Gone are the days when human resource was just considered to be back end work. Today human resource at a startup is considered as more of a business partner, advisor and mentor to the management. If a startup has to reach the peak of success, it is possible only through out of box and innovative thinking and through a well placed human resource and best practices.

But a problem many startups fail to realize is the one highlighted by ‘The Peter Principle’. It means that employees, who are a part of the hierarchical organization, are eventually promoted to the highest level of competence, after which further promotion raises them to incompetence. The employee’s incompetence is not necessarily exposed as a result of the higher-ranking position being more difficult – simply, that job is different from the job in which the employee previous excelled, and requires different work skills, which the employee may not possess. This is exactly the reason why most employees in a startup fail to deliver excellent results.

The move to incompetence in most startup occurs when ‘technical people’ try to step into management or executive roles, for which they have no aptitude, training or interest. And needless to mention but many technologists have tried to run startups and failed for this reason.

Some ways of solving the problem are, concentrating more on communication skills of employees, mentoring or training or probably keeping a check on the spectrum of responsibilities the employees have. The keys to avoiding ‘the Peter Principle’ are further explained in the article below:
http://blog.startupprofessionals.com/2009/12/peter-principle-thrives-within-startups.html

Recognize and deal immediately with the occurrences of Peter Principle because a good HR team is an asset to any startup, as mentioned earlier. 

The Peter Principle is something that we all have to deal with, in our own career, and with other team members. In a small startup, everyone has to carry a maximum load for survival, and everyone sees the non-performers. If you are the last to see the problem, or the last to react, maybe it’s time to look in the mirror.