The Peter Principle

So the morning started off with a series of management meetings with some very difficult issues to discuss:
develop, implement and improve current institutional career structures and employee recognition programs!

All I could think about is the Peter Principle. You never heard of it? Then check out this article
http://www.businesspundit.com/40-years-after-peter-principle-promotion-still-arent-a-science/

Last year improbable Nobel Prize was not so improbable after all! Check out this solid Italian research group at the University of Catania:
http://arxiv.org/PS_cache/arxiv/pdf/0907/0907.0455v3.pdf

They developed a computational method that proved that in a hierarchical structure promoting at random,  or randomly alternating the promotion of the best and the worst members actually improves the efficiency of an organization.

It is no news to anyone that most management is indeed incompetent ! and now we have scientific proof! No matter what we do, we will reach our level of incompetence soon or later and the warning signs are many.

So what to do?? Not promoting is not an option. I am personally a strong proponent of rewarding based on performance. However the latter requires evaluation of performance by management, and so we really are in a pickle of a situation! Any suggestions??