Leadership, teams & operations · law 091
Peter Principle
By Shivam Bhandari · Reviewed 31 October 2026 · How we write
what it means
In a hierarchy, people tend to be promoted until they reach a role they are not competent at — and stay there.
How Peter Principle works
Promotions usually reward performance in the current role, not ability in the next one. A brilliant salesperson may be a poor sales manager, because the skills are different.
For growing businesses, the lesson is to promote based on the skills the new role needs, and to create career paths that don't force experts into management.
where it comes from
Educator Laurence J. Peter and writer Raymond Hull set it out in their 1969 book The Peter Principle. A 2019 study by Alan Benson, Danielle Li, and Kelly Shue found top salespeople promoted to manager often became worse managers.
Peter Principle examples in business
Sales
The top seller becomes sales head and the team's results fall, while the company loses its best seller.
Technical roles
A great engineer promoted to manager spends days in meetings and is unhappy.
Family businesses
Long-serving staff are promoted to senior roles out of loyalty rather than fit.
How to apply it
- 1Define the skills each senior role actually needs.
- 2Assess candidates on those skills, not past performance alone.
- 3Offer expert career tracks without management.
- 4Train people before promoting them, and allow a way back.
common misreading
It doesn't mean promotions are bad — it means they should be based on fit for the next role.
ask yourself
Did your last promotion reward fit for the new role, or success in the old one?
put it into practice
Frequently asked questions
What is Peter Principle?
In a hierarchy, people tend to be promoted until they reach a role they are not competent at — and stay there. Promotions usually reward performance in the current role, not ability in the next one. A brilliant salesperson may be a poor sales manager, because the skills are different.
Who came up with Peter Principle?
Educator Laurence J. Peter and writer Raymond Hull set it out in their 1969 book The Peter Principle. A 2019 study by Alan Benson, Danielle Li, and Kelly Shue found top salespeople promoted to manager often became worse managers.
How do you apply Peter Principle in business?
1. Define the skills each senior role actually needs. 2. Assess candidates on those skills, not past performance alone. 3. Offer expert career tracks without management. 4. Train people before promoting them, and allow a way back.
What is a common misunderstanding of Peter Principle?
It doesn't mean promotions are bad — it means they should be based on fit for the next role.