The Peter Principle Revisited
Why men fail in the economy's middle and succeed at its top.
Why are there so many bad bosses? In 1969 Dr. Laurence Peter and Raymond Hull published The Peter Principle, which argued that everybody rises to his own level of incompetence. You do one job well, you get promoted. You do the next job well, you get promoted. You do the next job not so well, you get stuck there. You don’t get promoted anymore, but neither do you get fired.
It was a fascinating theory, but it was built around a corporate economy that doesn’t exist anymore, where firings were infrequent because managers didn’t have Wall Street breathing down their necks and mass layoffs were seen as a sign that a company was failing. That world doesn’t exist anymore. Today firings are common and mass layoffs are seen as a sign that a company is thriving (because they make the stock price go up, and the stock price is all that matters). Today, if you perform your job incompetently, Dr. Laurence Peter’s principle can’t help you. Your ass will get fired.
Today’s economy is a strangely bifurcated system where the old corporate paternalism exists only at the very top. Workers are underpaid relative to performance except in the C-suites, where they’re overpaid. That, of course, is because it’s the top executives who determine pay structure (with the uncritical assent of a captive board). Top executives do get fired now and then, but that’s almost a reward thanks to golden parachutes. Failing at the top pays infinitely better than succeeding in the middle.
Something else is happening as well. Working-class men are adjusting poorly to the shift from a manufacturing to a service economy, as documented in various books by Susan Faludi, Hanna Rosin, and Richard Reeves (the political scientist, not the political journalist), who has started a nonprofit to address this problem.
The idea that men are in economic trouble often makes feminists jeer. “Yeah, right,” they say, “I guess that’s why only eight percent of chief executives in the S&P 500 are women.” And of course they have a point. But these facts are not inconsistent. Men demonstrate emotional obtuseness and inappropriate aggression relative to women in the economy’s middle, causing them to lose ground relative to women in our service-dominated economy. But if men can somehow vault past that middle, that same antisocial behavior will give them an advantage over women in the race to the very top. Be a prick down below and you never get ahead. Be a prick in the C-suites and you become chairman of the board. I don’t defend this system. I merely describe it.
I still haven’t worked out how male antisociability allows you to rise to the place where the top job is in sight. Probably it has something to do with the siloed nature of the economy. Maybe it also has something to do with the fact that a lot of corporate chairs come from the world of finance, where it’s an advantage at every level, not just the top, to play poorly with the other children. But for those at the very top, the Peter Principle still reigns, because the antisocial behavior that gets you there is pretty different from the behavior you need to demonstrate to be an effective leader.
These thoughts are inspired by my latest piece, which is about the bad boss atop the Federal Deposit Insurance Corporate, whom President Joe Biden ought to fire. You can read it here.