In describing the Peter Principle, Laurence Johnston Peter stated, “In a hierarchy every employee tends to rise to his level of incompetence… In time every post tends to be occupied by an employee who is incompetent to carry out its duties… Work is accomplished by those employees who have not yet reached their level of incompetence.” This is an interesting principle and is often used to describe government employees within a bureaucracy. It is also found within management of the healthcare system. Research by Success Profiles, a consulting firm, indicates that the Peter Principle is accelerating in healthcare for the following reasons.

1. Degree of difficulty – the complexity of healthcare leadership assignments is increasing rapidly and outpacing the scope and skills of the managers. The cost cutting strategy of consolidation of management positions has lead to role creep and managers have more to manage.

2. Workload – Flattening of organizational management structures has led to more work for managers and sub-optimal performance. Author Tony Schwartz stated, “Even companies committed to creating positive work environments mostly continue to operate as if their people have infinite capacity, and are able to do ever more, with fewer resources. Precisely the opposite is true.” As hospitals cut costs and add more workload to managers, the process can produce workers who are unable to manage their workload, thus appearing incompetent.

3. Underdevelopment – Healthcare organizations are not dedicating as much in resources for professional development in areas such as leadership as in the past. This again is an economic decision often born out of necessity. Technologies are increasing within healthcare requiring managers to participate in training to learn new software and equipment.

All of these issues contribute to the Peter Principle in healthcare and specifically in hospitals. An example of this could be a floor nurse becomes a charge nurse and then a nurse manager. The next promotion is to a nurse administrator but they may not have the administrative skills necessary to fulfill the responsibilities of the position. They are continually promoted due to their years of service at the hospital.