According to The Peter Principle, people in hierarchical organizations tend to be promoted until they reach a position at which they are incompetent. The way managers manage depends on whether they have achieved incompetence or are still on the path to it.
The competence of an employee is determined not by outsiders but by his superior in the hierarchy. If the superior is still at a level of competence, he may evaluate his subordinates in terms of the performance of useful work. … This is to say, he evaluates output.
But if the superior has reached his level of incompetence, he will probably rate his subordinates in terms of institutional values: he will see competence as the behavior that supports the rules, rituals and forms of the status quo. Promptness, neatness, courtesy to superiors, internal paperwork, will be highly regarded. In short, such an official evaluates input.
Emphases in the original.
Much of The Peter Principle is humorous and exaggerated, but the excerpt above is neither. It is simply a description of how organizations work.