Is a True Meritocracy Possible in Business?

Rewarding employees based on performance requires buy-in from the entire company, including its leadership. Even so, is it even possible?
meritocracy

The concept of meritocracy sounds great in theory. The harder an employee works while producing their job’s desired results, the farther they are likely to advance in an organization and career. However, business experts have differing thoughts on if this idea of a true meritocracy exists in business.

Talent Economy spoke with a consultant and a professor who disagree on most areas of this argument.

What Is Meritocracy?

“Meritocracy is where each person’s performance is used to determine their compensation level, potential promotions, ownership and partnership opportunities and various other perks and benefits,” said Russ Minary, founder and president of On Purpose Enterprises, a talent consultancy focused on hiring strategies based in Larkspur, Colorado.

“I think it’s a lot of nonsense, really,” said Nigel Nicholson, professor of organizational behavior at London Business School and author of “The I of Leadership: Strategies for Seeing, Being and Doing.” Nicholson doesn’t believe that meritocracy is possible because individual accomplishments aren’t always the results of their own efforts. Due to differing resources and other circumstances, people are often on unequal playing fields even from the time they attend school to instances of when they succeed and fail, meaning their fate isn’t always in their hands.

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“For me, meritocracy is one in which people are full participants as agents for their own destiny, for their own role allocation,” Nicholson said. Rather than implementing the practice of measuring people and then putting them in positions that management feels are best, people should be able to try jobs to find out what works for them, thus providing new opportunities they otherwise wouldn’t receive based on their background and training.

“I would like to see organizations become more ethical, to be more kindly, to be more flexible and have more belief in human adaptability and helping people learn and develop and to move along paths that open their eyes,” Nicholson said.

What Role Does Measurement Play?

For companies that want to implement a meritocratic system, Minary said that it has to apply to everyone within the organization. In a sales team, for instance, if sales executives aren’t held to the same standards as their subordinates, then it will fail. Standards of fairness should apply to everyone from the front-line employees to the CEO and board of directors, Minary said.

As far as who sets these standards, Minary advocated for a collective decision. “It’s got to be, at some point, a team effort if it’s going to work,” he said. Sales goals, for example, must be set by both the sales leadership and those they’re managing. If set by another area of the company, then the system of meritocracy will likely fail.

To be sure, sales teams are relatively easy to measure compared to other corporate functions; some would argue that other roles are harder to collect data around. Still, Minary argued that everything in work nowadays can be measured, especially with the web’s ability to collect data on performance and outcomes.

“If it can’t be measured, I don’t think it’s worth doing,” he said.

There are three things that leadership needs to create meritocracy, according to Minary:

  1. Leaders’ ability to be honest with themselves and be able to evaluate their results honestly. Leaders should ask themselves, “Have I done my job well relative to some objective standard?”
  2. Everyone needs to be accountable to the same system. Leaders can’t hold people to a standard if they aren’t also accountable to it.
  3. There must be discipline that says if employees perform to a certain standard, they’ll be rewarded. “If you don’t do it, you can work; you just can’t work here,” Minary said. He noted that this is the area that makes people nervous and why many say it wouldn’t work.

In his experience, Minary sees that rewarding performance is highly motivating, while increasing profits and employee retention. However, as he sees success, a system of measuring performance could also have its flaws.

Because performance determines rank and compensation in a meritocracy, there are risks to underperforming. This makes some people nervous, especially among leadership, Minary said. The higher that employees get in an organization, the more comfortable they can be with contributing less. But meritocracy “comes down to individual, personal responsibility. I think that some people think that’s a passe concept. I don’t,” Minary said.

London Business School’s Nicholson said that ranking people isn’t a rational system to begin with. “In the back of people’s minds, it’s the idea that the organization is a kind of rational labor market, and good people will rise, and you can measure how good people are in some absolute ways,” he said. Talent management technology systems, Nicholson said, reduce human qualities to a single quotient that shows who is better than the other in organizations. However, the hierarchy isn’t based on merit because people are judging one another and making career decisions for them, Nicholson argued. Finally, measurement of people is not done well. “My beef is that it’s a game, and people are gaming the system and pretending that it’s a rational system,” Nicholson said.

The results of this aren’t healthy. “Your so-called meritocracy results in a poisonous, poisonous culture where people are obsessed with how good they are,” and people look down at each other or with fear and wonder if they’re good enough to hold the position, Nicholson said.

Nicholson also argued that individual accomplishments aren’t always the results of their own efforts; there is a great deal of luck and uncontrolled variants in outcomes from employees. Success also has a lot to do with motivation, he said, and despite the knowledge and skills of individuals, some will have more motivation than others, along with some having more visibility than others.

“We like to believe our own fictions that we are the masters of our fate, that nothing outside ourselves influences these outcomes,” Nicholson said. “It’s a lot of baloney.”

Lauren Dixon is an associate editor at Talent Economy. To comment, email editor@talenteconomy.io.