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posted by martyb on Friday June 15 2018, @02:57PM   Printer-friendly
from the I'm-not-competent-enough-to-judge dept.

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.


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  • (Score: 2) by AthanasiusKircher on Friday June 15 2018, @06:55PM (1 child)

    by AthanasiusKircher (5291) on Friday June 15 2018, @06:55PM (#693641) Journal

    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.

    Huh? First off, there are plenty of jobs where such straightforward metrics could be available -- you're in production, the person who produces more stuff is competent. Why is sales so different?

    Second, sales is actually worse, because sales environments shift with the economy, with the behavior of competitors, etc. A great salesperson may still have trouble in a bad time for that profession. Granted, you might still get some data from doing comparisons within a company at a specific location (which is pretty specific) -- though even there, there could be all sorts of other factors at work (e.g., salespeople who have specific contacts or connections that aren't necessarily do to their competence at sales, arrangements where certain senior salespeople get priority in certain situations with clients, etc.).

    Third, "we can measure their managerial ability as the extent to which they help improve the performance of their subordinates."

    HA! Are they joking? Yep, just like it's easy to measure the performance of classroom teachers based on students' performance on standardized tests. Don't worry about the past performance of students. Don't worry about their specific situation or challenges. And if you adopt an "improvement" metric, what happens to the poor manager who inherits a bunch of really competent salespeople already? They don't show as much improvement, so he/she must be a crappy manager?

    Don't get me wrong: you can probably still get some good data out of the raw numbers here, but a lot will depend on how your process it. Claiming this is "easy" in sales or that sales is easier than most other professions seems like a pretty stupid assertion. Like any such data manipulation, you can probably make this study say whatever you want, depending on how your design the metrics. (Disclaimer: I didn't read the whole original study, so maybe they were more sensitive than implied by the summary.)

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  • (Score: 0) by Anonymous Coward on Friday June 15 2018, @07:37PM

    by Anonymous Coward on Friday June 15 2018, @07:37PM (#693669)

    > Claiming this is "easy" in sales or that sales is easier than most other professions seems like a pretty stupid assertion.

    Look at the source, Harvard Business Review, where the best highest-paid MBAs are minted.