We present a computer model of general effectiveness of a hierarchical organization depending on two main aspects: effects of promotion to managerial levels and efforts to self-promote of individual employees, reducing their actual productivity.

It is shown in the simulations that the combination of Peter Principle (which states that people are promoted to their level of incompetence) and Dilbert Principle (which postulates that promotions are based on appearance of competence rather than true competence itself)  results in fast declines in effectiveness of the organization. 

We discuss the correspondence of model parameters to specific class of organization, namely sales structures in large commercial organizations. Despite the apparent ease of measurement of effectiveness of salespeople through actual sales results, use of differing metrics may lead to different degree of self-promotion. It is shown that improving organization resiliency to self-promotion and continuity of individual productiveness after a promotion can greatly improve the overall organization effectiveness.

We also discuss similarity to biology, where so called `costly signalling' mechanisms have evolved to avoid the trap of Dilbertian judgment by appearance. 

1. PRESENTATION: Dilbert-Peter model of organization effectiveness: computer simulations, PDF document, version 1.4, 0.2MB

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