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Coaching and The Peter Principle

Updated: Dec 31, 2020

The Peter Principle logo

The 2018 Harvard Business Review article "Do People Really Get Promoted to Their Level of Incompetence?" was the catalyst for my reflection on how coaching could be used to raise the “level of incompetence” for clients at professional and financial services firms and ultimately prevent the paradox from establishing itself and derailing a career.

Having spent the first half of my career, spanning over twenty years, working at these firms in New York and London I had witnessed many of the problems the principle identifies first hand.

The Principle

The Peter Principle, a management concept first presented in a 1969 book by the same name, describes the following paradox: if organisations promote the best people at their current jobs, then organisations will inevitably promote people until they are no longer good at their jobs. In other words, organisations manage careers so that

“Every employee tends to rise to the level of their incompetence.”

While the book was initially intended to be satire it became a popular management concept as it does make a serious point about the shortcomings of how people are promoted within organisations.

The Peter Principle arises when the skills and behaviours that make professionals successful at one job level don’t lead to continued success when promoted and given more responsibilities. The most common skills gap arises when technical experts are promoted to a managerial or leadership role. The rewarding of success often results in the best salespeople or best consultants or perhaps best lawyers being put in a position where skills such as technical expertise or being the best at selling are not top of the list for success going forward. The principle has been subject to much comment over the years, and more recently it was the subject of a Harvard Business Review article that empirically tested it for the first time. The recent study examined the performance of salespeople and their managers at over 200 firms. The findings show that “…sales performance is highly correlated with promotion to management.” and that

“…sales performance is actually negatively correlated with performance as a sales manager.”

In other words, the firms studied tended to promote top salespeople into management, even though they become the worst managers!

This is particularly relevant for the focus of my coaching, which is professional and financial services firms. It is not uncommon in these service organisations, for the highest producing salespeople or consultants, the best dealmakers, the highest-ranked researchers etc to make rapid advancement, gaining promotion to Managing Director or Partner and ultimately for them to be put in charge of large teams of people and businesses that, in terms of financial resources, could rank among the constituents of the FTSE 250.

Awareness and how we learn

A key element of coaching is awareness, and in particular, raising the client’s awareness through focused listening, a supportive environment and challenging, generative questions. As John Whitmore says in Coaching for Performance “It (awareness) is gathering and clearly perceiving the relevant facts and information, and the ability to determine what is relevant.”. With heightened awareness achieved through coaching, the client is well placed to self-identify the skills they need to develop for continued success at their new level and that the new, required skills often include changes in behaviour and so-called “soft skills” such as impactful communication, building powerful relationships and development of emotional intelligence.

With the heightened awareness of gaps in their skill set, the client has entered the second stage of The Four Stages of Competence:

  • Stage 1: Unconscious Incompetence

  • Stage 2: Conscious Incompetence

  • Stage 3: Conscious Competence

  • Stage 4: Unconscious Competence

Without coaching there is a risk that successful professionals will continue to exclusively focus their time and efforts on what has served them best to this stage of their career, such as closing deals or selling complex products and they fail to realise a different set of skills is what is required to succeed going forward, they are “Unconsciously Incompetent”.

Coaching case study 1

James, a Head of Operations, was firmly in stage 1 of the framework when we first met. The coaching goals identified upfront were to develop James’s leadership skills, including building and developing relationships, executive presence and more impactful communication. James had previously received this feedback but did not understand why it was necessary and felt that it was “management fluff” that took him away from solving the problems he was paid to fix. This is a mistake common to successful professionals during their careers, as they seek to maintain the status quo and remain within their comfort zones of doer/operator mode. Raising of James’s awareness and understanding about why these skills are essential for operating at more senior levels, and critically how to develop his capabilities, was going to be the foundation of our work together.

To help James, move to stage 2 of the framework, we worked to identify the leadership capabilities, that he valued in people holding leadership roles within his organisation as well as the broader business world. James constructed a list of his leadership values and self-assessed himself to identify where he would like to get to within the next twelve months. We worked together to develop action plans to bring about sustainable change in each area with the objective of making him a more capable, confident and resilient leader.

Forming (good) habits

Clients that are conscious of their own incompetence are in a healthy place to identify the skill gaps to remediate and work to develop new capabilities either through self-development, working with a coach or perhaps with the learning and development resources their employer makes available to them. Coaching can help those at stage 2 of the competency framework develop new habits as identified by Timothy Gallwey in The Inner Game of Tennis. In this context the required new habits will be to develop the missing capabilities such as enhanced communication skills, developing and leading people and high-performing teams, building relationships etc. Clients successful at forming new habits will rapidly advance to stage 3 of the competency framework, and although their new skills require constant attention and focus, they are now Consciously Competent. Over time they will have the chance to reach the stage that they don’t even have to think about the skills that they deploy because they have attained Unconscious Competence.

Coaching case study 2

Jenny, a Chief Operating Officer, knew that she needed to be more effective at delegating tasks because she was gathering more responsibilities and high-profile projects and couldn’t continue in the same doer/operating mode that had largely contributed to her success to this point. Jenny was at stage 2 and “Consciously Incompetent” when we first met, she knew what was required, but through our coaching, we identified several limiting assumptions that were holding her back from acting and making changes. Not uncommon for highly successful professionals at this stage in one’s career, Jenny believed she could do the jobs quicker and better herself and that her team were already jam-packed and so she did not want to further add to their workload. Our coaching helped Jenny to identify the new habits she needed to form e.g. new ways of approaching delegation (through regular team meetings to discuss upcoming projects and more open communication with her team members to assess their strengths and capacity for new projects) as well as focusing on the positives of giving her team more work (stretch assignments are a great way for the team members to learn new skills as well as making space in her busy schedule to think, reflect and plan). Through the coaching, Jenny successfully transitioned to being “Consciously Competent” and on the path to the new leadership skills becoming more natural and something that she does unconsciously.

Coaching partnership

The partnership formed between coach and client is the ideal place for this learning and development process to take place. The foundation of a good coaching relationship is one of openness, honesty and trust and I hypothesise that a high proportion of clients from professional and financial services firms are more likely to be open about their skills gaps and potential inadequacies with an independent coach than with their line management. The excellent Radio 4 program on "Insecure Overachievers" found that employees at elite professional services firms were “…driven by a sense of my own inadequacy…” and “…the higher I climbed the more frightened I became of falling…” which on the face of it appear to support my hypothesis.

I firmly believe that the position of being a strategic partner outside the client’s line management means that coaching has the unique opportunity to help already highly successful professionals develop the skills, capabilities and behaviours that they need to continue to succeed and rise to the next level and the next after that. As Marshall Goldsmith says

“What Got You Here Won’t Get You There”

which, for me, hits the nail on the head when it comes to tackling The Peter Principle.

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