The Peter Principle

The common understanding of the Peter Principle is that people rise to the level of their incompetence.  And while incompetence has a negative ring to it, there is hope for people suffering from the Peter Principle.  Unfortunately, the key to getting past where you are is the awareness that you are incompetent…which, again, with that negative connotation, most people do not readily admit.  Yet when it comes to organizational hierarchy the importance of realizing your…ahem, let’s call them ‘developmental opportunities’, might have larger impacts than you realize – particularly when it comes to employee engagement.

BlessingWhite released their 2011 Global Engagement report earlier this year.  And while the data is not necessarily new, some of the patterns emerging are starting to give validity to what Lominger’s FYI (For Your Improvement) identified as a “career staller.” Notably, interpersonal relationships.  BlessingWhite identified key areas of concentration for individual contributors, managers, and directors and above when it comes to affecting engagement.  For individual contributors it is ‘owning their own Engagement’.  In other words – Employee, if you want to improve your own engagement…stop waiting for someone else to magically do it for you. Figure out what engages you and ask for it or decide to work towards it. For Directors and above it was ‘clarify and direct’ – be clear about what you are asking and set a direction for people to work towards.  For managers, it was “relationships”.  No, not technical ability.

It has been long held that a person’s direct manager has a huge impact on employee engagement so this is nothing new.  What is startling, however, is that technical managers with no people or relationship building skills continue to get promoted.  Even more troubling is the lack of support and development most managers receive to support them in their new relationships-based role.  So they micromanage, treat employees like adolescents, and fail to delegate or develop staff. And yet, because of their technical competencies, they remain…as the employees beneath them underperform, encounter morale issues, and perhaps even become a revolving door.  Mostly because many performance management systems place a higher degree of importance on technical skills than on relationship skills, making it harder to justify removing technically competent people because they “do not play well with others.”

This is where it goes back to costing more than simply someone not doing their job as a manager well.  The dollars behind employee engagement are big, as big as any IPO, innovative product launch or collapse of a major competitor.  Research from Hewitt Associates shows a 19% higher than average shareholder return in companies with higher engagement scores, compared to a 44% below average shareholder return for companies with low engagement levels.  Now that might seem as staggering at first glance but lets put that in terms of an actual shareholder.  You have one stock outperforming competitors by nearly 20% – consistently; and you have another stock that is consistently under-performing by 44%. Now pick your investment.

Companies need to do the hard math when it comes to employee development in the “soft” skills.  If you have people who hate the “fuzzy” stuff…then chances are they are not making great managers.  If you could increase your employee development budget by 5% and get a company return of 20%, would you do it?


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