High Output Management

by Andrew S. Grove

If we are going to consider promotions, we have to consider the Peter Principle, which says that when someone is good at his job, he is promoted; he keeps getting promoted until he reaches his level of incompetence and then stays there. Like all good caricatures, this one captures at least some of what really happens in a merit-based promotion system. Take a look at the illustration opposite, where we track someone’s promotions. At point A the demands of Job 1 so tax him that he can only perform in an average fashion. In the jargon of performance assessment, he “meets the requirements” of the job. As time passes, he receives more training and becomes more motivated, and improves his performance to an above-average level, or, again in the jargon, to a point where he “exceeds the requirements” of the position. At this time we consider the person promotable, and in fact do promote him to Job 2, where he will at first perform only at a “meets requirements” level. With more experience, he again will “exceed the requirements” of the job. Eventually, he probably gets promoted again and the cycle repeats itself. Thus, an achiever will alternate between the “meets requirements” and the “exceeds requirements” ratings throughout his career, until he eventually settles at a “meets requirements” level, at which time he will no longer be promoted. This, perhaps, is a better description of how the Peter Principle works.