The Peter Principle

According to wikipedia, the Peter Principle is the principle that "in a hierarchy every employee tends to rise to their level of incompetence". In other words, at some point an employee will be promoted to a job that they are not incapable of performing. In my experience, that happens a lot even on initial hiring. That's why it is best to have high employee turnover. You want to make sure you're constantly shedding the deadweight and bringing in new talent.

It's also an argument for never promoting anyone in your company. There's a reason for nepotism. Just appoint people you like as figureheads to the higher paying positions (but not too high paying, mind you. That would eat into your paycheck). If you promoted from the lower rank grunts, they'll more than likely be incompetent anyway. You could even promote randomly for improved efficiency. If you start with an assumption of incompetence, you'll be far better off in managing your company.