The
theory is that individuals in a hierarchy who do a good job are promoted to the
next level. If they are competent, they are promoted again to the next higher
level. If they are not competent, they are not promoted and they remain at that
level. Thus, people stop getting promotions and remain one level above the last
level at which they were competent. Therefore, individuals are
promoted to a position of incompetence.
I can already hear the Moyes Brigade disregarding this
piece, saying “This is football, your business and management theories have no
place here.” Fair enough, this is football, but if you’ll allow me to explain,
you will see that my “theory” makes perfect sense. I will, however, do you one
favour… I will not apply my management theory to Manchester United, but to a
fictional company. Whether or not there are similarities is for you to decide.
Before I get started, let me clarify one thing. The
“Moyes Brigade” which I speak of are those fans that are still saying, “Moyes
isn’t the problem”, “It’s the players”, “Give him time”, “Fergie said we must
stand by him”, “It’s not Moyes, it’s the Glazers”, “Scotland should be
independent”, “Global warming is to blame”, “You younger generation know
nothing”, etc.
The story concerns a man named Will. Will is
the Managing Director of a midsize company, and has been for the past 10 years
or so. He hasn’t done badly in that time. Will kept the company very stable,
but there has been little growth to speak of. They had a few minor successes,
and they had a few big deals which they came close to, but they never really
worked out.
Will has a special affiliation with the CEO of
a huge multinational firm, Uncle Chapman, as he calls him. Uncle Chapman is
very fond of Will and his “hard working” nature. Under Uncle Chapman, this huge
multinational firm has enjoyed enormous success and has become one of the most
recognisable brands in the world.
Then one day Uncle Chapman announces that he
will be stepping down as CEO, but not to worry, he has handpicked his
successor, Will. At his going away party, Uncle Chapman thanks everybody for
their support over the years and tells them they are in good hands, and to stand
by their new CEO, Will.
Will takes over as CEO, and after a few months,
the doubts that existed at the start of his reign have not been dispelled, in
fact, they have increased. Will brought a few of his Executives with him, and
got rid of the ones that worked under Uncle Chapman. The company doesn't seem
to have any sort of direction or plan under Will, and their performance levels
decrease dramatically. Some of the Senior Managers have already started jumping
ship. The share price has dropped dramatically. The workers don’t seem to want
to work for Will, and he can’t seem to motivate them either.
Now the question is, what do the Board do about
this? Do they “stand by their new CEO”, despite him being unable to lay down
any sort of clear path, define a direction or even a plan? Or do they admit
that he might not be the man to take the company forward and get in a new CEO,
after going through the necessary due diligence (something which was lacking in
the appointment of Will). Should they get somebody who has a record of leading
large multinational firms, somebody who is able to lay out a clear plan of how
to get the organisation back on track and keep it there? Or should they stick
with Will, a man who was able to take a midsize company and … keep it stable.
Personally, I don’t think that keeping a midsize company stable qualifies you
for the job as a CEO of a large multinational corporation.
So back to the Peter Principle: In the story
above, is it safe to say that Will (a.k.a David Moyes) was promoted to a
position of incompetence? Is Will the right man to lead the company forward?
Should more thought have gone into who the new CEO should be after Uncle
Chapman steps down? In my opinion: yes, no, yes.
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