Dr Peter wrote:
“Look around you where you work and pick out the people who have reached their level of incompetence… the cream rises until it sours.”
Recent research  by Alan Benson et al shows how the Peter Principle applies to the sales function. After six years of exploration, studying 53,035 employees at 214 US-based companies, 1,531 salespeople were identified who had been promoted to sales managers. The results were shocking but not surprising:
“Firms are substantially more likely to promote top salespeople, even when these workers make worse managers on average.”
That’s a double whammy for the business:
- Poor leadership damages team results – Benson’s analysis suggests that they decrease team performance by 30%.
- The most productive sales performers get extracted and placed into non-revenue generating roles
That’s not to say that it’s impossible for good salespeople to develop into good sales leaders, we all know great examples who have made the transition. But it should make us think twice before promoting a successful salesperson into a sales management role: the skills and competencies required are very different, and success in sales is (as the Benson study shows) no guarantee of success in sales management.
So what can sales leaders do to beat the Peter Principle? We believe there are three essential tactics:
- Build a sales leadership competency framework that highlights the capabilities and behaviours required to be successful within the role.
- Create and refine a Sales Leadership Playbook that defines what success looks like (KPIs/metrics) and provides all the necessary tools (coaching methodologies, situational leadership etc.)
- Create a career path for individual contributors so that they can develop their careers as salespeople without needing to move into sales management.
With these in place, you have a much better chance of
- Hiring the right sales leader, either internally or externally
- Enabling them to be “on board” to their new role quickly and effectively
It also helps you
- Provide a development roadmap for those salespeople who do see their future in sales management
- Keep your high performing salespeople on-board – without turning them into lousy sales managers
Dr Peter originally intended “The Peter Principle” as a satire on organization failure, but there’s nothing funny about hiring the wrong sales leaders. The good news is that forewarned is forearmed, and that the right tools and processes can help you dodge the Peter Principle trap.
 “The Peter Principle”, Laurence J Peter, Raymond Hull, New York: William Morrow, 1969
 “Promotions and the Peter Principle”, Alan Benson, Danielle Li, Kelly Shue, The Quarterly Journal of Economics, Volume 134, Issue 4, November 2019, Pages 2085–2134, https://doi.org/10.1093/qje/qjz022 published 16 August 2019