A Class with Drucker - Headway | Work on yourself

PEOPLE HAVE NO LIMITS, EVEN AFTER FAILURE ■ 163
person for the right job was the manager’s responsibility. But even more
importantly, the notion that people rise to their levels of incompetence was
dangerous to the organization.
The Dangers of the Peter Principle
According to the Peter Principle, if an individual has arrived at his or her
level of incompetence, logically the organization has little choice but to get
rid of the incompetent employee before the entire organization becomes
overloaded <strong>with</strong> incompetent managers who make more and more bad
decisions. Yet, the concept and the recommended action has many downsides.
The only antidote to “incompetence” under the Peter Principle is
dismissal. However, before one should even consider dismissal, the basic
question concerns the assumption that failure is due to incompetence.
There is a story that Thomas Watson, founder of IBM, once asked to
see a newly promoted vice president who failed on his first assignment and
cost the company a million dollars. The young man reported to the IBM
chief ready for the worst. “I guess you called me in to fire me,” he said on
entering Watson’s office.
“Fire you!” exclaimed Watson, “We just spent one million dollars as
part of your education.”
A company that believes and applies the Peter Principle puts significant
additional pressure on its managers not to make a mistake, even though
mistakes are an inevitable part of taking action and a reasonable balance of
risk taking. This additional pressure is hardly conducive to the manager’s
willingness to take risks or even assume full responsibility, both of which
are essential. Such a “zero failure” climate will inevitably create problems.
An organization which buys into and practices this solution to the
assumed reality of the Peter Principle is hardly encouraging or a morale
booster for employees at any level. It says that a long term, hard-working,
talented, and loyal employee must eventually and inevitably meet his fate.
He will be plummeted headlong out of the corporation, or, at best, be
“kicked upstairs” or put out to pasture in a nonentity job. Accordingly,
every manager at every level had better take actions to ensure no mistakes,
no failures.
This particular problem recalls the 1970’s movie Logan’s Run. The movie
involved a society which required that its members be killed upon reaching
the age of thirty, thus maintaining a societal membership that was forever