Tough Call: The Peter Principle Problem

Tough Call the Peter Principle

A newly-promoted employee is underperforming in his new role. What would you do?

Like many LBM companies across the U.S., 2020 was a year of extremely strong sales for your lumberyard. Like many of your peers, the increase in business stretched your existing team to its limits. This meant expanding your team, promoting a couple of star employees, and hiring several people to take their place. Sure, there were growing pains. But the promotions and the onboarding of new employees went better than expected, and you felt that your company was well positioned for a solid future. And you were right, except for Peter. Here’s the story.

Peter started with your company working in the yard during summers in high school and college. His work ethic and personable demeanor made him a well-liked and valued member of your team. After college, you were excited to hire him full-time, with the goal of grooming him for an eventual leadership position. He worked his way up through the ranks, learning the different areas of the company, and proved to be a stellar inside salesperson. An ambitious young man, Peter let you know that he’d be very interested in moving up to outside sales. So, the next time a territory opened up, he became your newest outside sales rep.

In a relatively short time, Peter built up his territory— generating additional sales from existing accounts, while managing to score a couple of sizable new builders, making him one of your top performing reps. While he was great at what he was doing, and earning a solid income, he didn’t want to stay in sales forever. He asked for a closed-door meeting, and here’s what he said: “I’ve loved all the jobs I’ve done here and appreciate all the opportunity you’ve given me. I understand that I’m doing well for the company as an outside sales rep, but I really see myself in management. I’d appreciate it if you’d keep me in mind the next time a leadership opportunity is available.”

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Since he’d nailed every job he’d done, it didn’t take much convincing for you to tap him as your company’s new VP of sales. Peter was ecstatic, “I won’t let you down!” he promised. But that’s not how it worked out. Though it seemed like a natural next step for him, after six months, it appears obvious that he just can’t do the job.

You’re familiar with the concept of The Peter Principle, in which people are promoted to their level of incompetence. You’d never believed it, and had never experienced it, until now. With your sales numbers trending down and Peter earning a healthy salary for a job he’s not suited for, the smart move is to somehow gently demote him back into the sales role—but you know that he’d see this as a real slap in the face.

What would you do?

  • PULL THE BAND-AID. The longer you wait to demote Peter from executive management back into outside sales, the more it’ll hurt when you Just do it, and move forward.
  • TALK IT THROUGH. Sit Peter down and tell him that the new position doesn’t seem to be working. If he feels the same, he may welcome a return to a job he excels at.
  • JUST WAIT. Moving from sales to management is a big step, and it’s unrealistic to expect immediate results. Nurture Peter’s management skills, and help him grow into the position.
  • ADAPT HIS ROLE. Instead of choosing between outside sales and executive management, incorporate elements of both, to help set him up for future success as a leader.

What would you do?

Something else?

If you’d take a different plan of attack, email your suggested solution to If we publish your reply, we’ll send you an LBM Journal mug.

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