Most business owners have experienced it.
A talented employee consistently exceeds expectations. They deliver results, lead their team effectively, solve problems and become a trusted member of the organisation.
When a more senior position becomes available, promoting them seems the obvious choice.
After all, they have earned it.
But sometimes the promotion does not work out as expected.
This phenomenon is often described as the Peter Principle, developed by educator Laurence Peter in 1969. His theory suggested that people are promoted based on their success in their current role until they eventually reach a position where they are no longer fully effective.
While the principle can sound harsh, the reality is often more nuanced.
The promotion may not be the problem
I recently worked with a highly successful business that encountered exactly this challenge.
A respected manager was promoted into a more senior leadership role. In his previous position, he had built and led a successful team, delivered strong operational results and was widely regarded as a valuable asset to the business.
The promotion was well deserved.
The difficulty was not with the individual. The difficulty was with the assumption that excellence in one role automatically translates into excellence in another.
His previous role was primarily operational and tactical. Success depended upon managing day-to-day activities, solving immediate problems and ensuring the team delivered.
His new role required something different.
It demanded strategic thinking, longer-term planning, resource allocation, organisational development and the ability to step back from daily operations to focus on the future.
These are different skills.
Why good people return to what they know
Faced with unfamiliar strategic responsibilities, he naturally gravitated towards the areas where he felt most confident and experienced: the operational challenges he understood well.
Rather than spending time on planning and leadership development, he became drawn back into solving day-to-day issues.
This is entirely understandable. Most of us retreat to our comfort zone when confronted with new demands.
For an SME, this can be a particular risk.
The business owner may promote someone because they trust them, value their loyalty and need them to step up quickly. But if the new role is not clearly defined, the promoted person may continue doing the old job while the new job is only partly done.
The team then loses clarity. Decisions slow down. The owner gets pulled back into operational detail.
That is the opposite of what the promotion was meant to achieve.
Ask a better promotion question
The mistake was not the promotion itself. The mistake was assessing the candidate primarily against the requirements of his existing role rather than fully evaluating the skills, behaviours and attributes needed for the new one.
Businesses often ask: “Who is our best performer?”
The better question may be: “Who has the skills and potential required for the next role?”
The distinction is important.
- A great salesperson does not automatically become a great sales manager.
- A great technician does not automatically become a great operations director.
- A great manager does not automatically become a great leader.
Each step up the organisational ladder typically requires a shift in focus from doing the work to enabling others to do the work.
As seniority increases, leadership becomes less about personal expertise and more about judgement, influence, coaching and strategic thinking.
Promotion should come with support
Fortunately, this story has a positive ending.
Recognising the challenge early, the business invested in coaching and mentoring. Rather than viewing the situation as a failed promotion, they viewed it as a development opportunity.
The objective was not to change the individual. The objective was to help him develop the skills required for success at the next level.
By providing support, challenge and guidance, the business is helping him bridge the gap between operational excellence and strategic leadership.
For business owners, there is an important lesson here.
When considering promotions, do not simply evaluate how well someone performs today. Consider what success will look like tomorrow.
Ask yourself:
- What skills are required in the new role?
- Which behaviours need to change?
- What support will be needed during the transition?
- How will success be measured?
Promotions should reward performance, but they should also recognise potential.
The most successful businesses understand that leadership capability is developed, not inherited. They invest in helping talented people make the transition from operational expertise to strategic leadership.
When they do, they avoid the trap described by the Peter Principle and create stronger leaders for the future.
After all, promoting someone is only the first step. Helping them succeed is where the real leadership begins.
A UK Business Advisors member can help you review your management structure, clarify roles and support future leaders through the transition.