Lawrence J. Peter published his "The Peter Principle" back in 1969. It was considered, in part, "tongue-in-cheek". Not fully serious. But, like the Dilbert views of management, there is still a lot of truth to the idea. At the base, this principle says that a person will rise to a level in which they are no longer competent. If taken to extreme, this says that a lot of positions within management will be filled with non-competent people. The only competent ones would be the ones still in the process of rising to their own, individual, levels on incompetency.
In order to weigh the realities of this, it is important to understand the reasons people get promoted and how they actively try to achieve promotion. People get promoted because of time, connections, rewards for accomplishments, and demonstration of required skills. People actively achieve promotion primarily via self-visibility and networking.
The factor of time is especially important within strongly bureaucratic organizations. Government positions are often of this nature. There are strictly defined employment "levels" and it is expected that people will rise from one level to the next within a specific range of years. Thus, some rise more quickly and others more slowly but all are expected to rise in a steady fashion. This has some merit in that it is possible to gather applicable experience as years progress (it is also possible to avoid gathering experience and, instead, make use of methods of avoiding actual work).
Connections can include nepotism but it also can include general networking. In the case of general networking, it usually means being brought in to a position from outside the company rather than being promoted into it. Within certain types of businesses, having a large active personal network may be considered to be an attribute useful to the company and a factor for promotion.
The factor of awards for accomplishment seems to have merit. A promotion usually includes an increase in salary, perks, and title. With these, an increase in authority and recognition usually occurs. The problem with this route of promotion is that the skills, for which the person is rewarded, are not necessarily the skills needed in the position to which they are promoted.
The other major path for promotion is demonstration of required skills. This requires active participation by current management -- preferably the person to whom one reports. Tasks are delegated, skills learned, and eventually the person can "step into the shoes" of the person to whom they report. These required skills can be obtained in other ways but recognition, and rewarding, of such becomes more difficult without active management participation.
The factor of time just requires a calendar and the ability to check it occasionally. Other paths require that the person be noticed. This varies a lot between different work cultures. In some cultures, a person can explicitly self-promote -- "see what I've done, can you assign me to that, are there any positions opening up for promotion?". Doing this can be difficult for many people. In other cultures, active self-promotion can be counter-productive as it can be seen as not being part of the team.
So, with these ways of being promoted, what about the "Peter Principle"? Both time and awards have considerable danger of the person not having the skills needed for the level to which they are promoted. Developing the skills SHOULD, inherently, mean that the person is qualified for that next level, It often may do such but there is also the possibility that the skills learned are not the skills needed for continued promotion.
With such caveats, it looks like the Peter Principle can still often take place. There is nothing wrong with a person hitting a ceiling -- as long as they are qualified for the position in which they rest and if they are not actively prevented from acquiring the skills, experience, and ability to continue to rise. The latter often occurs within company cultures and may make it difficult for the culture to change or to accept all those who can positively contribute to the value of the company.
