Ig-Nobel Prize 2010 for Management
University of Catania (ITALY) and INFN
demonstrating mathematically that organizations would become more efficient if promotions were made at random!
Who should you promote to improve the efficiency of your organization?
"Peter Principle Revisited: a Computational Study" by A.Pluchino, A.Rapisarda and C.Garofalo ,Physica A 389 (2010) 467 (http://arxiv.org/abs/0907.0455)
Versione in Italiano qui
Click on the image below to start the Java applet
In the late sixties the Canadian psychologist Laurence J. Peter advanced the apparently paradoxical principle which can be summarized as follows: 'Every new member in a hierarchical organization climbs the hierarchy until he reaches his level of maximum incompetence'. Despite its apparent unreasonableness, such a principle would realistically act in any organization where the way of promotion rewards the best members and where the competence at their new level in the hierarchical structure does not depend on the competence they had at the previous level, usually because the tasks of the levels are very different between each other.
This applet, realized with NetLogo, shows that if the latter two features actually hold in a given model of an organization with a hierarchical structure, then not only the 'Peter principle' is unavoidable, but it yields in turn a significant reduction of the global efficiency of the organization.
The applet consider a prototypical pyramidal organization made by six levels, where each agent is characterized by an 'age', increasing in time, and by a 'degree of competence', which is represented by a colour scale of increasing intensity and which includes all the features characterizing the average performance of the agent in a given position at a given level.
At each time step all the agents with a competence under a given dismissal-threshold or with an age over a given retirement-threshold leave the organization and their positions become empty (yellow). Simultaneously, any empty position at a given level is filled by promoting one member from the level immediately below, going down progressively from the top of the hierarchy until the bottom level has been reached. Finally, empty positions at the bottom level are filled with the recruitment of new members.
The applet provides two possible ways for the transmission of the competence of an agent from one level to the next one: the 'common sense hypothesis', where a member inherits his old competence in his new position with a small random variation ądelta, and the 'Peter hypothesis', where the new competence of every agent is independent from the old one and is assigned randomly. For each one of these two ways exist three different ways for choosing the agent to promote at the next level: the most competent ('The Best' strategy, suggested by the common sense and adopted also in the Peter principle), the less competent ('The Worst' strategy) or one agent at random ('Random' strategy).
In order to evaluate the global performance of the organization was introduced a parameter, called 'global efficiency', calculated step by step by summing the competences of the members level by level, multiplied by a level-dependent factor of responsibility ranging from 0 to 1 and increasing by climbing the hierarchy (such a factor takes into account the weight that the performance of the agents of different levels have on the global efficiency of the organization). The result is normalized to its maximum possible value and to the total number of agents, so that the global efficiency can be expressed in percentage.
This applet was realized by A.Pluchino, Department of Physics and Astronomy, University of Catania, and it is provided as supplementary information for the paper 'Peter Principle Revisited: a Computational Study' by A.Pluchino, A.Rapisarda and C.Garofalo, Physica A 389 (2010) 467 (http://arxiv.org/abs/0907.0455)