The Peter Principle Explains Our Incompetence [Video]  

by Michelle Smalenberger, CFP® / June 21, 2019

Do you ever look back and think about the things that helped you get to where you are today? As you move up the ladder within your corporation, or you move from one opportunity to another –even between businesses. How does the Peter Principle teach you to never stop learning — regardless of how high a position you get?

What Is The Peter Principle?

If you’ve never heard this, I’m going to describe what it is. I’m going to talk about how this kind of affects and connects to what I was talking about, these different things as we look back across our career.
The Peter Principle observes that people in a hierarchy—so think of a corporation where you have different levels of employees– people in a hierarchy, tend to rise to their own level of incompetence.
Now what this means, is typically we think that “As I move and progress through my career, I’m getting better along the way.”  And we are, and we’re mastering new things.  But when you get promoted, you get promoted because of the things that you used to do.  You did really well, you mastered, you were a great team member, or you were a great communicator.  And so you’ve shown mastery at that current level.  But when you get promoted, you’re now getting promoted to a new level.

When You Get Promoted You Actually Become More Incompetent!

And in this new level, you’re actually incompetent.  Because you now have to learn how to master this new level–this new challenge or new role.  And so that’s what the Peter Principle is saying is that we actually rise or move to our own level of incompetence.

It’s interesting because if we think about this, as we get promoted, our self-esteem rises. We’re a little more confident.  And so we actually think that because we are promoted, maybe that’s why we do a better job.

But actually in that next step, when we’re incompetent at first, that’s actually when we’re getting better.

We’re gaining our self-esteem. We’re getting more confident. Because we’re learning that we can master this new skill, this new role, this new challenge. And so maybe that’s where our confidence is growing. And then when we’re promoted to the next level, now it’s just reassuring us that, “Yes, I did master that challenge.”

So just remember that as you’re promoted, it’s those new experiences, those new challenges, that are going to help you to gain some self-esteem and some confidence.  So never stop learning.  There’s always a new opportunity to master.  And if there isn’t something that you’re trying to master, you should go try and find something.  And maybe it’s not even professionally.  Maybe it’s even just personally.

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Michelle Smalenberger, CFP®

I have a passion for helping others develop a path to financial success! Through different lenses on your financial picture, I want to help create solutions with you that are thoughtful of today and the future. I have seen in my life the power of having a financial plan while making slight changes of direction from time to time. I believe you can experience freedom from anxiety and even excitement when you know your finances are on track.