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In light of some of the potentially-frustrating or miraculous changes impending on ADM (depending on which way the cookie crumbles), I thought I would take a moment to talk about the Peter Principle.


For those that don’t know, the Peter Principle is the idea where someone is promoted to the point of incompetence.  They simply work their way into a job with duties their not capable of fulfilling.  It is a virus that happens far too often in our industry.  Someone is good at their current job and it earns them a promotion with responsibilities that they do not have the understanding, know-how, background, or ability to handle correctly.  It is going around more and more.


Allow me to say that just because you are a great salesperson does not mean you will be a great sales manager.  Just because you are a successful sales manager and can close deals on TOs doesn’t mean you are a solid candidate for GM.  Just because you are a powerhouse in F&I (and can kink more deals than Congress) doesn’t mean you are worthy of ownership stake in a dealership.  Just because you are a superstar software tech working for a vendor doesn’t mean you know one thing about what a dealership needs from your technology.


This is a fast-moving consumer that we are assisting nowadays and the gross-oriented superstars of the past should not be promoted into a position of power or decision-making unless you are looking for a damaged reputations and some old-school sales tactics regressing your store.  As a dealer, you must seek out the most passionate and forward-thinking professional you have in your store and allow them to dictate their own future with their own advertising budgets.


As someone who speaks to GM after GSM, it is abundantly clear that dealers don’t recognize the shifting mindset that management needs to have.  It is no longer about what you know or what you’ve done, but what you are willing to learn.  If you have a person in a position of authority and power dictating the rules, regulations, strategies, and technologies on behalf of your Internet team when they themselves have no experience with the medium, you are doing your entire dealership a disservice.  Also, if you run a company that provides dealerships a service, but you put your own personal agenda before that of your clients and strong-arm others into adapting to your desire, than I ask you politely to promote someone with more competence.


I am sick of seeing many dealerships hurt because the wrong people are calling the shots.  I am tired of watching our industry take two steps back every time someone with power makes a decision fueled by ego or ignorance.  Stop promoting those with tunnel vision or those that are blind to the way of digital marketing.  Don’t listen to those whose own agenda, spites, and machismo overrides the greater good for the company.  These people are putting up stop signs in front of your business every time they overrule someone with a digital vision.


The Peter Principle should be avoided at all costs, but it is most deadly to a store’s success when that person’s lack of understanding is at the same level as their ego.  Promoting to the point of incompetence will drive your dealership – or your company – backwards.  Put the best and brightest in charge instead, those with ideas, and you will see your success flourish.


Views: 58

Tags: automotive, consulting, dealerknows, joe, paglia, peter, principle, ralph, redundancy, webb


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Comment by Rob Fontano on December 20, 2010 at 11:11am

Joe, I completely agree with you position. We as an industry are rapidly approaching the place where the emphisis must be on hiring people who are willing to learn and grow and not for all of the success that have had selling cars in the past.

Comment by Ralph Paglia on December 16, 2010 at 6:37pm

Joe - You have put words to a sentiment shared by many of us out here in the business of improving dealership operating results.

Comment by Matthew Clark on December 16, 2010 at 4:56pm

Joe -

Well put and timely.

In our organization we have, and have had for a long time, a mantra that says

"The thinking, things and ideas that got us where we are will NOT take us where we want to go"

The Peter Principle  at it's finest.

Like you I have been in about 1000 dealerships in the past 10 years or so and have witnessed first hand too many times how a growing, flourishing dealership seems to hit the rocks when an ego-centric (or ego-ignorant) person in authority seems to just blow up EVERYTHING - seemingly for no reason.

Yes they say "Hey - I've been very successful doing it THIS WAY" for many years…

Real meaning –

  • I’ve just never actually been run out of business yet.
  • I’ve been associated with a franchise that is so bullet proof even my incompetent ignorance is no match for the brand.
  • I’ve never actually been any where long enough for my gross incompetence to catch up with me
  • I’m too afraid to change – I really don’t know WHY my old ways worked (or when they stopped) but fear of something new scares the be-jeebus out of me.


While we do work in a very EGO driven business (think about the folks who post here – shrinking violets??!) I am always mindful to be on the look out for both the dealer/GM/GSM who knows it all – and isn’t afraid to tell you, and the same who will listen, ask questions and consider all options.

I think you are correct when you say there seem to be a lot more of the former now than is the past. As the industry improves a lot of the once GREATS have gone on and have been replaced by a cheaper, less experienced version with a lot less real experience but still unfortunately the same power…


Now that we’ve brought and identified the problem…, What’s the solution?




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