How To Use H.R. Processes to Avoid the Peter Principle - Bad Promotions

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How to Use H.R. Processes to Avoid the Peter Principle

“In a hierarchy, every
employee rises to his level of
incompetence.”

The key word in the Peter Principle is “hierarchy”.
The Peter Principle suggests that, over time as people continue to be
promoted within an organization with a hierarchical structure, they will
eventually reach a point of incompetence.
Lean companies with fewer layers of management can hide
incompetence easier than bigger companies. They can quickly cross-
train employees in other areas where they may prove to be more
competent.
©2016 Equilibria, Inc. www.eqbsystems.com @EquilibriaInc

There is a tried and tested method for avoiding the costs and
risks associated with making “bad promotions” in your company.
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
We’ve partnered with two HR experts to help explain this method.
Cathy Missildine
Chief Performance Officer
Intellectual Capital Consulting
Deborah A. King
Sr. Organization Effectiveness Consultant
Evolution Management, Inc.

Business Infrastructure = Business Design + Business Processes
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
1. When companies grow fast, so does their need to hire more people. However,
you want to make sure that your business is structured for success.
2. Make sure you define what work needs to be done as well as the skills and
qualifications a person should have in order to do that work.
3. Then, you’ll need to identify and document the processes.

Business Infrastructure = Business Design + Business Processes
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
Example H.R. Processes include:
• Recruiting
• Interviewing
• Onboarding
• Conducting Performance Evaluations
• Termination

Once your processes are in place, you’re ready to identify and assign
Key Performance Indicators (metrics).

What are some key metrics to look at in
measuring performance?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
Measuring employee performance is
often times considered a chore by
managers. The key metrics are very
dependent on what the organization
needs to drive their business
strategy. Once those are identified,
measurement is easy.
You can measure competencies like
customer focus, relationship
building, strategic thinker, and
decision-making. Also it is
important to measure individual
SMART goals that are cascaded form
the organizational strategy. There’s
not a once size fits all answer.

What is the suggested frequency for
reporting these metrics?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
A firm that utilizes an effective performance management
system probably formally measures performance once per
year, but FEEDBACK is critical for employees on an ongoing
basis. It’s hard to course correct if you want until the
end of the year to make adjustments.
.

How should managers be trained to look for
“diamonds in the rough” vs. incompetence?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
I believe they should be aware of what the needs are the business
are and compare that to the individuals using objective criteria
to do so.
If someone is really trying and has some basis skills along with a can
do attitude then that person may be worth the investment. But on the
flip side, if someone doesn’t possess the basics skills and does not
have a continuous learning approach, then tough decisions need to
be made.

How can managers tell when more
training is needed vs. warning and
eventually firing someone?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
That comes down to …the expectations and goals of the job.
Making sure those goals are measurable. Either people are
meeting those expectations or they are not. The key is to
figure out the root cause of non-performance. By asking
targeted questions, the manager can figure out if it is a
“fixable” training gap or a missing skill or attitude problem.

How can business owners/managers ensure they keep
the “right people in the right seat” as their business
grows (or is restructured) and their needs change?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
I believe the secret to the “right
people in the right seat” starts with
recruiting. Have we been able to
match our job with the person with the
right skills and have we matched the
person with our culture? The same
applies when we promote or
transfer someone.
Signs that you don’t have a good
match include poor performance,
absenteeism, lateness and missed
assignments. The manager needs to
make sure he has feedback sessions
with high potentials to make sure they
are retained.

Now that you are monitoring your metrics, its time to look for data trends to let
you know whether or not someone’s performance is getting low.

Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
Process improvement ensures the right things (metrics) are measured the right way.
1. Track metrics onto a graph.
2. Investigate root causes for downward
trends.
3. Provide feedback.
4. Determine whether or not poor
performance is process-related.
5. Establish a corrective action plan.
6. Track the metrics again.
7. Determine next steps for the employee.

Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
In this example, the solid green
horizontal line represents the
expected performance level of a
particular process.
This employee is performing above
expectations until he is promoted
(see yellow star) to a higher level in
the company.
Over time, this employee’s
competence on the job went from
exceptional to poor.

At this point, you’ve structured your business for success, are continuously
monitoring performance and making process improvements where necessary.
Now let’s explore the best ways to communicate the change that
comes as a result of these efforts.

What are the steps in creating and executing a
communication plan for resolving people and
process-related issues?
Planning for, and successfully implementing organizational change requires a
significant planned engagement with employees and stakeholders to gather their
ideas, suggestions and reactions. This time, which organizations often overlook,
sets the stage for helping employees understand why the change is necessary and
how the changes will impact their position, responsibilities, future career options.
Cont. on next page…
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change

What we know about human behavior is
that unless employees are kept informed,
human nature will be to “interpret” what is
happening – and most likely it will be
interpreted incorrectly, leading to rumors
and even the possibility of good employees
leaving, thinking that they’ve seen the
writing on the wall. A good strategy would
be to create a communications plan that
offers as much information, in a timely
manner, as possible to all employees.
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
Information can be shared through avenues such
as: town hall meetings, talking points to be
covered in staff meetings, access to senior leaders
for questions and clarifications, updates in
newsletters and system voice messages, email
notices of current change activities and progress
reports of what’s changing and the success the
organization is having with the changes.
During times of change – remember to
communicate as frequently as possible through as
many avenues as possible,, since employees may
not be exposed to certain messages. You can’t
communicate too much.

How do you reshuffle/reorganize people in a way
that promotes/ensures future competence?
As organizations are considering change, they should be thinking about the current
level of skill sets and competencies being utilized in the organization, as those that will
be needed to be successful after the change. Depending on the amount of time that is
available, existing employees may be able to receive appropriate training in order to
take their performance to the needed level. If time is not available for training, it will
be important for Human Resource professionals to meet with hiring managers to
assess where the gaps are, and what options might be suitable to address the
immediate needs. Some options might include: outsourcing, using part-time staff
until existing staff can perform at the new level of expectations, transition staff to
other positions and hire new workers. However, no option should be pursued until a
thorough understanding of the needed skill sets is documented.
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change

Can you discuss promotion (upward position)
vs. a raise (same position) in minimizing the
risk of incompetence and sabotage?
From an HR perspective, I don’t think you want to encourage a practice to give
someone a raise while they are in the same position, unless it is warranted by
their performance review. I can’t imagine a situation where you would give them
a raise without restating expectations if the position was changing, so the
“promotion” should be demonstrated by additional responsibilities, and therefore,
additional compensation.
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change

What are your thoughts about “try before you
buy” efforts once people are promoted?
As the organization is planning to transition, it may be an option to “try” an
existing employee in the new role before promoting them. Of course, this option
would require serious consideration of contract rules, if a union is involved. If
there is no union to deal with, the Human Resources Manager, Supervisor and
employee could have a conversation about the organization’s desire to transition
the employees’ role and responsibility.
Cont. on next page…
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change

It should be clear that if the employee is open to “trying” the new role, what the
exact performance expectations are, when and how often his/her performance
would be evaluated, how feedback would be provided, what assistance the
employee thinks he/she would require to be successful and the actions that will
result after the trial period; either promoted into the new role, or transitioned to
another position or out of the firm. The employee should understand there are no
guarantees, and all of the communications should be in writing, signed by both the
supervisor and employee.
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change

What are some best practices for reducing
incompetence?
Structure for
Success
Identify
Metrics
Improve
Process
Manage
Change
During organizational change initiatives it is just as important to communicate
what is not changing, as those things that are changing. So, those positions
that will continue to do the same tasks, processes, etc. should be made aware of
it. They should also know how other positions are changing, and the required
skills they will need, so they can consider the information and build it into their
professional development plans. There should always be an open door to ask
HR for assistance with training plans, and to help identify any internal
mentoring, workshops, courses, etc. they might be able to take advantage of.

Conclusion
With proper planning, you can avoid the Peter Principle
and break the cycle of bad promotions by:
• Structuring your business for success
• Measuring and monitoring performance
• Improving processes when necessary
• Managing your staff through all changes

Image Credits
• Slide 01: AMC Entertainment, LLC
• Slide 02: http://www.heyuguys.com/4-new-images-breaking-bad-season-5/breaking-bad-2/
• Slide 16: http://skillfulmeanstraining.com/what-2-key-personality-traits-help-managers-manage-change/
• Slide 24: Image Credit: http://www.uhdwallpapers.org/2013/10/breaking-bad.html
Click here to get access to the full article
© Copyright 2016. Alicia Butler Pierre for Equilibria, Inc.
Alicia Butler Pierre
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How To Use H.R. Processes to Avoid the Peter Principle - Bad Promotions

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