Promoting internally: Why your best employees often fail

Promoting internally: Why your best employees often fail

Promoting the wrong person can often drain your finances and morale due to lost productivity, disengaged teams and missed deadlines.  It eats up time, energy and focus you don’t have.

Does “Why can’t they just do the job I pay them to?” sound familiar?

As a small business, can you really afford for a new promotion to not be performing?  No.  Of course you can’t.  But you keep making the same mistakes and guess what, the same thing happens.

This is called the Peter Principle, a concept every small business owner needs to understand.

Coined by Dr. Laurence J. Peter in 1969 (yes, leaders have been messing this up for over 55 years), is the idea that people in an organisation are promoted based on their performance in their current role and not their ability to succeed in the new one.

Eventually, they rise to a level where they’re no longer competent and fail to deliver.  That’s when things start to break down.
Imagine your top-performing salesperson for example.  They regularly hit sales and business development targets and consistently outshine their peers.  They push for promotion because they want the recognition they deserve.

It feels like a no-brainer, promoting them to sales manager and giving them the salary and package that goes with it.  But great sales skills don’t always translate to great leadership skills. Now, they’re responsible for team coaching, staff issues, strategy development, reporting and admin – tasks they may be completely unprepared and untrained for.

Meanwhile, your team underperforms, your star employee feels lost, and everyone loses.  Double whammy!  You have lost a great sales person and finished up with a poor sales manager.

This can lead to missed financial revenue and profit goals, lower team output, and even costly staff turnover if your best people leave out of frustration.

It crushes the confidence of the person you thought you were promoting and rewarding, turning a motivated employee into someone who dreads coming to work.  You can’t demote them as you have filled their role and they are now on a higher package with a greater standard of living.

You are both trapped.  You either accept the situation or they leave (you push or they jump)!

For you, where every hire and promotion counts, avoiding this trap is critical.

Here’s how to sidestep the Peter Principle:

• Promote for potential, not just performance – Look for soft skills like empathy, communication, and decision-making
• Test the water – Let employees try leadership responsibilities for say three or six months before making a formal change
• Invest in training – Offer mentorship or leadership development programs before they are promoted so they are role ready
• Create alternative growth paths – Not everyone wants or should go into management. Recognise and reward expertise in other ways

Promoting should be about fit, not just flattery.  When you align people with the right roles, you set them and your business up to grow at pace.

Having a clear succession and transition plan for your team isn’t a nice to have anymore.  It’s a survival essential.

Have you witnessed this and if so, what steps did you take to alleviate the issue?