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Promoting the best as an incentive : reply to Pluchino et al. on the Peter Principle

Olsson, Erik J LU and Proietti, Carlo LU (2015)
Abstract
The Peter Principle states that employees tend to be promoted until they reach their level of incompetence. In a sophisticated simulation study, Pluchino et al (2010) confirmed a version of the principle. However, they also noted that their model has the counterintuitive consequence that “the best ways for improving the efficiency of a given organization are either to promote each time an agent at random or to promote randomly the best and the worst members”. We argue that what promotion rule is used can in general influence employee productivity (which is here seen as part of competence). Accommodating this psychological aspect of promotion is noted as an open problem by Pluchino et al. Using an amended simulation model we verify that if... (More)
The Peter Principle states that employees tend to be promoted until they reach their level of incompetence. In a sophisticated simulation study, Pluchino et al (2010) confirmed a version of the principle. However, they also noted that their model has the counterintuitive consequence that “the best ways for improving the efficiency of a given organization are either to promote each time an agent at random or to promote randomly the best and the worst members”. We argue that what promotion rule is used can in general influence employee productivity (which is here seen as part of competence). Accommodating this psychological aspect of promotion is noted as an open problem by Pluchino et al. Using an amended simulation model we verify that if the incentive induced by promoting the best is strong enough, then that strategy will be optimal. In a final simulation experiment we consider the effect on the efficiency of an organization of using “double standard” promotion strategies, i.e., strategies that depend on the official promotion rule being different from the de facto promotion rule. We show that double standard promotion strategies can be highly efficient, although we also note that in using such strategies the employer may take an unacceptable medium to long term risk. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Working Paper
publication status
unpublished
subject
keywords
Peter Principle, simulations, promoting strategies
pages
14 pages
DOI
10.13140/2.1.2201.8888
language
English
LU publication?
yes
id
9c71735c-69cf-4d8b-ae51-b8ece406b0f4 (old id 4935763)
date added to LUP
2015-01-15 16:03:13
date last changed
2016-04-16 11:38:06
@misc{9c71735c-69cf-4d8b-ae51-b8ece406b0f4,
  abstract     = {The Peter Principle states that employees tend to be promoted until they reach their level of incompetence. In a sophisticated simulation study, Pluchino et al (2010) confirmed a version of the principle. However, they also noted that their model has the counterintuitive consequence that “the best ways for improving the efficiency of a given organization are either to promote each time an agent at random or to promote randomly the best and the worst members”. We argue that what promotion rule is used can in general influence employee productivity (which is here seen as part of competence). Accommodating this psychological aspect of promotion is noted as an open problem by Pluchino et al. Using an amended simulation model we verify that if the incentive induced by promoting the best is strong enough, then that strategy will be optimal. In a final simulation experiment we consider the effect on the efficiency of an organization of using “double standard” promotion strategies, i.e., strategies that depend on the official promotion rule being different from the de facto promotion rule. We show that double standard promotion strategies can be highly efficient, although we also note that in using such strategies the employer may take an unacceptable medium to long term risk.},
  author       = {Olsson, Erik J and Proietti, Carlo},
  keyword      = {Peter Principle,simulations,promoting strategies},
  language     = {eng},
  note         = {Working Paper},
  pages        = {14},
  title        = {Promoting the best as an incentive : reply to Pluchino et al. on the Peter Principle},
  url          = {http://dx.doi.org/10.13140/2.1.2201.8888},
  year         = {2015},
}