Peter Principle

One of the basic features of bureaucracy is the promotion on the basis of majorly the period
for which the employee is at that position. The position, the designation is supposed to be
occupied with those individual in the organisation, who out of their experience and stay in the
organisation have delivered the results and are very well aware of the environment and
climate of the organisation. The advantage which this nature of promotion holds over other
form of organisation is that, in this case the employee does not need to acquaint with the
vision and other requirements of the organisation. In this case the individual is already aware
of the said requirements. Another benefit which this form of organisation enjoys over other
form is the ease with which the vision, purpose and the culture & climate can be
communicates to the lower level employees. This works automatically. The individual who is
at the top will create such an environment which is fit to his/her working culture and in turn
which is the requirement of the organisation.
But consider the thinking again. Does the bureaucracy bring the same level of efficiency as
thought in the theoretical terms? The answer may be perhaps “No”. But to some of us the
answer can be “Yes”. The discussion in this regard is beyond the purview of this section. But
a light on this can help in bringing the concept closer to the application in the real world. The
principle has targeted the basic theme of bureaucracy “The timely promotion”. A basic
characteristic of timely promotion is vertical movement of individual in the organisation from
a lower level to the higher one, when that person has fulfilled the requirement of being at that
designation for a certain period.
Peter Principle was introduced by Dr. Laurence J. Peter in his famous book the Peter
Principle. In his work he concentrated his study in the hierarchy inside the organisation for
which he gave the name the study of “Hierarchiology". His work gave a new dimension in
the field of bureaucracy. The bureaucracy was initially thought as the most efficient an
effective form of organisation. This was so because of its basic nature of promoting a person
on the basis of the experience a person has. But this thought in bureaucracy gave a loophole
in the same form of organisation.
According to Peter Principle “in a hierarchically structured administration, people tend to be
promoted up to their "level of incompetence””.
Peter Principle has its application in the long run. To understand this principle the long term
perspective has to be considered. Whatever effect is to be shown in a bureaucratic
organisation, according to Peter Principle that is to be shown in the longer duration. The short
term perspective is not going to work in case of Peter Principle.
According to Peter Principle, in long term every organisation will be occupied by the person
who is incompetent to perform the task. According to the theory of bureaucracy, once an
individual has passed the considerable time in the organisation, he/she has developed the
requisite skills to perform the task; then that person is to be promoted to the next higher level.
Here lies the contradiction, as the individual who has developed the competencies in a
particular level will be promoted to the higher level, then what about the competencies that
person has developed in the job which he/she is performing. Actually Peter Principle is the
concern for the organisation. The individual who has worked for the considerable number of
period in the organisation and precisely in the job, then the mastery over the job is bound to
come. The mastery which that employee has gained will not be utilized for the growth of the
organisation. This is so because that individual will be promoted to the next higher level
where that person will not be utilizing the skills and techniques which it has developed in the
organisation while being with the job. In fact the other way round is going to happen. The
individual will be required to develop a new set of skills for the new designation. When that
individual will be ready for that position with all learned skills and technique for the
promoted post and designation, the basic nature of bureaucracy will show its function again.
That individual will get the promotion again to the next higher level of hierarchy. Thus in the
long term is the system is to be visualized then we can find that, organisation is filled with the
incompetent managers at the higher level.
There is also the another dimension for Peter Principle that, if the higher level of the
organisation is to be get filled with the incompetent managers then how the growth and
profitability of the same can be made sure? Or in this scenario who compliments the growth
and profitability of the organisation? The answer is also the solution to the problem pointed
out by Dr. Laurence J. Peter. It is the lower and the middle level employees who confirm the
growth of the organisation. Infact there are certain category of individual in the organisation
who does not accept the promotion, and here is the solution, these individual contribute to the
growth of the organisation.
This situation can be considered as the solution. Infact now a day’s many organisations have
started considering the growth of the individual by keeping that individual in the same level.
The organisation like Birla Sun life Insurance and Indian Railway, first ask the individual
before giving the promotion to the said one. If the individual is not ready for the same they
give the increment in the same term as it would have been if accepted the promotion. There
are many advantages to this effect. First of them is the surety in the productivity an
organisation can have while having a individual who has developed a competencies in the
same level. Secondly an organisation can expect a highly motivated and charged employee
who is working according to the interest and skills possessed by the person. Third and the
most important of them is the wrong decision making if the same individual has been
promoted to the level for which required skill and the dexterity is missing.
Infact this needs to work out at every level in the organisation. Every level in the organisation
consists of the individual who wishes to get promoted and the individual who do not want
any promotion. This needs to be segregated. This is important because, if given to the wrong
individual the process can take a very disastrous step. Consider a situation where an
employee was given promotion because of his performance in the present job and level. If the
individual doesn’t have any thing which can denote him a manager then the individual will be
taking such a step which will ruin the organisation and thus the life of the organisation will
reach to its end.
Thus in this way the Peter Principle provides the useful information and alarm to the
organisation in order to make sure the growth of the organisation.

References:
• http://en.wikipedia.org/wiki/Peter_principle

• Peter, Dr. Laurence J. and Hull, Raymond: The Peter Principle: why things always go wrong, William Morrow &
Company Inc. New York, 1969, 179 pages.

• Edward P. Lazear, The Peter Principle: A Theory of Decline, A Special Issue of the Journal of Political Economy,
2001