The Peter Principle states that “in a hierarchy every employee tends to rise to his level of incompetence.” Laurence J. Peter made it up in his book The Peter Principle in 1968.
If a person is good at his job, he will be promoted. Eventually, he will reach a position where he is no longer competent to do the job.
I have seen this happen in design studios where a good graphic designer becomes a crap manager when promoted. Not quite the fault of the person involved – the two positions are markedly different and require different mindsets and skills.
What this does highlight is the need for management to be aware of and provide appropriate training when promoting people to positions that require fundamentally different skills. Just because an employee is good at doing the work does not make them good at managing people doing the work. In the case of this particular graphic designer, she ended up pissing off the entire team because she could not stop being a designer.
Similarly, a good executive does not automatically make a good board member. In his book The Fish Rots from the Head, author Bob Garratt points out this very fact – that failure of most boards to perform their function (as the visionaries/strategists for the business) adequately is due to the trend of promoting executives (who are focused on operational issues; ie the doing) to a thinking and strategic position without any training or assistance with the needed mind-shift.
Promotion is not the only way to reward good employees. There needs to be more thought on how a business can provide an employee with stimulating growth; starting with a wider, and tailored definition of “growth”.