What’s the CEO Equivalent of The Peter Principle?

I think most of us have either heard of, or experienced in some way, this statement; “Employees tend to rise to their level of incompetence.”. (Laurence J. Peter and Raymond Hull)

And some of us, if we’re completely honest, were guilty if it ourselves at some point [cough].

But what happens when it’s the person who started out at the top? By either point-in-time genius, or sheer dumb luck, they manage to take a small company into the big-time.

How do you tell the person at the top it’s time to step down?

There are 3 types of CEO:


  1. ‘CEOs’ who are very good at taking an idea to a level where they are noticed by larger companies who wish they had thought of the idea first. But that’s it;
  2. CEOs who are gifted at taking a small company public, and making everyone lots of money. But that’s it; and
  3. CEOs that can lead a company for the long haul. And yes, that’s it for them too.

The BEST CEOs know which they are, and have the ego-less foresight and common sense to step aside when their job is done. Unfortunately the rest end up driving their companies into the ground and taking their employees with them.

Which begs the question; Why is corporate social responsibility almost entirely outward facing?

I have long thought of our places of work as the new communities. Historically, we humans derived a great deal of our security, sense of belonging, and even a large chunk of our identities from the communities in which we lived. But, not any more. At least not in the major cities of the industrialised countries that represent the lion’s share of the people reading this. Physical communities have been replaced by the organisations where we spend increasing amounts of time, especially now that we’re never off-line.

Should CEOs be more accountable to the people they employ? Not for money, healthcare, career advancement etc, but for the more fundamental human needs expressed in the previous paragraph?

A business is not a democracy, and the CEO has no legal obligation whatsoever to do anything of the sort. But is it really so difficult? Security and a sense of belonging just takes a culture that places values on them. As for our identities, don’t we all love buying into a vision of the future? One in which we can believe?

And what’s so wrong with just saying thank you? A SINCERE thank you directly from the CEO to an individual will engender a 100 times more loyalty than an annual 3% cost of living increase.

In a global market where competitive advantages are measured in weeks, not years, and where people can telecommute from half a globe away, the most successful businesses will be the ones where they have the hearts of their people. Not a resignation of things never getting anything better. Innovation and creativity will only be shared within the company if their basic human needs are met, otherwise they’ll take their ideas with them to the competition.

I don’t know if I’ll ever have employees, but I would hope that I treat them with all the respect they deserve, and not as things to be used for my benefit.

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