The Peter Principle Explained: Why People Get Promoted Until They Fail

We’ve all seen it: that superstar employee gets promoted, and suddenly they’re struggling, overwhelmed, or insert dramatic sigh here burning out.

What happened?

They hit their “level of incompetence.” Enter the Peter Principle.

Coined by Dr. Laurence J. Peter in 1969, this principle says that people get promoted based on how well they’re doing in their current role, not how well they’ll do in the new one.

Eventually, they reach a point where they can’t handle the new challenges and… oops—they’re stuck.

It’s like giving someone a golden ticket to a new level of a video game… but forgetting they’re not equipped for the boss fight.

So, what does this mean for companies?

It’s a wake-up call for smarter promotions and career paths.

You can’t just level up someone based on past success.

It’s time to think about their next move before they hit that competence wall.

What is the Peter Principle?

The Peter Principle is a management theory that can be summed up like this:

In a hierarchy, every employee rises to their level of incompetence. — Dr. Laurence J. Peter

In other words: employees get promoted based on how well they perform in their current role, not based on how well they’ll do in the next one.

And guess what?

Eventually, they land in a position that doesn’t quite fit—and that’s when things go sideways.

How it plays out:

A brilliant software developer gets bumped up to team lead, but suddenly finds himself sinking in a sea of emails and awkward team meetings.
A top salesperson becomes a sales manager but struggles with the “fun” parts of management, like strategic planning and actually delegating work.
A detail-obsessed analyst is promoted to project manager, only to be crushed under the weight of juggling multiple teams, deadlines, and people.

The result?

Frustration, underperformance, and sometimes, top talent peacefully exiting stage left.

Why Does the Peter Principle Happen?

The Peter Principle isn’t just a quirky theory—it’s happening in workplaces everywhere.

Why? Several structural and psychological factors make it easier than you think for employees to land in roles they’re not ready for.

1. Promotion based on past performance

In most organizations, high performers get promoted.

But here’s the catch: just because you’re amazing at one thing doesn’t mean you’ll be great at something totally different.

Example: You can be the world’s best coder, but that doesn’t mean you’ll thrive as a team lead. No one taught you how to manage personalities, right?

2. Lack of managerial training

When employees get promoted, they’re often tossed into a leadership role without proper training.

They’re just expected to “figure it out.” Which, spoiler alert, usually results in stress, confusion, and a lot of “um, help?”

Example: It’s like giving someone a director’s chair in Hollywood and saying, “Good luck—hope you know how to direct!”

3. Social expectations

There’s an unspoken assumption that moving up the ladder is always a good thing.

Employees may feel social pressure to accept promotions, even if they’re not the right fit for the role.

Example: It’s like your friend offering you a spot in their wedding party when you’re the last person who knows how to hold a bouquet—awkward.

4. Poor role design

Some promotions are really just a way to keep employees around, even if the new role doesn’t add much to the job.

This results in title inflation and watered-down responsibilities that don’t actually help anyone.

Example: Congrats, you’re now a “Senior Assistant.” But… what does that actually mean?

5. Biases in evaluation

Managers sometimes promote employees based on things like likability, tenure, or personal rapport, instead of actual readiness or skill for the next role.

It’s like casting your friend in a lead role because you like their coffee order, not because they can actually act.

Example: “They’re super nice at meetings, so let’s make them the manager!” (But are they actually ready?)

The Hidden Costs of the Peter Principle

The Peter Principle might seem like a one-off issue where a single employee flounders in a new role, but its ripple effects are much more widespread.

When someone is promoted past their level of competence, the costs can be pretty staggering.

Here’s a breakdown:

Team dysfunction and low morale

When a leader is struggling, it impacts the whole team.

Underperformance at the top can create frustration, confusion, and a “wait, why are we doing this?” vibe.

Team morale takes a nosedive when they know their boss isn’t up to the task.

Decreased productivity and innovation

An ill-equipped leader can slow things down, misdirect resources, and kill the creative spark in the team.

Without a clear vision and capable leadership, productivity dips, and innovation is stifled.

Increased turnover among high-potential team members

Top performers thrive in an environment where they feel challenged and supported.

When the wrong person is in charge, those rock stars will start looking for greener pastures.

Say hello to high turnover and goodbye to your A-team.

Damage to client relationships

When your teams aren’t functioning well, it shows.

Clients can sense if the quality of work drops or if there’s a lack of coordination.

The result? Lost trust and a strained client relationship.

Wasted training and onboarding resources

When someone isn’t ready for a promotion, all the time, money, and resources spent on their training and onboarding are essentially thrown down the drain.

You’ve just invested in someone who might not succeed, and now you have to start over.

A 2018 study from the National Bureau of Economic Research (Benson, Li, & Shue) backed up what we already know.

They analyzed over 50,000 sales employees and found that top salespeople, when promoted to management, often caused a decline in their team’s performance.

So, turns out, the Peter Principle isn’t just a theory—it’s happening in real life.

Recognizing the Signs: Is the Peter Principle at Play?

You know that feeling when you promote someone, and suddenly everything starts going sideways?

If you’re noticing these signs, it could be the Peter Principle rearing its ugly head.

Here are some key red flags that someone may have been promoted past their level of competence:

Constantly micromanaging instead of delegating

When someone is in over their head, they often feel the need to control every little thing.

Micromanagement is their way of staying afloat, but it ends up drowning the team in unnecessary details.

Avoiding difficult conversations or decisions

If your leader starts avoiding tough decisions or conversations, it’s a sign they’re not confident in their ability to handle the responsibility.

This can lead to unresolved issues that pile up like dirty laundry.

High team turnover or disengagement

If talented people start leaving or checking out, it might be because the leadership isn’t cutting it.

Team members want guidance and support, not a leader who’s struggling to keep things together.

Struggling with time management or prioritization

When someone’s in over their head, they can’t keep up with the workload, and everything becomes a last-minute scramble.

They’ll be overwhelmed by the little stuff while missing the bigger picture.

Avoidance of strategic thinking or long-term planning

If a promoted employee sticks only to the day-to-day tasks and avoids thinking about the future, it’s a sign they’re not prepared for the strategic demands of their role.

Resistance to feedback or professional development

When someone’s in over their head, they may resist feedback because they’re already overwhelmed.

Instead of looking for ways to grow, they stick with what they know, often leading to stagnation.

How to Avoid the Peter Principle: Strategies That Work

Instead of letting the Peter Principle derail careers and performance, let’s talk about how organizations can step in and fix it before things go south.

Here’s how to keep your team members from hitting their “level of incompetence”:

1. Redefine success beyond promotions

Not every career path needs to be about climbing the ladder.

Some of the best employees are the ones who crush it in their roles but aren’t interested in managing a team.

Reward that! The goal doesn’t always have to be “get promoted or bust.”

Actionable tip

Create dual career tracks—one for individual contributors (ICs) and one for managers.

Make sure both tracks have equal prestige, pay, and opportunities for growth.

It’s like offering both the chance to be Batman and Robin, without forcing anyone into the cape.

2. Use competency-based promotion criteria

Before promoting someone, make sure they actually have the skills for the next level—not just because they’ve been great at their current role.

You wouldn’t put someone on a snowboard without teaching them first, right?

Tools to use:

Competency frameworks (helps define what’s needed at each level)
360-degree reviews (ask everyone’s opinion)
Behavioral interviews (let’s dive deeper into how they think, not just what they’ve done)
Assessment centers or simulations (because who doesn’t love a good mock trial?)

3. Offer leadership training before promotion

Don’t wait until someone’s already promoted to realize they need more training.

Give them the leadership tools they need upfront.

It’s like training for the role, not just assuming they’ll “figure it out” once they’re in the hot seat.

What to include in training:

Emotional intelligence (aka how to not snap under pressure)
Conflict resolution (because disagreements happen, even in the best groups)
Delegation and feedback (so they’re not micromanaging like a parent at a sleepover)
Project and people management (basically, how to juggle while on a unicycle)

4. Test in small doses: Use “trial roles”

Before promoting someone full-time, give them a chance to try out the managerial duties.

A “trial run” can help you see if they really enjoy and excel at leadership—without the risk of throwing them into the deep end.

Examples of trial roles:

Lead a short-term project (like a mini pilot episode for their managerial career)
Mentor a junior colleague (it’s like being the Yoda to a young Jedi)
Run a team meeting (testing out those “boss vibes” in real time)

5. Foster a culture of honest feedback

People should feel comfortable turning down promotions if they don’t feel ready or don’t want them.

Creating a safe space for this kind of honesty is key to making sure promotions are actually a good fit.

Encourage conversations like:

“What do you really want in your career? Like, dream job material.”
“Do you prefer working with people or solving problems on your own?”
“Where do you want to grow—not just go? You don’t have to follow the ‘standard’ career path.”

The Peter Principle in the Age of Remote Work

With hybrid and remote work taking over the office landscape, the Peter Principle is getting a 2023 upgrade.

Leading remotely requires a whole new set of skills—digital communication, juggling time zones, and tracking outcomes instead of just punching in and out.

So, when newly promoted managers try to replicate their old in-office habits in the virtual world?

That’s when things go off the rails.

You know the drill: there’s miscommunication, people aren’t aligned, and suddenly it’s all about the micromanaging. Sound familiar?

The Fix: It’s simple—invest in specific training for remote leadership. You can’t just recycle in-office management tips and expect them to work. Remote leadership is its own beast.

Case Study: How Google Combats the Peter Principle

Google isn’t just about search algorithms and quirky office perks—it’s also about making sure managers are actually good at managing.

Through Project Oxygen, they found something pretty eye-opening: being a tech wizard doesn’t automatically make you a great manager.

Who knew, right?

Instead, Google discovered that people skills—coaching, communication, and career development—are what really make someone thrive as a leader.

So, what did they do? They flipped the script.

Here’s how Google tackles the Peter Principle head-on:

Delays promotions into management until a person proves they’ve got the soft skills to lead (no, not everyone’s cut out for The Office boss role).
Extensive training and coaching for new managers, because being promoted shouldn’t mean figuring it out on the fly.
IC (Individual Contributor) career paths for those who want to keep climbing without getting into management, with fancy titles like “Distinguished Engineer” that make everyone feel like a superhero.

Conclusion: Rethink Promotions to Unlock True Potential

The Peter Principle is that annoying truth every company needs to hear: promote someone just because they’re good at their current job, and you risk setting them up to fail.

But here’s the good news—by rethinking how you promote, you can avoid that trap.

Don’t just reward people for what they’ve already done; focus on preparing them for what’s next.

Create systems that recognize different skills—because not every rockstar needs to be a manager to keep shining.

And when you make promotions about growth, you’ll end up with a team that’s not just surviving, but thriving.

Think of it as leveling up—without the awkward boss fights.