*This article is a restructured version of Hydraft®’s consulting assets.
[1. Promotion as the Default Reward for Performance]
We naturally tend to believe that as people accumulate experience and achievements, they should be rewarded with promotion. Alongside salary increases, promotion — whether in the form of a higher title, managerial authority, or leadership responsibilities — has long been regarded as one of the most representative ways to recognize performance and career growth.
However, very few people recognize that promotion does not always accelerate someone’s growth. In some cases, it can actually pull a person away from the very area where they are capable of delivering their best performance.
Rewarding performance does not necessarily have to mean promotion. More precisely, performance and promotion should not be connected in such a one-dimensional way. Yet many organizations continue to treat the relationship between achievement and promotion as an unquestioned formula.
From this perspective, this article aims to examine what organizations should truly consider before making promotion decisions, what the real role of leadership actually is, and what kinds of problems emerge when people are prematurely promoted or appointed as leaders despite not being suited for those responsibilities.
[2. The Peter Principle and Promotion]
Before diving deeper, it is worth examining the theory proposed by renowned educator and management theorist Laurence J. Peter, whose work left a lasting mark on the field of organizational management. Through what later became known as the Peter Principle, he argued the following:
“Members of every hierarchy in organizations such as businesses, governments, schools, and the military tend to rise to their level of incompetence.” — Laurence J. Peter
This means that individuals who perform exceptionally well in their current roles continue to earn promotions, but eventually reach positions that exceed their actual capabilities. At that point, they stop growing, remain in roles for which they are no longer the right fit, and can ultimately hinder organizational innovation.
As a result, organizations risk becoming filled with people who are unable to effectively handle the very positions they occupy. This idea closely aligns with the point discussed in a previous article: the capabilities that prove someone successful before becoming a leader are often entirely different from the capabilities required after becoming one.
Andrew Grove, the CEO who led Intel Corporation through its golden era, also addressed many of the problems surrounding promotion. What he warned against was not performance itself, but rather organizations that fail to interpret performance correctly.
One of the most common mistakes organizations make is assuming that a person who excels in one role will naturally excel in a completely different role or position. Yet this simplistic assumption can, in fact, damage organizational performance rather than strengthen it. Let’s take a closer look at three key ideas proposed by Andy Grove regarding this issue.
2-1. Promotion Based Solely on Performance Is a Mistake
• Organizations usually promote people who perform exceptionally well in their current roles.
• However, the capabilities required in the next position or level can be completely different from those required today.
A simple example is that the best developer does not necessarily become the best team leader. For this reason, promotions and leadership appointments should not be determined solely by past performance.
2-2. Promotion Is Ultimately Unpredictable
• There is no perfect way to know in advance whether someone will succeed in their next role or position.
• In that sense, every promotion involves a certain degree of risk.
In particular, when an organization recognizes that the “bet” has failed yet still hesitates to make corrections, the organization can slowly begin to decline.
To address this issue directly, Andrew Grove operated various talent rotation programs, including “re-entry” opportunities and “Bold Moves,” which involved transferring employees into entirely different functions or roles.
Most participants in these programs demonstrated remarkably fast growth in their new positions, largely because they already possessed a deep understanding of the company’s business context. Although some experienced temporary reductions in title or compensation during the transition, many eventually reached levels even higher than before.
More importantly, however, these programs helped individuals regain long-term sustainability within the organization. Interestingly, many companies consider hiring itself to be the area with the greatest uncertainty. No matter how carefully organizations prepare, predicting whether someone will truly succeed in a role remains inherently difficult.
2-3. Promotion Is an Official Message to the Organization
Organizations must deeply understand that promoting someone is not merely a personnel decision. In many ways, it is a public declaration to every employee about what kind of role model, talent, and organizational culture the company truly values and aspires to build.
[3. Andy Grove’s Sharp Warning to Leaders]
Most professionals naturally desire positions, authority, and recognition that match their experience and achievements. Some may already hold leadership titles, yet surprisingly few make a serious effort to develop the actual capabilities required to become an effective leader.
A true leader must possess a deeper understanding than anyone else of the company’s philosophy, mission, vision, and products. These are not optional qualities, but the most fundamental requirements of leadership. Andrew Grove argued firmly that anyone who fails to meet these basic conditions should not become a leader in the first place.
He went even further, stating that if a leader cannot effectively transfer their knowledge, experience, and know-how to others, then their role as a leader ultimately loses its meaning. He summarized this idea as follows:
A team member fails to perform or does not work effectively for only two reasons:
• First, they simply do not yet have the capability to do the job.
• Second, they lack the motivation to grow.
Therefore, according to Andy Grove, leaders must focus intensely on two responsibilities:
• Transferring their knowledge, expertise, and operational know-how to team members through continuous guidance and education
• Inspiring and motivating people to pursue growth and improvement on their own
[4. Implications for Organizations]
Many factors determine whether an organization becomes healthy, sustainable, and capable of continuous innovation. Yet today’s discussion makes one thing particularly clear: it shows where organizational leaders should focus their attention most.
Leaders must use their skills, experience, and knowledge to help their team members create greater leverage and impact. If that is not happening, it is often a signal that either the leader or the organizational structure itself is failing — and the organization must respond quickly.
At the same time, before making decisions about promotions or leadership appointments, companies must think more deeply about a more fundamental question:
“In which role or position can this person contribute most sustainably and effectively to the organization’s success?”
[5. Another Reality Organizations Often Avoid]
Another recurring problem across many business environments is the tendency to avoid confronting the real responsibilities of leadership or the structural issues facing the organization. Instead, some attempt to justify avoidance through convincing excuses, or create the appearance of innovation simply by changing titles and positions.
Viewed objectively, these are rarely signs of meaningful transformation. More often, they are self-preservational actions driven by personal comfort, political considerations, or concern over how things appear to others — ultimately little more than cosmetic change.
And in most cases, organizational ownership or top management is not unaware of this reality. Sometimes, such decisions may simply function as temporary gestures of respect or compensation toward long-time colleagues, employees, or partners who have shared many years with the organization.
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