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Three authors at the Harvard Business Review briefly discuss the Peter Principle by dealing with a quantifiable data set. That principle is the one which states that people are promoted to rise to their particular level of their incompetence. At the end they propose several possible solutions or work-arounds.
The Peter Principle problem arises when the skills that make someone successful at one job level don’t translate to success in the next level. In these cases, organizations must choose whether to reward the top performer with a promotion or to instead promote the worker that has the best skill match with a managerial position. When organizations reward success in one role with a promotion to another, the usual grumbles ensue; the best engineer doesn’t make the best engineering manager, and the best professor doesn’t make the best dean. The same problem may apply to scientists, physicians, lawyers, or in any other profession where technical aptitude doesn’t necessarily translate into managerial skill.
[...] While the Peter Principle may sound intuitively plausible, it has never been empirically tested using data from many firms. To test whether firms really are passing over the best potential managers by promoting the top performers in their old roles, we examined data on the performance of salespeople and their managers at 214 firms. Sales is an ideal setting to test for the Peter Principle because, unlike other professional settings, it’s easy to identify high performing salespeople and managers — for salespeople, we know their sales records, and for the sales managers, we can measure their managerial ability as the extent to which they help improve the performance of their subordinates. The data, which come from a company that administers sales performance management software over the cloud, allow us to track the sales performance of a large number of salespeople and managers in a large number of firms. Armed with these data, we asked: Do organizations really pass over the best potential managers by promoting the best individual contributors? And if so, how do organizations manage around the Peter Principle?
[...] Both solutions can be implemented as part of the performance evaluation process. One approach, embedded in evaluation regimes like the ninebox, asks raters to decouple evaluating future career potential from prior job performance. People who score highly on future career potential can be rewarded with promotion to management roles and stock options to retain them until their potential can be realized. People who score highly on prior job performance can be rewarded with bonuses, promotions up an individual contributor track, or recognition. The process should be designed to recognize and reward excellence in one’s role without necessarily changing one’s role.
Incentive pay, dual career ladders, and thoughtful performance evaluations can recognize that people contribute to the success of the organization in different ways. But it seems that, at least in sales, companies nonetheless reward sales talent by promoting top sales workers into management.
(Score: 5, Insightful) by BsAtHome on Friday June 15 2018, @03:39PM (23 children)
The general idea that "management" is "better" than other jobs is a wrong way to look at it. It is utterly wrong that "promotion" should mean "moving to management". It simply shows that the a hierarchical view is equated with a prestige value associated with distinct jobs, where the value and view of prestige is created by the hierarchy. The actual value of a job and associated work does not lie in the hierarchical position, but in the value it creates in context of the whole.
As a simple example, imagine that we abandon some of the lowest prestige jobs, for example cleaning the floors (or, in good HHGTTG style, B-ark workers). You will only recognize the real value of that work once you experience it is missing.
(Score: 3, Informative) by JoeMerchant on Friday June 15 2018, @04:00PM (7 children)
Management is valued because of the pyramid principle. Of course floor cleaners are more important than your CEO, that's why you have so many more of them (in a big company.) In Fortune 500 companies, the floor cleaners (and other janitorial staff) collectively earn more than the CEOs. Take Cintas - #500 on the list, CEO annual compensation $8.6M. 42,000 total employees. Janitor salaries average $28.5K [salary.com] - so Mr. Scott Douglas Farmer earns as much as 302 janitors, is it reasonable to assume that janitors and other cleaning staff make up more than 0.72% of the Cintas workforce of 42,000?
I believe we have made the pyramid too pointy for overall societal harmony, but that's the way it's played these days: if you manage a large number of people, you are generally compensated at a higher level than the average person you manage, and when this gets amplified through 7+ levels of management, we end up with these compensation multiples of 300 and more.
🌻🌻 [google.com]
(Score: 1, Redundant) by nobu_the_bard on Friday June 15 2018, @04:40PM (3 children)
You assume Cintas has janitors at all. Lots of places contract it out.
(Score: 0) by Anonymous Coward on Friday June 15 2018, @06:13PM
Do contracted janitors not cost money, or did you just want to nit-pick about something?
(Score: 2) by JoeMerchant on Friday June 15 2018, @06:19PM
So whether the janitors are counted in the 42,000 or they are extra contractors on top, point being, I think it's a safe bet that janitorial services are costing Cintas more than their CEO.
🌻🌻 [google.com]
(Score: 2, Informative) by nitehawk214 on Friday June 15 2018, @10:44PM
This is amusing because Cintas is a company that provides janitorial and uniform services to other companies.
They have thousands of janitors. :)
"Don't you ever miss the days when you used to be nostalgic?" -Loiosh
(Score: 2) by choose another one on Friday June 15 2018, @04:55PM (1 child)
> I believe we have made the pyramid too pointy for overall societal harmony, but that's the way it's played these days:
I think that this has happened as an artifact of consolidation and globalisation - companies are getting bigger, even the big ones. Over last 20 years US dollar inflation is about 50%, whereas Fortune 500 total revenue has gone up well over 100%. Management jobs are valued, at least in part, by how much revenue your decisions affect, hence as companies get bigger managers at the top get more - and I am not sure it is related to number of people managed, I suspect total F500 revenue has gone up faster than total employees (if that has gone up at all).
(Score: 4, Interesting) by JoeMerchant on Friday June 15 2018, @06:33PM
In most organizations I have worked with it goes something like this: "O.K.: our last manager's wife left him 6 months ago and he had a mental breakdown last week, who wants his job? You'll be reporting to the next-level psycho who acts that way because he's got the next-level psycho above him breathing down his neck three times a week about performance metrics and what we're doing to ensure that HIS stock options will be worth something next quarter. Anybody want to do this for the same pay you currently make? Oh, and by the way you'll need to cover your normal responsibilities during the transition period while we try to claw back your headcount from HR who's trying to snatch it up as an opportunity to not have to downsize another department..." When that pitch doesn't work out, they pull their most likely suckers (candidates) into a room one at a time and make them a lowball pitch offer slightly above their current compensation, and repeat the process until they find the fool willing to step up to the plate and become a shoulder for 15 of their coworkers to cry on, not to mention being procedural tech support for every new hire in the department as well as every existing one who forgets how to do anything, conduct performance reviews, handle layoffs, be heavily involved in the hiring process, yeah, is it any wonder that half the time they end up hiring from outside instead?
Just kidding, it's not like that most places I've worked, only maybe 40%. Then there was the place where I was hired to replace a guy who was found on the concrete 24 floors below his hotel balcony, I did lots of conference calls from home and my wife was convinced that my primary co-worker there was the reason the last guy jumped.
Other places have been better - I try to stick with the better places.
🌻🌻 [google.com]
(Score: 3, Insightful) by HiThere on Friday June 15 2018, @05:37PM
Depends on what you mean by "valued". They get more money because they have more leverage over who gets paid how much. They get higher ratings, because they define the rating system. Et multitudinous cetera.
Javascript is what you use to allow unknown third parties to run software you have no idea about on your computer.
(Score: 0) by Anonymous Coward on Friday June 15 2018, @04:05PM (6 children)
Everybody (well, all except incompetents) is needed for the company to work. We each have our role to play.
But it seems you are really complaining about some workers not getting their "fair share" of the rewards: respect, money, etc.
Your compensation is based on many things, but the biggies are: how much money do you bring into the company -and- how hard is it to find someone who could do your job?
In the case of cleaning staff, you bring in nothing, and the bar for someone to replace you is can they push a mop? So low a bar that someone with an elementary school education that speaks almost no English who arrived here yesterday from Honduras can do it and start immediately.
(Score: 4, Insightful) by Arik on Friday June 15 2018, @05:13PM (2 children)
It's tradition, and the nature of our existence as mammals, not capitalism that causes us to place management at the top of each career path. In traditional societies; hunter-gatherer, pastoralist, agriculturalist etc. this generally made sense. Those who were young and strong did the hardest work, if one survived into older age ones contribution would gradually shift to supervision and teaching rather than brute work, more or less as ones physical ability to do such work waned, so all to the best.
With industrialization and medical breakthroughs and so forth this has all tended to break down though. Old people in traditional societies are rare - most died young. The handful that lived to show grey hairs were valued for their wit and wisdom. Today we have warehouses full of people that have been written off as too old and too ill to do anything useful. Back then, the knowledge needed to supervise was mostly the knowledge needed to teach the job. More and more supervisors are 'resource managers' who may not even really know what the 'units' under them actually do - just when they are to arrive and leave, what they get paid, their scores from QA, etc. It's all much more specialized.
Some workplaces moreso, some less; there are definitely niches where part of that doesn't apply, but the Peter Principle observation applies to the space outside of those niches. And in that space, when you promote a good worker to management, you all too often lose a good worker and gain a poor manager. Because the skills and even personality needed for the roles just are not the same.
If laughter is the best medicine, who are the best doctors?
(Score: 2) by Thexalon on Friday June 15 2018, @06:10PM (1 child)
There were and are lots of hunter-gatherers that live to 70 or so. The 2 major barriers to that depend on your sex:
- Everybody's at high risk of dying before age 5. Illness, injury, predators, etc. Babies, infants, and toddlers have a really hard time defending themselves and a really easy time doing all kinds of stupid things that get themselves killed.
- Young women are at high risk of dying when they give birth, particularly to their first child, typically around age 14-17.
- Young men are at high risk of dying in battle, which in a lot of these societies was around age 15-30.
Ancient civilizations weren't that different: There are lots of historical figures that made it well past 40. The image of the lives of cave men being nasty, brutish, and short (or even living primarily in caves) is not really in line with either the archaeology or anthropology.
The only thing that stops a bad guy with a compiler is a good guy with a compiler.
(Score: 2) by Arik on Friday June 15 2018, @08:07PM
"There are lots of historical figures that made it well past 40."
Indeed there are but it's also quite clear that they were unusual for that fact. As you say, infant mortality was high, and young adulthood was also a time when many died; women in childhood, young men in hunting accidents or conflicts with others. Once someone did get reach what we now think of as middle age, yes, a fair number might then live on several more decades. But the percentage who made it that far was clearly much lower.
"The image of the lives of cave men being nasty, brutish, and short (or even living primarily in caves) is not really in line with either the archaeology or anthropology."
That's true, it's not; but no moreso is the romantic image of the noble savage living in perfect health and harmony. "Nasty, brutish, and short" applies more aptly to the lives of the supposedly more advanced agricultural peasants than to the hunter gatherers, that's true, it's good that you appreciate it, but don't jump from one ditch all the way across the road into the other. Relatively good nutrition and constant exercise do make for healthy bodies. But it's also a lifestyle which entails constant risk of injury, and without any real medical care available, many injuries, even ones we would consider minor today, can easily kill you.
If laughter is the best medicine, who are the best doctors?
(Score: 3, Insightful) by JoeMerchant on Friday June 15 2018, @06:47PM
Which is an impossible metric. Does the head of a project get credit for all the revenue the project team brings in? How is it divided between R&D, Sales, Customer Support, HR, Food Services, etc?
Generally speaking, I think the people at the top get disproportionate credit for their contributions, primarily because they are the faces that are seen by the next level up. Yes, the head of a project probably does contribute more than a line-worker functionary who participated in it, but... how much? 2x? 10x? 300x? If Cintas is any gauge, assuming they have seven levels of management, each level makes a bit more than twice as much as the level beneath it, on average (2.26^7 = 301), in practice the multiples climb as you climb the ladder, Janitors at 30K, Janitors' managers at 45K, next level at 80K, etc. accelerating to multiples of 3 and 4 nearer the top.
🌻🌻 [google.com]
(Score: 2) by sjames on Friday June 15 2018, @07:14PM (1 child)
Unfortunately, that assessment is usually illogical on it's face. For example, sales is considered a profit center but development and manufacturing are counted as cost centers, as if the sales guys could get anyone to give them a dime if there was no product or service to sell.
As for cleaning, if the office becomes a festering pit of pestilence, nobody can or will work there.
As for management, MBAs are plentiful but they still tend to get paid more than the harder to find people they mis-manage.
(Score: 0) by Anonymous Coward on Saturday June 16 2018, @01:32AM
And if the guy with the key to the building doesn't show up, nobody can get in and start working.
Does that mean he should get paid the same as the CEO?
(Score: 5, Insightful) by DannyB on Friday June 15 2018, @05:03PM (7 children)
You hit the nail on the head. I was going to write a similar thought from a different angle.
It is Managers who seem to think that getting promoted to Management is some kind of a "reward" instead of a demotion from what you know and love doing.
Managers don't actually contribute value (or if any, then not much) to the organization. Just like the floor sweeper. There must be management. Accounting. HR. I certainly don't want those jobs.
What there needs to be is an actual career track for a lifetime developer. One should be able to become a senior developer with perks that are similar to being a manager.
A hypothetical, like Sony might have a guy that is an antenna designer. Maybe been doing it for decades. Maybe the best antenna designer on the planet. Why should he have to get demoted into management? That guy should be recognized as having a senior position -- but just not managing. He has as much (probably more) value than a manager does and should be recognized as such.
The real problem is that Managers have a narrow view. It only seems to be managers who think they should not understand what it is that they manage. If you manage tech, then you should have a basic understanding of the tech you manage. Otherwise how can you even make good decisions?
I've observed over a lifetime, one universal thing: the worker bees in any organization, in any business, seem to universally complain that management doesn't understand how things actually work down in the weeds, or where the rubber meets the hard thing, er. . . uh, road.
The lower I set my standards the more accomplishments I have.
(Score: 0) by Anonymous Coward on Friday June 15 2018, @06:18PM (1 child)
In the old days, IBM had a separate technical track with promotions. Not sure if they do it anymore, but a friend was on it for a good 30 years (in manufacturing). He developed all kinds of tools (analysis/software) and also taught his methods around the company as a technical specialist / scientist. Don't know the number of different managers he worked for, but as time went on the managers got younger (absolute and also relative to his age) and it seemed to take longer and longer to break them in and get the managers to understand what he did, why it was necessary and that he was really good at it.
I haven't heard about other large companies doing this, but it worked out pretty well for him. Things did get a little rough near the end of his career, but his early retirement benefits sounded reasonable. And he's picked up the same job (more or less) with a new company.
(Score: 3, Informative) by JoeMerchant on Friday June 15 2018, @07:01PM
Lots of places say they have technical track, but don't really in practice. I was at one that gave 25 management track promotions for every tech track promotion. I'm at another now that's slightly better - tech track can reach up to about the same level of compensation as managing maybe 200 people, but it's mainly there for people who tried management track and failed - but the company doesn't want to lose them, so they lateral over to a "tech" position.
Really, that's what's telling about the problem with technical track: even with a relatively small 7:1 reporting ratio, by the time you advance to level 4 you have 343 people reporting beneath you. When you start with a pool of 344 technical workers, how many of them are going to be satisfied if only 1/344 of them "achieves level 4" by their 30th year working in the field?
🌻🌻 [google.com]
(Score: 5, Insightful) by JoeMerchant on Friday June 15 2018, @06:55PM (4 children)
Good management actually is very valuable to an organization - they act as a combination of clear communication and buffer. They keep upper management well informed about the things they need to know, while filtering the noise. Likewise, they keep their flock well informed about what they need to know, while also filtering irrelevant noise. They argue (successfully) for additional resources they need to achieve management's goals and aspirations, they minimize waste by repurposing ineffective resources in more effective roles. They keep everybody above and below happy and satisfied in their current roles and help them to progress as they want to in their careers.
Truly perfect managers are like unicorns, but there are clearly some that are better than others and what they do has real value to the organization, even if they never directly interface with a customer, never lift a finger for product development or support, never have a single thing to do with sales, they do contribute value. If you don't believe me: replace a good manager with a bad one - wait one year and then tell me how much damage has been done.
🌻🌻 [google.com]
(Score: 2) by DannyB on Friday June 15 2018, @07:07PM (1 child)
I'm glad you qualified it as Good Managers.
Yes, they do exist. I've had them. And I've had the other kind as well. Fortunately the other kind didn't last so long.
The lower I set my standards the more accomplishments I have.
(Score: 3, Interesting) by JoeMerchant on Friday June 15 2018, @07:25PM
You can take the view that all management has negative value: the cost of their salary and benefits. However, the best managers will not cost the company too much more than that, while bad ones can do almost infinite damage. In that world view lack of management also does significant damage, so you hire these people to fill the roles and minimize damage.
I quit a place after 6 months once - at the hiring interview I actually had a chat with the owner about my recent career history, a series of multiple ~2 years and out, and I explained to him how each of them wasn't really my choice but forced by circumstances (which was true...) Amusingly, he lost his temper in a big way one day, took it out on our whole department one by one, myself included, threatening to fire everyone, etc. later that night I got an offer for a "lateral" to what looked like (and turned out to be) a much better job. If "the big man" hadn't just lost his cool, I might have let the other job go as an unknown, but with this "known quantity" going off like that in my first few months on the job.... During my (multiple, highly apologetic and concerned) exit interviews the upper level people there planned to put in an additional level of management and forbid the CEO/owner from approaching his productive workers when he's "in a mood" in the future. Apparently this wasn't his first outburst that was followed by good people leaving.
🌻🌻 [google.com]
(Score: 5, Insightful) by sjames on Friday June 15 2018, @07:21PM (1 child)
Everything you said is true of GOOD managers. It's telling that so many have yet to meet a GOOD manager that they have concluded that managers are worthless to an organization.
(Score: 2) by JoeMerchant on Friday June 15 2018, @11:42PM
The "big man" I mentioned earlier was quite the psychotic. He would almost never accept suggestions on their face, in meetings he always told people what shit their ideas were and how things were just fine the way they have been up to now. On the flip side, I was only there for 6 months, but after meetings where he either dismissively grunted or actively ridiculed my suggestions, he would later (like within days) implement almost every thing I ever pitch, anything from updating the asset database to collect more complete information to clearly communicating to the workforce that A) he is taking the company public, and B) that will include bonus shares for the current workforce.
🌻🌻 [google.com]