The Peter Principle describes the practice of promoting employees until they reach a position at the threshold of their incompetence.

You might be doing a great job and be well regarded, and then there’s a spot for promotion. Because you were a stand-out in your role in that job, you might get that promotion. Now you’re a lead person—for something you have no experience in! So, going in, you’re not trained for the position, and because everybody’s too busy to train you, you’re not competent for that role. As an employer, what you’ve done is you’ve elevated somebody who has great ability at this point, but their competency doesn’t allow them to operate at the new level. You might not even be aware that they are not competent for this—and they might not be aware of it either. The consequence is that if they do not get training or guidance, they will remain incompetent in that role.

All of us have certain natural abilities, skills, and a way we handle things. We then get to a certain competency level. If you elevate somebody above their competence, you might be expecting them to do something that’s not in their nature or natural to them. You might be taking a great technician and making them a manager. If they don’t have the skills, personality, or that’s not their area of strength, then even with the right training they might fail as a manager. And you’ve lost a great technician in the process. The danger is you might give them too much, and they don’t know how to manage their time, tasks, or work. They say “Yes” when they can’t deliver, and they will start dropping the ball and making mistakes. They risk becoming so overwhelmed and incompetent that they are eliminated from future promotion and might even risk being demoted!

If you’re not aware, and you just keep elevating people, here’s how it works:

• When you’re great you might get rewarded with a promotion—into something you’re not qualified for. Are you doing that to people? Is it happening to you? Are you aware if you’ve been elevated to a level of incompetence, you don’t know how to do it, but you took the risk anyway and exposed yourself? Ask for training!
• No chance of further promotion, but you usually won’t get fired.
• In time every position will be filled by an employee who is incompetent.
  

I’m aware of this 100 percent of the time, because my life works off awareness. I don’t have the privilege of thinking I know what somebody else is thinking. What I do know is that the problem needn’t be with the promotion but rather the lack of education and training to prepare for the new duties. Make it possible for them to learn trades and enhance skills so they can first increase their productivity and then qualify for advancement.

If you think about it, the Peter Principle actually only applies to people who have strong skills and are good at what they do. If you aren’t good at what you do, and don’t show any interest in growing, you won’t be promoted anyway. But if you continue to operate without being aware of the Peter Principle, and you elevate people based on your needs–and not on their ability–then they’ll elevate themselves to the point of being incompetent. And you’ll eventually end up with an organization filled with incompetents.
—Mike Holt