"El liderazgo efectivo no se hereda, se construye con preparación y visión"
“In a hierarchy, every employee tends to rise to his or her level of incompetence.” This statement, stated by Laurence J. Peter in his book The Peter Principle (1969), resonates strongly in the context of family businesses. These organizations, whose success depends largely on continuity and effective leadership, face a unique challenge: How to ensure that people in management roles are truly prepared to lead?
The Peter Principle states that, in a hierarchy, people are often promoted based on their performance in a previous role, until they reach a level where they are no longer competent. In family businesses, this phenomenon can be particularly critical when the management succession falls to a family member who, although successful in other areas, lacks the necessary skills to lead the organization.
From my experience advising family businesses, I have observed how this dynamic can put the stability of the business and, in some cases, family harmony at risk. The traditional succession system, based on seniority or family law, does not always guarantee that the successor has the appropriate skills to lead. Therefore, it is crucial to adopt a more strategic approach that allows us to overcome this limitation.
Strategies for effective management succession
The Peter Principle does not have to be an inevitable doom. With the right practices, family businesses can build a succession system that prioritizes talent and preparation. Here are some key recommendations:
Comprehensive competency assessment
Before defining the next CEO, it is essential to carry out an evaluation that considers not only technical skills, but also leadership competencies, strategic thinking and the ability to manage conflicts. This evaluation must be objective and based on criteria aligned with the company’s future challenges.
Custom development plans
Identifying potential successors with sufficient time allows you to design training and mentoring programs that prepare them to assume leadership. These plans may include training in key areas such as finance, strategy and team management.
Alternative trajectories
Instead of assuming that the only path to success is to become CEO, family businesses can create horizontal trajectories that allow family members to contribute in roles aligned with their strengths. This encourages an approach based on talent, not title.
“Succession is not a prize, it is a strategic decision to guarantee continuity.”
External mentors
Incorporating outside experts or advisors into the succession process can provide an unbiased perspective and enrich the successor’s preparation. These mentors can also help identify areas of improvement and accompany the transition.
Feedback continuo
Creating a culture of constant feedback makes it possible to identify the strengths and weaknesses of the future leader from the early stages. This facilitates adjustments to the development plan and reinforces the commitment to continuous improvement.
Looking beyond the rise
The Peter Principle invites us to reflect on how we understand success within family businesses. Succession should not be seen as a reward for past performance, but as a strategic decision that guarantees the continuity and prosperity of the business.
in his book BeginningRay Dalio reinforces this idea by proposing a meritocratic system based on skills, adaptability, and objective evaluations. Family businesses that take this approach are more likely to prevent their leaders from reaching a level where they are no longer effective.
In family businesses, the balance between tradition and modernity is essential. The paradox is that to preserve their legacy, they must be willing to question how they choose their leaders. As Peter says at the beginning: “What led us to success is not always what will lead us to the future.”
The Peter Principle remains valid and offers valuable lessons for those seeking to build effective and sustainable succession systems. Let us remember the words of Peter Drucker: “The best way to predict the future is to create it.” May each decision in the management succession be a conscious commitment to a prosperous future.
Contact:
Twitter: @mariorizofiscal
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