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Create Business Leverage Using the Peter Principle

Most businesses put themselves at a competitive disadvantage by promoting people to their level of incompetence or at the very least past their level of optimal or maximum competence. This is called the Peter Principle and states that employees tend to be given increasing responsibility and authority until they cannot continue to work competently. It was formulated by Laurence J. Peter and Raymond Hull in their 1969 book, “The Peter Principle” and here’s how it happens….someone is great at their job and so they are promoted to a higher position e.g. supervisor or manager because they know how to do all the tasks in an area better than anyone else. However, their ability to manage projects, resources and people versus tasks has not been adequately assessed and so although they were incredible doing the tasks, they are now a disaster at managing. Or someone is a great manager so they are promoted to an executive position where leadership and strategic thinking are the most important factors and so where they were excellent (and happy) managing people and resources, their discernment and ability to contribute at a senior management level is limited not to mention, they and others are not so happy about it. So an obvious point of leverage to improve a business’s competence and competitive advantage, not to mention employee morale and satisfaction, is to promote someone only after he or she shows the skills and work habits needed to succeed at the next higher job.

Written By Rob Pilz © Copyright December 6, 2013 Revelation Business Solutions Ltd.

About Rob Pilz

A senior executive, including former CFO, of public and private companies, I have more than 20 years experience building, optimizing and financing businesses ranging from Fortune 500‘s to Delloite’s Technology Fast 50TM. With a talent for bringing out the best in leaders and an expertise in creating leverage, my current passion is building a network of highly conscious leaders generating a virtuous cycle of positive change and wealth. I am constantly looking for ways to improve the odds of business success and have developed a process combining mind, heart and gut to make better faster decisions that I call Zero Point Decision MakingTM. I welcome your questions or comments to my email address at or phone 646-480-0507.

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