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A study of 1,500 salespeople who were promoted to managerial roles found outstanding sales performance predicted managerial failure more often than not.

Why?

Because the skills that made them successful salespeople were not the skills they needed to become successful managers.

Jay Fitzgerald of the National Bureau of Economic Research says the research is a confirmation of Laurence J. Peter’s Peter Principle, which is the idea that employees in organizations will ultimately rise to their level of incompetence.

When executives make promotion decisions based upon employees’ performance in their current roles, they are ignoring the importance of the skills that will be important in the new roles. Selling is very different than leading a sales team.

And most executives overlook the obvious – when they promote their best sales rep, they lose the revenue of their best sales rep.

A key observable trait that can help predict which salespeople will make better managers is whether they have experience working within sales teams, rather than individually. The researchers found that employees with collaboration experience typically produce better results as managers.

“The cream rises until it sours.” 

The Peter Principle doesn’t apply only to sales, though. People who excel at any position in an organization are often rewarded with higher positions, eventually arriving at those that exceed their areas of expertise.

Dr Peter said every bureaucracy was inevitably made up almost entirely of people inadequate to their tasks. “In every organization,” he said, “there is a considerable accumulation of dead wood at the executive level.”

Scott Adams’ Dilbert Principle is a variation of the Peter Principle:

Promoting less productive people to higher positions prevents them from getting in the way of the small group of productive workers who get things done and keep the company going forward.

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