you need people who are more experienced and stronger than you in other areas.
- When you are convinced of something, ask yourself what the consequences would be if you were wrong. Could you live with this consequence?
Peter Principle protection for consultants:
- Use advice from consultants in moderation. (Take some and leave some.)
- Consult with more than one expert in a field, when the issue is an important one.
- Keep an open mind but think critically.
- Ask what the consequences would be if the other consultant was wrong. Could you live with this consequence?
- What works for your neighbour may not work for you.
- There is often more than one solution, and none are perfect or miraculous.
- When you meet an expert who says he is the only one with the truth, avoid him like the plague!
- Pierrette Desrosiers,
Work Psychologist, professionnal speaker, author and business coach
Relying solely on consultants or solely on yourself inevitably has risks. Once again, the key is avoiding extremes. If you are doubtful of the Peter Principle, just look at the way in which our managers manage us, how our politicians make seemingly good decisions, how highly-placed bureaucrats operate.
Then think about taking a peek at your neighbours. You will probably find several little “Peters.”
Enjoy this food for thought!