In a typical professional organization, there's often payoff for personal investment. You commit to a job, take pride in your work and thus receive a promotion and all that goes with it. At face value this seems to be a win-win situation—the most competent parties move on to positions of greater responsibility and impact while the company becomes stronger as a result. However, new research shows that just the opposite may actually take place.
A recent study conducted by researchers at the University of Catania in Sicily subjected the so-called "Peter Principle" to mathematical scrutiny with surprising results. Named after the Canadian psychologist Laurence J. Peter, the "Peter Principle" states that, "Every new member in a hierarchical organization climbs the hierarchy until he or she reaches his or her level of maximum incompetence." In other words, you'll keep getting promoted until you stop doing a good job, at which point, you're stuck.
The assumption—and problem—of merit-based promotions is that the aptitude displayed at one level will transfer to the next. While this seems like common sense, it might not be true. One may actually need an entirely different skill set to succeed at that next level.
A merit-based model of promotion, researchers suggest, serves to weaken every level of a hierarchy by spreading incompetence throughout. The study's authors propose that reconsidering these promotions may, in the long, run benefit the organization at large.
The study, through a hair raising process of statistical analysis, simulated various scenarios by which organizational advancement takes place and measured their resulting effects on overall system efficiency. Using as variables types of "competence transmission" including consistent competency at a new position (the common sense idea) versus a new, random level of competency (as Peter predicted), the researchers came to a counterintuitive conclusion: what what seems logical—promoting excellence—actually decreases efficiency in a rapid manner.