Why Skilled Employees Struggle as Managers

Managers play a crucial role in shaping an employee’s experience. For example, research shows that nearly 70% of the variability in employee engagement can be predicted by their managers’ behavior, decisions, and personality traits. In other words, whether people are happy, energized, or miserable at work depends mostly on their boss—and whether or not they’re an incompetent manager.

Unfortunately, the impact of managers on employees often skews more detrimental than empowering. Many employees quit their boss, not their job. Indeed, a recent Gallup study of over 7,000 adults found that 50% of employees quit to escape an incompetent manager.

Naturally, the reasons why some managers are so incompetent have captivated researchers and practitioners, including us. Theories abound regarding the paradoxical fact that inept individuals somehow manage to advance their careers, climb the organizational ladder, and “fail upwards,” to everybody else’s peril.

Some incompetent managers get ahead due to their overconfidence or narcissistic traits, as discussed in Why Do So Many Incompetent Men Become Leaders? Likewise, some individuals can get ahead through their powerful connections, political skills, or purely by some luck theory can’t explain.

Unsurprisingly, this is even more common in political elections, where voters are not always skilled enough to evaluate candidates’ potential (or unwilling to scrutinize them properly) than in corporations.

Even more intriguing is that it’s not uncommon for individuals who perform well in their jobs as individual contributors to fail to perform as expected when given managerial or leadership responsibilities, much like great individual athletes can disappoint after retiring and transitioning to team coaches or managers.

This phenomenon is well explained in The Peter Principle, by Laurence J. Peter and Raymond Hull in 1969. The core premise of the principle is simple: “In an organizational hierarchy, every employee tends to rise to his level of incompetence.” That is, people get promoted until they are no longer worthy of promotion, which means that their actual potential is where they end up minus one level, or the role before their stagnation.

The Peter Principle

The Peter Principle is an old concept, but it still explains some of the biggest problems in organizations: The presence of incompetent managers who frustrate their subordinates and the leaks and silos in talent development.

You may not have heard about the term, but you’ll likely agree with the concept once we explain it. You may have suffered the impact of the actual effect if you have worked or are working for someone who ended up as your boss without having the leadership or management skills to manage people, including you.

According to the original example from the authors’ book, in a pill-rolling factory, a high-performing factory worker, once promoted to their first managerial role, would stay there until the end of their career because they did not have the people skills to manage effectively. Remember, these workers were promoted based on how fast they produced roll products but didn’t know how to manage other workers.

Yale Professor Kelly Shue and her colleagues’ recent field study provides the first large-scale evidence for the Peter Principle, more than 50 years after the concept was introduced. This paper analyzed promotion practices in 153 different sales organizations over six years, covering nearly 40,000 workers considered for promotion to managerial positions. Their findings are fascinating and worth detailing.

First, they found that companies still prioritize employees’ prior performance (individual sales performance in this case) over their managerial potential in their promotion decisions. It seems little has changed since the 1960s when many factories promoted workers into managerial roles based on manufacturing efficiency rather than managerial potential.

Second, they discovered that new managers’ pre-promotion sales performance was negatively related to their effectiveness as managers, such as in team management and creating collaborative commissions. High-performing sales workers often turn out to be less effective or incompetent managers.

In their seminal book, Peter and Hull developed the principle as a satirical critique of the inefficiencies often found in management practices and relied heavily on hypothetical cases. However, emerging evidence supports the principle’s core assertion by showing that promotions focusing on past performance can lead to employees reaching their level of incompetence. As Kelly Shue’s research shows, this practice can be costly for organizations and individuals by promoting managers with inadequate skills or stripping promotion chances from those with excellent managerial skills who fall a bit behind in a cutthroat sales competition.

Read the full article: Why competent workers become incompetent managers