According to Wikipedia, the Peter Principle states that "in a hierarchy every employee tends to rise to his level of incompetence". Aside from anecdotal evidence, has this ever been proven or disproven by science?

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    I wonder how this could be researched. How do you measure incompetence of "every employee in a hierarchy"? You can take some success and failure rates of people, but testing this in general isn't easy. – Martin Scharrer Apr 8 '11 at 8:06
  • Corollary? A company that never promotes anyone outperforms a company that offers promotions. – Paul Apr 8 '11 at 9:06
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    It is self evidently true of meritocracies, don't you think? – Sklivvz Apr 8 '11 at 10:13
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    I'm thinking the same as Martin...How do you quantify? Everyone that's ever worked in nearly any environment has seen this... The notion that just because you were a dynamite salesman would make you a competent manager does not often hold water. – M. Werner Apr 8 '11 at 13:57
  • I know of some companies that have policies designed to limit the damage done by the Peter Principle, and have some anecdotes of people who benefited from the policies; either getting put back to the job they excelled at without loss of benefits or being allowed some time to adapt and learn until they were ready for their new position. But I agree with the other commentators, this would be hard to measure. – dmckee --- ex-moderator kitten Apr 8 '11 at 16:23

In this discussion paper,

  • Lazear, Edward P., [The Peter Principle: A Theory of Decline (April 2003)]. IZA Discussion Paper No. 759. Available at SSRN

the author argues that the effects of the Peter Principle can be explained by a regression-to-the-mean rather than poor promotion practices.

More importantly, for this question, he summarises some of the evidence (with references):

There is substantial evidence of the Peter Principle. In addition to papers from the marketing and organizational behavior literature, there are a number of findings in empirical labor economics that support the claim. In an early paper that used subjective performance evaluation, Abraham and Medoff (1980) reported that workers’ subjective evaluation scores fell, the longer they were on the job. In Lazear (1992), it was found that the coefficient of job tenure in a wage regression was actually negative. The longer a worker was in a particular job, given his tenure in the firm, the lower his wage. The reason presumably is that the better workers are promoted out of the job so those with a given number of years of firm experience who have fewer years in a job are less likely to have gotten stuck in that job. Baker, Gibbs and Holmstrom (1994) replicate this finding in their data and Gibbs and Hendricks (2001) find that raises and bonuses fall with tenure.

So, yes, there is empirical evidence that the Peter Principle holds, even if there is controversy about why it holds.

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