The Peter Principle states that “in a hierarchy every employee tends to rise to his level of incompetence.” It was formulated by Dr Lawrence Peter and Raymond Hull in their 1969 book by the same name.

I call them “the brand dead” or “brand spectators” who fur up the organisation’s arteries. Most MDs tolerate a Peter or two. But when conditions change, Peter and pals can very quickly poison your brand from within. When the big battalions are mobilised and change is demanded, the Peter’s, not the market conditions, are your worst enemy.

Consider the impact a Peter can have on your recruitment drive.

“Hire people who are better than you are, then leave them to get on with it . . . ; Look for people who will aim for the remarkable, who will not settle for the routine.” The late David Ogilvy, advertising executive

“If you pick the right people and give them the opportunity to spread their wings—and put compensation as a carrier behind it—you almost don’t have to manage them.” Jack Welch, former chairman and CEO of General Electric

Ogilvy and Welch point the way towards recruitment nirvana – making the most of the fact that it’s an employer’s market to recruit experienced; challenging; maverick; game changers who will stimulate the innovation you need.

But the Peters will desperately cling onto the status quo, recruit in their own image and reinforce the employer brand which failed to spot the issues which have since marched all the way around the corner and into your boardroom.

And if you’ve encouraged Peter-style behaviour within your intermediaries and recruitment agents, you’re in deep trouble as they will doubtless perpetuate a protectionist culture.

When you get a moment, just take a look at the various recruitment and blogging forums and consider how many really good people are out there at the moment. Listen to what they’re saying about the recruitment practices of the Peters. Ask yourself whether you know who your Peters are and whether Peter can be motivated to change?

But most of all question whether your recruitment strategy is paying Peter by robbing Paul and the impact this is having and will have on the performance of your brand.

I was at a dinner party thrown by a former HR director friend recently and as I arrived at his house was struck by the number of high performance cars on the driveway and then, once I was introduced to his guests, was equally surprised by the fact that most were from the HR community.

Now, I’m not deriding folk for their success. It just took a little getting used to, especially as most of the conversation revolved around the financial benefits associated with acquiring a reputation as a downsizing expert and “being the last one to turn out the lights” before moving on.

It’s clearly wrong to claim that re-sizing has become the raison d’etre of the modern HRD. But this perception wasn’t helped by the dinner party conversation about what it really means to trust and whether trust has any place at work?  

One premise was that the last two years has seen employees’ trust in their organisations fall dramatically and that organisations need to work at ways of re-engaging and re-establishing the psychological contract. The opposite - and prevailing view - was that there are certain things in business that have to remain secret, that being open and honest is often impossible and people should be mature enough to accept that.

The concensus was that trust has no real place at work any longer and that a healthy scepticism should prevail recognising that the employer/employee relationship is “a marriage of convenience”. Neutrality was seen as preferable but is it possible or even desirable to remain neutral in a vocational environment you devote the largest portion of your life to?

I appreciate that many of the HRDs I seem to meet these days are vassels for the process re-engineers and have become de-sensitised to emotions in a similar way to soldiers on the frontline. But is this a reflection of behaviour born of survival or how they really believe things should be?

Trust is a fairly fundamental emotion. If there’s no trust there’s no psychological contract between employees and the employer. Without that there’s no “extra mile” and no relationship development.

I guess you can have a relationship or marriage of convenience based on neutrality, without passion; empathy and drive. But then you can also join Victorian role playing societies to escape from reality.

 These are complex corporate times but as the finger of blame for the global economic downturn is pointed at various external stakeholders like the regulators and even the customers themselves, it’s interesting to hear the term “corporate culture” finally surfacing in banking post mortems.

The term performance culture has been increasingly abused within performance management parlance.  It has become inextricably linked with the drive for delivering shareholder value in quarterly increments and the “up or out” mentality which has spilled over from investment banking.

But now that almost every investment banking super-tanker has holed itself on the reefs of greed, selfishness, arrogance and some fairly suspect practice it’s time to reclaim the phrase. This is why leaders like RBS’s Stephen Hester are now having to open internal moratoriums in an attempt to bridge the obvious and growing employee engagement gap that has opened up within some of our high profile financial services names.

Ironically, despite this being an employer’s market, employee engagement; employer brand and corporate culture have never been so important. But it’s time for a fundamental re-think about how internal stakeholders (employees) are managed. The infrastructure underpinning many employment brands is clearly in need of a dramatic overhaul. And this is no job for the marketing function or advertising types.

Clearly characteristics like sustainability, network building and relationship development are the bedfellows of integrity, accountability, security and trust (the values, ironically, most popularly used to market the wares of financial services companies). But how can these values flourish when FS employees have seen HR functions replaced by processes and help lines; when average employee tenure (and loyalty) has fallen so dramatically and when  effective performance management and feedback loops have been replaced by grievance processes and whistle blowing – the corporate equivalent of “ratting on your colleagues”

I’m certainly not calling for a complete return to the cosy old hierarchies; glass ceilings and command and control regimes. But it’s clear that there’s going to have to be a large dose of mature, “back to the future” relationship based thinking if the nirvana of an appropriate and authentic performance culture is ever going to be achieved by arguably our most influential businesses and brands. And if the last 18 months has taught us anything it’s that none of us can afford for our financial services brands to continue to fail their employees by making promises to customers and the market that they simply can’t keep.

Ian

These are complex corporate times but as the fingers of blame for the global economic downturn have been pointed at various external stakeholders, it’s interesting to hear the term “culture” creeping into the post mortem about the banking sector.

I’ve become increasingly fascinated by the growing abuse of the term performance culture within performance management parlance. For me this phrase has become inextricably linked with the drive for delivering shareholder value in quarterly increments and the “up or out” mentality which has spilled over from investment banking.

But where does this leave the zealots now that a number of the investment banking super-tankers have holed themselves on the reefs of greed, selfishness, arrogance and some fairly suspect practice? It’s time for a fundamental re-think. The infrastructure underpinning many employment brands is clearly in need of a dramatic overhaul.

The current witch hunt for high profile scapegoats amongst the executive leadership cadre may “give good headline” but this sideshow threatens to distract from the core issues. Controversially I would go so far as to suggest that the culture problem is a widespread issue every bit as serious as the accusations of systemic racism levelled at the police force back in the 90s. Arguably this crisis will have even more far reaching consequences.

Far from being advocates of what have often been derided as “nice to have” initiatives, in these tough times, organisation development should be prioritised as part of the recovery process and OD professionals should be leading the revolutionary line. The time has come for comprehensive internal reviews followed by an energetic re-positioning of the vision, mission and values and associated people processes within many of our leading brand names. This should be the first step towards a re-framing of the definition of performance in the context of the employer or employment brand

This is a complex issue but consider for a second the long established theory that an individual is at their most effective within a role some 2.5 years into the job. Or reflect on the equally established best practice that leaders should spend most of their first 100 days listening and gathering information. Contrast this with the notion of “hitting the ground running” and the obsession with quarterly shareholder reporting and year on year incremental targeting regardless of conditions. Mixed messages?

It seems a little old fashioned in these high octane times but there’s sound logic underpinning leadership best practices which call for considered, well paced decision making based upon an understanding that the decision makers will still be around when the impact of their decisions come to fruition.

Bankers, for example, used to be remunerated on the basis of loyalty bonuses and benefits packages at preferential rates. Not so long ago, any posting on a c.v. revealing tenure in a role of under three years was viewed with suspicion. Lift the drains on the recent recruitment drive amongst the retail banking sector and you will be greeted by whole teams made up of job-hopping former investment bankers.

Of course the flipside of low employee turnover includes problems with innovation, pace and inertia. But inertia and stability are two very different things. The latter was once a highly prized commodity even in important parts of the investment market but was derided by the “short termists”. What wouldn’t shareholders now give for even incremental returns on their investments?

Those in the know suggest that many of the high profile leaders who will be appearing in committees over the next few months have been off the record advocates of culling grey hair in their staff ranks. What price wisdom now?

Don’t get me wrong. I very much believe in the notion of a culture of performance. That’s why we’re all in business after all. I just don’t believe in the notion of winning at all costs.

I’m realistic enough to understand that sustainability, network building and relationship development are the bedfellows of integrity, accountability, security and trust (the values, ironically, most popularly used to advertise the wares of financial services companies). I’m certainly not calling for a complete return to the old hierarchies and command and control regimes but it’s clear that there’s going to have to be a large dose of mature, “back to the future” thinking if the nirvana of an appropriate and authentic performance culture is ever going to be achieved by arguably our most influential businesses and brands.

If you would like to know more about how to develop a people centred approach to culture development and brand engagement drop us a line.

Ian Buckingham is the author of Brand Engagement: How Employees Make or Break Brands

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