I’m Mary Walden with economist MW welcoming you to the economic perspective. Today’s program looks at the Peter Principle in real life. Mike, the Peter Principle was a theory of management developed fifty years ago. It says that individuals who are the best at their job – say as a salesperson – are often promoted to managerial positions, at which they promptly fail. Is there evidence the Peter Principle actually exists, and if so, why do businesses keep using it.
- In essence, Peter Principle says if you’re good at one job, you won’t necessarily be good a another
- So, you may be a good salesperson, but that doesn’t mean you’re be a good manager of sales people
- Still, a new study shows businesses still promote based on the ideas skills are transferable, and a large percentage still find they’ve made a mistake
- Why do business keep doing it – because it sometimes works
- But also, they use as an incentive – for example, to motivate sales people – if do really well – will be promoted to manager with higher pay