...a concept in management theory in which the selection of a candidate for a position is based on the candidate's performance in their current role rather than on abilities relevant to the intended role. Thus, employees only stop being promoted once they can no longer perform effectively, and managers rise to the level of their incompetence. (http://en.wikipedia.org/wiki/Peter_Principle)What this means in practical terms is that some people should not be promoted to management.
In the corporate world, if you want to keep making more money, you often have to advance to a higher level and/or pay grade. This often comes with more responsibility, including management responsibility, but if you've ever had a bad manager, you know the damage this can inflict.
So what is the solution?
Instead of maxing out pay grades and forcing people to advance just to get a higher salary, continue rewarding their continued contribution with appropriate raises. A company and team are better off keeping that person in a position where they can shine—and that plays to their strengths—than promoting them to a position that they are not suited to and where they will
- contribute less,
- have a negative impact on the rest of the team,
- and therefore cause the team to contribute less.
What companies should be doing instead, in addition to allowing people to stay where best suited, is to train and test potential managers. Not doing so is akin to having a therapist without the proper training or correct disposition trying to treat clients. And yes, bad managers can cause as much psychological and emotional distress as can a bad therapist.
The flip side is that people need to take responsibility for their own actions too and speak up if they are not interested, trained, or suited for management. This action should not be held against them and is not a failing since as I've said before, no one can be good at everything.
Do you know anyone who was promoted to their level of incompetence? Would you be able to recognize this in yourself?