If companies claim they care about talent, why do so many still promote people into roles they’re not prepared for?
The recent wave of layoffs has left many wondering what happened. In 2023, layoffs rose 98% from 2022, impacting sectors like tech, retail, and finance.
While there are many factors to consider, the Peter Principle might play a role. It’s both a management theory and the name of a book written by Laurence J. Peter. In his book, he explains that people rise in a hierarchy until they hit a job they’re no longer competent in. That’s because each new role requires different skills than the previous one.
The Peter Principle was published in 1969, but the theory describes something that happens every day.
How Good Employees End Up In The Wrong Roles
If you want an idea of how this plays out, look at what happens to someone like Kelly. She spent eight years as a secretary at a company we will call XYZ123. When an executive secretary position opens up, she gets promoted due to her stellar performance and seniority. However, the new role requires more complex tasks, and Kelly lacks the training to adapt.
Kelly didn’t get the training she needed because she had always been so good at her old job. Her employer assumed she could figure it out.
This is the Peter Principle in action. A top performer becomes a struggling employee because their new role required skills they were never given the chance to develop.
Apply Kelly’s situation across an entire organization and the pattern becomes harder to ignore.
How Poor Promotions Lead To Poor Hiring
The Peter Principle starts with internal promotions, but it creates an external hiring problem too. When someone is placed in a role they’re not prepared for, they’re usually the ones responsible for hiring the next wave of talent.
That affects everything.
They may not understand the skills the job requires. Or they’re not confident in the job itself to evaluate candidates effectively. A shaky promotion can reshape entire teams.
This is how companies end up hiring people who are not qualified, even with the best intentions. All because the people making the decisions were never set up to succeed in the first place.
Why Companies Keep Repeating This Pattern
The Peter Principle reveals an uncomfortable truth about how organizations operate. Companies reward past performance, not future potential. They assume skill is transferable without making sure they’re actually right.
Companies, eager for growth or facing talent wars, might hire aggressively. This is how individuals find themselves in roles that don’t utilize their full potential or provide opportunities for development. The outcome is the same. Mismatched jobs, unprepared managers, and low engagement.
Avoiding the Peter Principle Trap
So, how can companies avoid falling into this trap to keep their workforce effective and adaptable?
Employers need to ask themselves: who is prepared for what this next role demands?
That means assessing skills objectively. Offer training to potential candidates. And more importantly, stop promoting people simply because it’s convenient.
The Peter Principle is about misalignment, not incompetence. People want to do well. Most will rise to the occasion if they have the right training and are given a role that compliments their strengths. Companies cannot keep pretending that a good employee is someone who stuck around long enough to be promoted.
If organizations want to grow without repeating this cycle, they have to change the way they think about who deserves a promotion. A smarter system creates better employees, stronger teams, and fewer failures that end with mass layoffs.
📌 Changelog
- December 4, 2025: Changed the formatting. Also added additional information about how the Peter Principle works.
- February 7, 2024: Date article was originally published.
