In the simplest terms, the Peter Principle is a management theory which suggests that organisations risk filling management roles with people who are incompetent if they promote those who are performing well at their current role, rather than those who have proven abilities at the intended role.
The theory is that individuals in a hierarchy who do a good job are promoted to the next level. If they are competent, they are promoted again to the next higher level. If they are not competent, they are not promoted and they remain at that level. Thus, people stop getting promotions and remain one level above the last level at which they were competent. Therefore, individuals are promoted to a position of incompetence.
I can already hear the Moyes Brigade disregarding this piece, saying “This is football, your business and management theories have no place here.” Fair enough, this is football, but if you’ll allow me to explain, you will see that my “theory” makes perfect sense. I will, however, do you one favour… I will not apply my management theory to Manchester United, but to a fictional company. Whether or not there are similarities is for you to decide.
Before I get started, let me clarify one thing. The “Moyes Brigade” which I speak of are those fans that are still saying, “Moyes isn’t the problem”, “It’s the players”, “Give him time”, “Fergie said we must stand by him”, “It’s not Moyes, it’s the Glazers”, “Scotland should be independent”, “Global warming is to blame”, “You younger generation know nothing”, etc.
The story concerns a man named Will. Will is the Managing Director of a midsize company, and has been for the past 10 years or so. He hasn’t done badly in that time. Will kept the company very stable, but there has been little growth to speak of. They had a few minor successes, and they had a few big deals which they came close to, but they never really worked out.
Will has a special affiliation with the CEO of a huge multinational firm, Uncle Chapman, as he calls him. Uncle Chapman is very fond of Will and his “hard working” nature. Under Uncle Chapman, this huge multinational firm has enjoyed enormous success and has become one of the most recognisable brands in the world.
Then one day Uncle Chapman announces that he will be stepping down as CEO, but not to worry, he has handpicked his successor, Will. At his going away party, Uncle Chapman thanks everybody for their support over the years and tells them they are in good hands, and to stand by their new CEO, Will.
Will takes over as CEO, and after a few months, the doubts that existed at the start of his reign have not been dispelled, in fact, they have increased. Will brought a few of his Executives with him, and got rid of the ones that worked under Uncle Chapman. The company doesn’t seem to have any sort of direction or plan under Will, and their performance levels decrease dramatically. Some of the Senior Managers have already started jumping ship. The share price has dropped dramatically. The workers don’t seem to want to work for Will, and he can’t seem to motivate them either.
Now the question is, what do the Board do about this? Do they “stand by their new CEO”, despite him being unable to lay down any sort of clear path, define a direction or even a plan? Or do they admit that he might not be the man to take the company forward and get in a new CEO, after going through the necessary due diligence (something which was lacking in the appointment of Will). Should they get somebody who has a record of leading large multinational firms, somebody who is able to lay out a clear plan of how to get the organisation back on track and keep it there? Or should they stick with Will, a man who was able to take a midsize company and … keep it stable. Personally, I don’t think that keeping a midsize company stable qualifies you for the job as a CEO of a large multinational corporation.
So back to the Peter Principle: In the story above, is it safe to say that Will (a.k.a David Moyes) was promoted to a position of incompetence? Is Will the right man to lead the company forward? Should more thought have gone into who the new CEO should be after Uncle Chapman steps down? In my opinion: yes, no, yes.
Written by James Brown of When the Seagulls Follow the Trawler. Follow him on Twitter @JWBoriginal