Workshop on “Causality in Complex Systems”, Mt. Tamborine, July 2009 A Thought-Piece from Dave Sonntag (via David Batten) The “Peter-and-a-Half Principle”: Towards Better Organisation

The Peter Principle? There's a paradox at the heart of most Western organizations  The people who perform best at one level of an organization tend to be promoted on the premise that they will also be competent at another level within the organization. Doubtless most of us will have had personal experience of the way that this hypothesis fails in practice. In 1969, a Canadian psychologist named Laurence Peter encapsulated this behaviour in a rule that has since become widely known as “The Peter Principle”: "All new members in a hierarchical organization climb the hierarchy until they reach their level of maximum incompetence."

Enter ABM That's not as unfair as it sounds, say Alessandro Pluchino and buddies from Universita di Catania, who have explored this behavior using an agent-based model (ABM) for the first time. So called “common sense” tells us that a member who is competent at a given level will also be competent at a higher level of the hierarchy. Thus it may well seem like a good idea to promote such an individual to the next level. But, as CAS fans, we know that common sense often fools us. It's not hard to see that a new position in an organization requires different skills, so the competent performance of one task is unlikely to correlate well with the ability to perform another task well.

Pluchino and colleagues Pluchino and co have simulated this practice with an agent-based model for the first time. Sure enough, they found that it leads to a significant reduction in the efficiency of an organization, as incompetency spreads through it. That must (or ought to) have an uncomfortable ring of truth for some CEOs. But is there a better way of choosing individuals for promotion? It turns out that there is, say Pluchino and co. Their simulation results showed that two other strategies outperform the conventional method of promotion.

Finding Better Organisation The first is to alternately promote first the most competent and then the least competent individuals. …. and the second is to promote individuals at random. Both of these methods improve, or at worst do not diminish, the efficiency of an organization. What would be a suitable prize for the first CEO to implement such a policy? CONCLUSION RE INTERVENTION IN CAS: In certain CAS, simulation can help to identify superior strategies that have proved to be difficult to explore experimentally in the actual system of interest.