The Peter Principle: Why Competence is Punished

There is a tragedy that plays out in almost every high-growth company.

You have a Star Engineer. He/she writes clean code, mentors juniors, knows the system inside out. He/she is the most valuable Individual Contributor (IC) you have. So, to reward him/her, you do the "logical" thing: You promote to Engineering Manager.

Six months later, the new Engineer Manager is miserable and spends all day in Zoom meetings. The team is unhappy because their manager is distant and irritable. And—worst of all—you have lost your best coder. You have successfully turned a Great Engineer into a Terrible Manager.

This is not bad luck. This is a sociological law known as The Peter Principle. It states that in any hierarchy, people do not rise to the level of their success; they rise to the level of their failure.

1. The Giant: Laurence J. Peter

In 1969, Laurence J. Peter, a Canadian educator, published a satire that turned out to be scientifically accurate. His observation was simple but devastating:

"In a hierarchy, every employee tends to rise to his level of incompetence."

Here is the logic:

1. If you are good at your job, you get promoted.
2. If you are good at the new job, you get promoted again.
3. This cycle continues until you land in a job you are bad at.
4. Once you are bad at the job, you stop getting promoted.
5. Result: You stay in that role forever.

The "Chief Wise Officer" Realization: If you look around a large organization, many senior executives are not there because they are good at their current job. They are there because they were good at their previous job. They have reached their "Final Placement"—the level of their incompetence.

2. The Engineer-to-Manager Fallacy

The Peter Principle hits the technology sector harder than any other industry. Why? Because the skillset required to Write Code is diametrically opposed to the skillset required to Manage People.

• Engineering (The Maker Schedule): Requires deep focus, solitude, logical precision, and control over the environment. Success is deterministic (Code runs or it doesn't).
• Management (The Manager Schedule): Requires constant context switching, empathy, emotional intelligence, and letting go of control. Success is ambiguous (People are messy).

When you promote a Star Engineer to Manager, you are not giving them a "step up." You are giving them a Career Change. You are asking a concert pianist to stop playing the piano and start conducting the orchestra. They are related fields, but completely different skills.

If you don't train them for this new career, they will fail. And because they are high achievers, they will try to "work harder" by micromanaging the code (the thing they know), which destroys the team's autonomy.

3. The Solution: The Dual-Track Career Ladder

How do we break the Peter Principle? We must stop treating "Management" as the only path to "Status."

In traditional companies, the only way to get a raise or a fancy title is to manage people. This forces great engineers to become reluctant managers just to pay their mortgage.

The Antidote: You must build two equivalent ladders:

1. The Management Track: Manager -> Director -> VP -> CTO.
2. The Individual Contributor (IC) Track: Senior -> Staff -> Principal -> Distinguished Fellow.

A Principal Engineer should have the same salary, same equity, and same "clout" as a Director. This allows your Star Engineer to keep rising without entering the incompetence zone. She can become a "Wizard" rather than a "Boss."

4. The Artifact: The Promotion Risk Matrix

Before you promote anyone, you must audit why you are promoting them. Are you promoting them because they are ready for the new role? Or are you promoting them as a reward for the old role?

Use this matrix to assess the risk of a "Peter Principle Event."

🛠️ Tool: The Promotion Risk Matrix

Proposed Move: From [Role A] to [Role B]

Scoring:

• If the candidate shows mostly Dangerous Signals, do NOT promote them to Management. Give them a raise, give them a bigger title (Senior/Staff), but keep them as an IC.
• Promoting a "Lone Wolf" to "Pack Leader" is a death sentence for the pack.

Summary

Competence is context-dependent. Just because someone is a genius in the IDE does not mean they will be a genius in the boardroom.

As a leader, your job is not just to fill boxes on an org chart. Your job is to protect your people from their own ambition. Don't let your best people rise to their level of incompetence. Let them rise to the level of their Mastery.

If you protect the "Makers" from the "Managers," you will build a company that is not just big, but actually competent.

Further Reading

• "The Peter Principle" by Laurence J. Peter. (The original satire/science).
• "The Manager's Path" by Camille Fournier. (The bible for tech career ladders).
• "High Output Management" by Andy Grove. (How to actually measure management value).