Meritocracy mirages

It is largely a consensus across organizations. It is promoted as a core tenet of their culture. Everybody agrees it is the fairest model to reward individuals for their merit, abilities, and potential. Why does it frequently fail? Meritocracy is a thorny concept since it is difficult to define, to implement, to measure. But it still is a worthy pursuit. An ownership-minded culture depends on it. ??

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As first defined by Michael Young in his 1958 book “The Rise of the Meritocracy”, Meritocracy ”refers to a society where advancement is determined by an individual's talent, abilities, and hard work rather than social status or inherited privilege. In a meritocratic system, individuals are expected to rise to positions of influence and power based on their merit, with the most capable individuals occupying the highest roles”.

In order to properly work, a meritocratic system requires equal opportunities, so individuals have a fair chance to showcase their abilities. It also requires objective assessment of merit, avoiding biases and favoritism. Finally, it requires fairness and proportionality in setting rewards. Each of these pillars has its intrinsic challenges.

Equal Opportunities. Meritocracy assumes that individuals have full control over their outcomes and that success is solely a result of their efforts and abilities. But many factors fall beyond the individuals’ control and can play a big role in their success, such as bias or luck. Over the long term, a truly exceptional individual might be able to mitigate these uncontrollable factors, but many promising careers are disrupted by short term results.

It is very difficult to guarantee a level playing field across an organization. Some individuals might be fortunate to be assigned to divisions with a bias for overperformance, from either internal (e.g., a division with competitive advantages) or external (e.g., a division benefited from a positive regulatory change) factors. Or they might be assigned to a manager that favors them over others, and thus get assigned to better projects, get easier targets, and are prioritized for promotion based on subjective or biased preferences. If targets and expectations are not fairly set, these individuals’ chance of meeting their targets and building a good track record is higher than for other people in the organization.

Objective Assessment of Merit. Some aspects of merit are inherently subjective. The definition of “talent” and “potential” is elusive. It is very hard if not impossible to eliminate bias or subjectivity in judging leadership qualities, innovative thinking, and even artistic talent, although these are important aspects of merit.

Even if targets are objective, the level of stretch embedded in them might not be. It is not trivial to ensure targets across an organization have a systematic approach to ensure stretch or difficulty levels are consistent. Managers, like every human being, can be very subjective, and might set softer targets for individuals they personally have better rapport with.

Also, the achievement of targets can be gamed, especially since targets have a short-term bias. I have met a few individuals in my career that were quite apt in getting promoted by delivering their short-term targets with little regard to the long-term impact of their actions (which would be inherited by the next person holding the role).

Proportionality & Fairness of Rewards. Another difficulty is ensuring that rewards are fair and proportional to the individuals’ merit across functions, divisions, grades, etc.?Given all the issues around assessment of merit, how much should an individual be rewarded based on one aspect of merit vs. another? How valuable to the organization is an achievement in a support function vs. a customer acquisition in sales? How valuable is the delivery of short-term targets vs. showing potential to take on a senior leadership role?

All in all, there is no perfect model of Meritocracy. As I mentioned in “Designing Carrots”, organizations should ensure the policies and processes promoting Meritocracy are as simple as possible, so they are easier to understand, to communicate, to implement, and to assess. Overengineered models create confusion and make it difficult to identify issues, let alone mitigate them.

Organizations need to strive to make target setting and merit assessment rules as objective and clear as possible and evolve the model continuously to improve it. Clarity allows individuals to understand what is expected of them and enables evaluators to make judgments based on merit that are more consistent and unbiased.

Organizations should proactively identify and address biases that can influence evaluation and decision-making processes. For example, bias awareness training, structured interviews, standardized tests could help mitigate the impact of biases and create a fairer system.

Individuals should get regular feedback and opportunities for development, so they understand their strengths and areas for improvement, enabling them to enhance their performance.

Organizations should promote continuous learning and development, providing individuals with opportunities to enhance their skills and progress within the organization. This can include mentorship programs, training initiatives, and performance feedback mechanisms.

Organizations should ensure they set reasonable compensation ranges and limited skewness in the distribution of rewards, fostering a sense of fairness.

Ultimately, involving employees in the design and evaluation of reward systems can provide valuable feedback for continuous improvement of Meritocracy. It would also foster a sense of ownership and collective agreement on the fairness of the system.

In doing so, organizations can ensure that their Meritocracy, although imperfect, is being perfected continuously. Its commitment to a fairer system is a critical factor in building trust with employees and building an ownership-minded culture. And ownership-minded leaders are more prone to check themselves for biases and fairness for the benefit of the organization’s long-term prospects.