“Many employees in modern companies are renamed with impressive names such as directors or vice presidents, where they continue doing the same thing and the only thing that was achieved was to raise costs and salaries”
"Having hard skills allows us to show our knowledge learned during activities prior to the new work activity that we are going to develop, but they do not guarantee a level of competence for personnel management, since this requires soft skills, which allow us demonstrate that we are prepared for work beyond our academic or technical skills"
THE PETER PRINCIPLE AND LABOR INCOMPETENCE
Vancouver native and 1958 graduate of Western Washington State College, Laurence J. Peter quickly became a teacher while continuing to study psychology and educational sciences. He earned his doctorate in the latter discipline during 1963. He then directed the Evelyn Frieden Center, becoming a consultant in programs for children with adjustment problems for the University of Southern California in 1966. Although his first book, Prescriptive Teaching, was published in 1965, he did not become famous until the publication of The Peter Principle (1969), written in collaboration with Raymond Hull (Canadian screenwriter, 1919-1985).
The hierarchical structure of a company is naturally pyramidal. This simplified view reflects strictly defined hierarchical levels: a base of workers managed by a smaller number of managers, managed by an even smaller number of senior managers, and so on.
According to Jean-Paul Delahaye (French computer scientist and mathematician, born in 1952), if we accept these simplifying hypotheses, we will logically assume that any promotion tends to reduce
the employee's performance, according to two effects:
• The ratchet effect: This is when reversion is not possible because a promoted employee cannot be demoted. If he is competitive, he will continue to move up and will not stay in the position in which he is competent. This movement necessarily continues until it reaches the too high level, where it is no longer efficient or competitive.
• The statistical effect of regression (or principle of statistical distribution): when a random event called "normal" occurs, there is a greater chance of obtaining a result close to the middle than of obtaining a very high or very low result. Thus, the company, which is lucky enough to have an employee much more competent than average and which decides to change his position, again randomly determines the latter's competence with a high probability of obtaining an average result.
So, hidden beneath the assumptions of the Peter Principle is an uncomfortable truth:
♾️ Probably, over time, the incompetent would end up occupying all the positions.
♾️ While the higher up a position is in the hierarchy, the more important it is for the overall performance of the structure.
This does not mean that the base of the pyramid is less important for the proper functioning of the company, quite the opposite. Simply, if we admit the pyramid structure and give it equal importance at all levels, a position has more importance in overall performance where there are few positions. For example, if there are two managers for five employees, the individual competence of the manager will represent the 50% of the performance of their hierarchical level, while the individual performance of an employee will count only 20%.
CASE STUDY AND THE ROLE MANAGER
I met a company in Mexico where 51% of the investors were Mexican and the remaining 49% were foreigners; This mix generated a very peculiar organizational culture in the company, sometimes creating antagonistic positions between the Mexican and North American sides, which resulted in constant changes of direction.
It was in one of those changes that I began to collaborate, as general sales manager, where I was in charge of nine sales executives, who before my arrival were working against Alejandro: my objective was to replace Alejandro due to his poor performance in obtaining of results and in the management and control of its sales force.
Alejandro had been an excellent salesman, so it was natural that he was promoted as a sales manager, however, considering the "Peter Principle", this type of promotion obeys what is known as "Percussive sublimation or pseudo Promotion": this strategy that promotes the incompetent to the top level serves mainly to maintain the hope of all the others who think that one day they will be promoted. It is dangerous because its objective is to make people who are not part of the hierarchy get their hopes up.
"Having hard skills allows us to show our knowledge learned during activities prior to the new work activity that we are going to develop, but they do not guarantee a level of competence for personnel management, since this requires soft skills, which allow us demonstrate that we are prepared for work beyond our academic or technical skills"
Alejandro was a person who did his best to be accepted as the leader of those nine salespeople, however, he did not manage to consolidate his leadership due to lack of soft skills, which I would like to list below:
📍 Teamwork, the attitude towards his salespeople was despotic and he treated them as his servants and not as authentic sales executives.
📍 Ability to adapt, Alejandro believed that having been imposed as a sales manager automatically gave him the authority to do whatever he wanted with his salespeople, and so he did.
📍Communication, Organization and Marketing Work Skills, his lack of preparation in marketing and business management issues prevented him from correctly communicating the business mission and the organization's strategy to his sellers.
To successfully develop his position, Alejandro did not have other soft skills such as Creativity, Flexibility and Willingness to learn.
Unfortunately, he did not understand that “being a boss” did not automatically give him the right to be a leader, since the right to be a leader must be worked, this being the starting point of leadership.
Anyone like Alejandro could have been appointed to this position but said appointment did not guarantee anything about his soft skills like those already mentioned.
Alejandro's appointment as the new Sales Manager did not guarantee his ability to influence others, so he did what many incompetent executives do, use his job title to put pressure on his “subordinates” to achieve their budgets; The result was that his collaborators did not see in Alejandro a person they could trust, much less someone to discuss things with, which is why his work team was divided into three unmotivated groups:
✔ Passive hostiles, who murmured against Alexander behind his back.
✔ Active hostiles, who even faced verbal aggression against Alejandro.
✔ Passives for whom life was the same.
This happens especially in organizations that are growing or, in companies like the one mentioned, that, being large, try to change to improve; The result, whatever the case may be, is that departments are getting larger and that means a greater need for managers, and what generally happens is, what the Peter Principle mentions, that one of the employees is given the leader status, rewarding him with a higher position, like Alejandro who went from being a salesperson to National Sales Manager.
This is when two possibilities happen:
a) It may happen that the “new leader” realizes that there is more to leadership that involves stages of growth, and then, he will be able to grow to the next level. Therefore, this first level is called “Position”, because the appointment of a person to a new position does not guarantee his or her leadership abilities, but it is a good starting point to experiment and learn the foundations of leadership that will lead to success; second level of leadership is known as “Permission”.
b) Or it may happen that the “new leader” like Alejandro, does not realize that he must learn the stages of growth as a leader, resulting in what actually happened: “his nine salespeople teamed up to sabotage him and fire him; finally Alejandro was exiled to the position of Marketing Manager (where only an assistant reported to him) and that is how I came to replace him in his sales functions.”
TO REFLECT
🔘How many times do you use your title or position in the company to achieve your results?
🔘Do you see your collaborators as such or as subordinates? 🔘Do you spend time developing your collaborators in both their technical and non-technical skills?
🔘 Do you practice by example?
🔘 If you ask a collaborator to do an activity, can you do it? Could it be that you ask for it because you don't know how to do it?
🔘 When an employee makes a mistake, do you scold them to the point of damaging their self-esteem? Or do you redirect it through your advice and mentoring?
🔘Do you think that, if someone promoted you for a new position, it is because you already know everything and that everyone will automatically respect you?
🔘Do you consider that respect is earned by intimidating others, creating fear in them so that they will give you results?
🔘Are you a manipulative or assertive boss?
🔘Do you know what assertiveness is?
The Peter Principle has been questioned and of course is not a dogma of faith, however, it seems that it is validated by what was said years before by "Father of Modern Management", Peter Drücker, when referring to Marketing and the History of the Gravedigger in his extraordinary book “Effective Management.”
GRUPO BIMBO AND THE STORY OF THE GRAVEDIGGER
“Many employees in modern companies are renamed with impressive names such as directors or vice presidents, where they continue doing the same thing and the only thing that was achieved was to raise costs and salaries”
Recently, Grupo Bimbo appointed Rafael Pamias Romero as its new general director (previously, he was operational general director), a position that creates a bit of confusion since it is not very clear if Rafael really is the general director or the general administrator. Let's go for it. parts.
• Rafael, as general director, will report his results to the executive president.
• Daniel Servitje leaves general management to become executive president.
• Daniel will continue to be involved and participate in the management and strategy of the company
• The objective is for Bimbo to improve its corporate governance and strategic supervision and strengthen its structure to face the complexity derived from the growth and expansion of recent years.
OBSERVATIONS:
🔵A general director (CEO in the USA) is normally the one who designs the strategic plan, the company's policies, and executes them once the Board of Directors approves them. It seems that Rafael will continue doing the same thing, but with another title.
🔴A general administrator (COO in the USA) is the one who receives the strategic plan and the company's policies already designed and simply manages their execution.
🔵An executive president and/or executive director is normally the one who leads the company and its strategy. It seems that Daniel will continue doing almost the same thing, but with a different title.
MARKETING REALITIES
This restructuring (Bimbo Group), without detracting from its objective, is similar to the "Story of the Gravedigger by Peter Drucker (father of modern Management)" which I allow myself to paraphrase as follows:
▶️ Juan had been working for 20 years at the “The Merciful Angel” cemetery as a “Digger” of graves; One day the directors of said cemetery decided to promote Juan as “Official Gravedigger” which entailed a good salary increase. However, a digger is still a digger, even if he is called a “gravedigger”, the only thing that increases is Juan's salary and the cost of the burial.
▶️Let's look at the “marketing concept” for example, not everything attributed to this term corresponds to it. The word “marketing” has become a fashionable term. However, a digger is still a digger, even if he is called a “gravedigger.” The only thing that goes up is the cost of the funeral.
This is what happens with many sales managers who have been renamed “vice president of marketing” and the only thing that was achieved was to raise costs and salaries. Much of what is now called “marketing” is, at best, organized systematic selling, in which the major tasks—from sales forecasting to stocking and advertising—are grouped and coordinated. This is good. But the starting point remains: our products, our customers, our technology. The starting point is still inside.
BEST REGARDS,
CLIC HERE: STRATEGY / HUMAN FACTOR / INNOVATION
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