Sunday, August 20, 2006

The Curse of the Peter Principle: A Crisis of Incompetence

For all of those who do not know the Peter Principle, it is the principal that "people tend to get promoted to their highest level of incompetence." It's most common application is to management . . . since most people seem to get promoted because they are good at what they do and management (at some level) becomes a part of their responsibility whether or not they have any skills in that area. We all know some (or several) people who should NEVER be managing others. The largest Gallup study of profit centers in this country revealed that people do not leave companies, they leave managers. It doesn't seem to matter how good the talent coming in really is if the managers suck at what they do. Would you be surprised to learn that it is almost unheard of for lawyers to go through management training? Do you actually think that partners at most firms are held accountable for being good "managers?" Given your answers, are you surprised that law firms are experiencing the highest attrition rates ever? If you want to know how bad the "management crisis" is, just count the number of books written on the topic in the last decade.

The epidemic in the law is real and systemic. I will outline my view of the problem and propose solutions below:

1) It starts with the training and mentality of lawyers. In law school, students are not learning the law, they are learning a new way to think. They are learning how to "find" the law and how to be resourceful. With naturally high egos and resourcefulness most lawyers actually believe they can do just about anything well. It is time for the reality check that managing professionals is a real skill that requires training and competency in the area. Firms need to take this seriously to retain their best people. (Read David Maister's book "First Among Equals" for a crash course)

2) Create up-ladders that do not have "bundled" management responsibility. If you do not, you cannot avoid a Peter Principle problem because not all of your performers have a natural management skills (in fact, most won't). At Exemplar, it is our mission to be a "Peter-Principle-Free Zone!" We will not position our people to fail by putting them in a position that does not leverage their talents and minimize their weaknesses: It is cruel to them because it will be the least favorite activity of their job, it is cruel to the people they lead because they deserve better than that, and it is more costly to the organization than any firm has the means to calculate. We have created up-ladders that are tailored to the individual's talents and strength and are designed to minimize one's weaknesses.

3) Managers ought to be compensated (and accountable) for being good managers. (Yes, this is far more logical than it is common) If you want them to think only about themselves (which is the message being sent by most law firm compensation systems today) then you will only compensate based on metrics having to do with their core function as an attorney. (Thus, you just want them to fish). If you want them to play for the team and teach everyone to fish then you have to compensate to motivate! What do you think will be more profitable for the firm, a bunch of individualists out for themselves, or a team that is helping the organization to move forward at every turn? At Exemplar, attorneys at not "endowed" with a management function by virtue of being experienced. The attorneys who manage are "selected" to lead and manage people based on skill and ability.

4) Create Mangement Standards: Should one associate's experience in your firm be drastically different from another just because they report to different people? Of course not, so why would you let you lawyers treat their reports any way they want with no oversight? Just like needing to make sure that your customers have a consistent customer experience with your firm, you also need to make sure that the heart of your organization (your people) have a consistently positive experience in your firm. If you truly care about your people then you have to create management standards that your managers are accountable to and the best people to review them for compliance is, yes, their direct reports! The days where role and power do not accompany accountability need to be declared "OVER" in order to move your organization forward. At Exemplar, we think much harder about positioning our people for success because role and authority most certainly comes with the corresponding amount of accountability.

Summary: The Peter Principal crisis is not unique to the legal profession. What is problematic is that the Peter Principle is a significant problem given current large-firm pyramid structures and committee-based decision making schemes, yet it is not as significant a discussion topic in our industry as it ought to be. At Exemplar, we believe that a Peter-Principle-Free-Zone is the key to creating a boundaryless organization. This is a significant challenge and takes a serious dedication of time and resources, but our people will know the difference and be positioned to soar to heights that they could not otherwise go!

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