Promotion Dynamics the Peter Principle: Incumbents vs. External Hires

The "Peter Principle" (Peter and Hull, 1969; Fairburn and Malcomson, 2001; Lazear, 2004) suggests that individuals are "promoted to their level of incompetence". A corollary of the "Peter Principle" prediction is that external hires should have an advantage when competi...

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Main Author:	Acosta, Pablo
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Job, Occupational, and Intergenerational Mobility Promotion J620 Personnel Economics: Firm Employment Decisions Promotions M510
Online Access:	http://hdl.handle.net/10986/5582

id	okr-10986-5582
recordtype	oai_dc
spelling	okr-10986-55822021-04-23T14:02:22Z Promotion Dynamics the Peter Principle: Incumbents vs. External Hires Acosta, Pablo Job, Occupational, and Intergenerational Mobility Promotion J620 Personnel Economics: Firm Employment Decisions Promotions M510 The "Peter Principle" (Peter and Hull, 1969; Fairburn and Malcomson, 2001; Lazear, 2004) suggests that individuals are "promoted to their level of incompetence". A corollary of the "Peter Principle" prediction is that external hires should have an advantage when competing with incumbents for a higher position. Using five years of personnel records from a single large U.S. corporation, this paper contributes to the literature on internal labor markets and intra-firm job mobility by testing this prediction for career advancement. Results support the idea of differences in promotion dynamics among incumbents and external hires, since past career advancement within the firm result in a lower probability of subsequent promotion, even after controlling for workers' heterogeneity and tenure on the current job. The advantage for external hires does not hold once other job changes (lateral transfers, task reorganizations) are considered, highlighting that promotions are a very different job placement mechanism than transfers. Overall, the evidence points out towards declining performance following promotion, as opposed to alternative competing hypothesis of probation placement or "handicapping" external candidates. 2012-03-30T07:33:32Z 2012-03-30T07:33:32Z 2010 Journal Article Labour Economics 09275371 http://hdl.handle.net/10986/5582 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Job, Occupational, and Intergenerational Mobility Promotion J620 Personnel Economics: Firm Employment Decisions Promotions M510
spellingShingle	Job, Occupational, and Intergenerational Mobility Promotion J620 Personnel Economics: Firm Employment Decisions Promotions M510 Acosta, Pablo Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	The "Peter Principle" (Peter and Hull, 1969; Fairburn and Malcomson, 2001; Lazear, 2004) suggests that individuals are "promoted to their level of incompetence". A corollary of the "Peter Principle" prediction is that external hires should have an advantage when competing with incumbents for a higher position. Using five years of personnel records from a single large U.S. corporation, this paper contributes to the literature on internal labor markets and intra-firm job mobility by testing this prediction for career advancement. Results support the idea of differences in promotion dynamics among incumbents and external hires, since past career advancement within the firm result in a lower probability of subsequent promotion, even after controlling for workers' heterogeneity and tenure on the current job. The advantage for external hires does not hold once other job changes (lateral transfers, task reorganizations) are considered, highlighting that promotions are a very different job placement mechanism than transfers. Overall, the evidence points out towards declining performance following promotion, as opposed to alternative competing hypothesis of probation placement or "handicapping" external candidates.
format	Journal Article
author	Acosta, Pablo
author_facet	Acosta, Pablo
author_sort	Acosta, Pablo
title	Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
title_short	Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
title_full	Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
title_fullStr	Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
title_full_unstemmed	Promotion Dynamics the Peter Principle: Incumbents vs. External Hires
title_sort	promotion dynamics the peter principle: incumbents vs. external hires
publishDate	2012
url	http://hdl.handle.net/10986/5582
_version_	1764395565639008256

Promotion Dynamics the Peter Principle: Incumbents vs. External Hires

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