A Class with Drucker - Headway | Work on yourself

PEOPLE HAVE NO LIMITS, EVEN AFTER FAILURE ■ 161
was the right man for the job, and he made the appointment <strong>with</strong>out
stopping to think twice. However, for the first time in his career, Novak
failed miserably.
McQuinn felt that Novak had no excuse. He decided that the appropriate
solution was to fire Novak for his demonstrated incompetence at this
higher level of management. However, the chairman had a policy that all
senior firings had to be discussed first <strong>with</strong> him. So, McQuinn met <strong>with</strong>
the chairman.
The chairman asked McQuinn for his analysis of Novak’s failure.
McQuinn told him that Novak made serious errors in judgment which had
cost the company a great deal of money. When pressed further, McQuinn
could not offer much, other than that clearly the job was too much for
Novak to handle and that he had gone about as far up the corporate ladder
as he could.
Much to McQuinn’s surprise, the chairman blamed him for Novak’s
failure. He told McQuinn that, “The one thing we know for certain is that
you made a mistake, since Novak was your appointment.” Moreover, the
chairman told him that to fire Novak was not only unfair, it was stupid.
“Why should we lose a proven manager as valuable as Novak, just because
you made a mistake?”
<strong>Drucker</strong> asked us what we thought of the chairman’s argument. Almost
immediately someone brought up the Peter Principle.
The Peter Principle
Dr. Laurence J. Peter was at the time an Associate Professor of Education
at the University of Southern California. His well-known book based on
what he called the “Peter Principle” was published in 1968. It was followed
by several other books by him on the same general topic. His central
concept was: “In a hierarchy every employee tends to rise to his level
of incompetence.” Being incompetent, they would be promoted no further,
yet must be removed from his responsible position. If not, the organization
could collapse when the number of incompetents among its ranks
reached a critical number, resulting in the inability of the organization to
perform its functions efficiently, effectively, or competitively.
The Peter Principle is based on the observation that organizations
have hierarchies. New employees typically start in the lower ranks. As
they do well and prove to be competent in their duties, they get promoted