The Peter Principle

According to the Certified Financial Planners Board of Standards, Inc., nearly one-third of lottery winners go bankrupt.  There are undoubtedly a variety of reasons, but I have an idea about the root cause.  That which is earned without effort is often beyond our abilities to handle.

Maybe nearly one-third of lottery winners go bankrupt because they have not developed the financial maturity necessary to cope with so much money.  The internet is full of stories of lottery winners who invested in lousy business ventures, lent money to the wrong people, spent the money faster than it came in and even sold their rights to incremental payments for some up-front cash.

In this case, what is true of the lottery is true of leadership.  Those who receive lightning-fast promotions are typically singed in the process.  They rise within the organization faster than their skills develop.  Before long, they find themselves in a position that they can’t handle, and the results are usually messy.  Demotions, terminations, transfers to dead-end positions or dead-end teams, reduced responsibilities, early retirement…  If for some time no one seems to notice a manager’s incompetence, the manager will often try to cover it up.  The more there is at stake (pay, perks, pride, prestige…) the more desperate the manager often becomes to hide his or her struggles.  This can do no end of damage to an organization and its people.

With tongue in cheek, Laurence Peter defined this process as “The Peter Principle,” which states that “in a hierarchy, every employee tends to rise to his level of incompetence.”  He tells us that the solution is to make sure that the candidate has the skills to do the job in some degree before promoting him or her to do it.  There’s a benefit to promoting people slowly.  While they are in their current job, they should be developing the maturity and the skills they will need at the next level.  They should be making mistakes and learning from them.  (Making mistakes at lower levels of leadership is a lot less costly than making them at the higher levels.)

If you are a leader, a mentor, a coach, a parent….make sure those under your leadership are faithful with small things before you give them larger things.  When they earn it, they will learn it.


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Filed under coaching, delayed gratification, delegation, discipleship, failure, Fathering, growth, Instant Gratification, leadership, learning, management, mentoring, parenting, performance

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