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The Peter Principle and the New Trend of No Performance Reviews

The Peter Principle and the new trends in performance management have some interesting potential correlations.

The Peter Principle is a management theory formulated by Laurence J. Peter in which the selection of a candidate for a position is based on the candidate's performance in their current role, rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and "managers rise to the level of their incompetence."

The current trend is not to do annual performance reviews.  Many larger organisations are claiming to eliminate the annual performance review (PwC, EY, Accenture and IBM to name a few).  The replacing of the annual performance review with a variety of other processes, more frequent reviews, project and team based reviews.  The overall objective is to give feedback more frequently and at the point in time when it will create the best impact.  In addition, organisations are wanting their people manager to be better coaches and helping to build talent and also manage out those that are not adding value or culturally are in the wrong company.

So what about promotions and the Peter Principle?  If a company does not have a more formal, all-encompassing review process how do you compare between departments, countries and divisions?  If you eliminate scoring (the 1 to 5 rating process) how do you differentiate between things like pay increases and promotions?  And while we would all like our people managers to be created equal regarding coaching and mentoring skills, this is not the case, so how do you normalise the organisation to take into account that some people managers are better than others?

And if you consider the Peter Principle then the people managers today had risen to their current position based on their ability to do the role that they were in BEFORE they got promoted.  Which means some of the managers that we now want to transform into coaches so we can successfully eliminate annual reviews are not going to be strong enough.  They have risen to their personal level of “incompetence” following the Peter Principle.  Maybe organisations need to sort out the people manager role, ensuring the right people are in those roles, who have the right skills, competencies and behaviours to be truly the great coach and mentor that employees need.

So is the trend of no annual performance reviews going to resurrect the Peter Principle?

And a couple of good articles on the potential downsides of eliminating the much dreaded annual performance review.

LA Times

Globe Force

Article by Mary Sue Rogers

Picture Credit - Nevit Dilmen


Posted On : 25-08-16

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