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Peter Principle Pop Quiz

Peter Principle Pop Quiz

Mar 26, 2009 -

You have to love the Peter Principle. It’s the theory that employees rise in an organization based on their competence but eventually this competence runs out, and they remain at that level. 

Laurence Peter and Raymond Hull published this theory in 1968, and now there’s a fortieth anniversary edition: The Peter Principle: Why Things Always Go Wrong.  (My how time flies when you’re incompetent!)

We live in a target-rich time for examples of the Peter Principle in action, so the staff at HarperCollins, the book’s publisher, provided this pop quiz.

Richard Wagoner’s record at GM proves which Peter axiom?
  • In a hierarchy every employee tends to rise to his level of incompetence.
  • The incompetent supervisor evaluates input, not output.
  • The habitually incompetent can, by random action, be right once in a while.

Answer: 1. Obviously. [2: Wrong. Both inputs and outputs tanked. 3: Wrong. When was he ever right?]

AIG’s bonus payments are an example of which Peter axiom?

  • Super-competence is more objectionable than competence.
  • Teeter-totter syndrome: the complete inability to make decisions appropriate to the sufferer’s rank.
  • Peter’s Spiral: the non-progressive course followed by organizations suffering from high-level incompetence.

Answer: 3. Turbo-charged incompetence, indeed. [1: Wrong: the super-incompetent were rewarded, not punished. 2: Wrong: apparently it didn’t occur to anyone not to pay up.]

The repeated bailouts of AIG, adding tens of billions of taxpayer dollars at each round, is an example of which Peter axiom?

  • Creative incompetence: feigned incompetence which averts the offer of unwanted promotion.
  • In any economic or political crisis, one thing is certain. Many learned experts will prescribe many different remedies.
  • The incompetent supervisor evaluates input, not output.
Answer: 3. If we keep paying them, the bailout must work. Right? [1: wrong: nobody was faking incompetence. 2: Wrong. In this case, they all seemed to agree on the wrong remedy.]
Lateral arabesque: a pseudo-promotion, often to get someone out of the way. Which is the best recent example?
  • Jon Corzine moving from chairman of Goldman, Sachs to U.S. Senate, 2000.
  • Jon Corzine moving from the U.S. Senate to Governor of New Jersey, 2006.
  • Henry Paulson moving from chairman of Goldman, Sachs to Secretary of the Treasury, 2006.
  • Henry Paulson moving from Secretary of the Treasury to the IMF Board of Governors, 2009.
Answer: 2: the same voters that gave him the first job, and soured on him, gave him the second one. [1: wrong: the voters were a new boss for him. 3: Wrong; the White House was a new boss for him. 4: Close, but not quite right. Nobody can pretend that this was a promotion.]

The efficiency fallacy: the belief that incompetence, if coordinated, equals competence. What is the best recent example by the government?
  • The creation of the Department of Homeland Security.
  • The naming of Treasury Secretary Timothy F. Geithner to oversee many parts of the government in managing the restructuring of the auto industry.
  • The creation of the office of Director of National Intelligence. 
  • Too close to call!
 Answer: 4. Obviously! [1: Not quite. What’s the difference between 1 and 3? 2: A good example, but is it the best? 3: Not quite. What’s the difference between 3 and 1?]

Barack’s appointment of Hilary as Secretary of State fits which Peter axioms?
  • Percussive Sublimation—being kicked upstairs: a pseudo-promotion.
  • Peter’s Circumambulation—a circumlocution or detour around a super-incumbent.
  • Peter’s Pretty Pass—the situation of having one’s road to promotion blocked by a super-incumbent.
Answer: 1. Correct! Getting out of the Senate seemed like a good move, but now what? [2: Wrong: the super-incumbent (Barack) gave her the job, and he knows what he’s doing. 3: Wrong : the super-incumbent (Barack) gave her the job, and he knows what he’s doing.]

Which of Peter’s axioms best explains Bernie Madoff?
  • Gargantuan Monumentalis: giant burial park, big mausoleum, and huge tombstone syndrome.
  • Rigor Cartis—abnormal interest in charts, with dwindling concern for realities that the charts represent.
  • Image Replaces Performance—a substitution technique involving smoke and mirrors.
  • 2 and 3 only.
Answer: 4: Correct. At least, this explains his clients. [1: Wrong: you’re cofusing Madoff with Robert Stanford. 2: True, but not the entire answer. 3: True, but not the entire answer.]

The time you are spending on this test is an example of which Peter axiom?

  • Never stand when you can sit; never walk when you can ride; never Push when you can Pull.
  • Cachinatory inertia: the habit of telling jokes instead of getting on with business.
  • Work is accomplished by those employees who have not yet reached their level of incompetence.
Answer: 2: Obviously. [1: Wrong! Read the book. 3: Wrong! You call this work?]

The question that every small business owner faces is whether we, and our employees, have reached the level of their incompetence. Honestly, not a day goes by that I don’t think that I have. Let’s hope that realizing it is the first step towards fixing it. 

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