Who says meritocracy says oligarchy

Back to Why Elites Fail by Christopher Hayes and his thoughts on the challenges of meritocracy.

The dynamic Michels identifies applies, in an analogous way, to our own cherished system of meritocracy. In order for it to live up to its ideals, a meritocracy must comply with two principles. The first is the Principle of Difference, which holds that there is vast differentiation among people in their ability and that we should embrace this natural hierarchy and set ourselves the challenge of matching the hardest-working and most talented to the most difficult, important and remunerative tasks.

The second is the Principle of Mobility. Over time, there must be some continuous, competitive selection process that ensures performance is rewarded and failure punished. That is, the delegation of duties cannot simply be made once and then fixed in place over a career or between generations. People must be able to rise and fall along with their accomplishments and failures. When a slugger loses his swing, he should be benched; when a trader loses money, his bonus should be cut. At the broader social level, we hope that the talented children of the poor will ascend to positions of power and prestige while the mediocre sons of the wealthy will not be charged with life-and-death decisions. Over time, in other words, society will have mechanisms that act as a sort of pump, constantly ensuring that the talented and hard-working are propelled upward, while the mediocre trickle downward.

But this ideal, appealing as it may be, runs up against the reality of what I’ll call the Iron Law of Meritocracy. The Iron Law of Meritocracy states that eventually the inequality produced by a meritocratic system will grow large enough to subvert the mechanisms of mobility. Unequal outcomes make equal opportunity impossible. The Principle of Difference will come to overwhelm the Principle of Mobility. Those who are able to climb up the ladder will find ways to pull it up after them, or to selectively lower it down to allow their friends, allies and kin to scramble up. In other words: “Who says meritocracy says oligarchy.”

I think Hayes is on to something important though I think it more complex than he indicates.

A complicating factor is that the challenge is our comprehension of "matching the hardest-working and most talented to the most difficult, important and remunerative tasks." I suspect that on first read, most people would interpret this as matching the smartest and hardest working to the most productive work. However, productive work consists of two elements, maximizing a desired outcome AND minimizing risk. Measuring maximized outcome can be complicated but it is relatively straightforward compared to measuring the impact of minimizing/mitigating risk.

For a number of years I ran global consulting businesses and as part of that we had reasonably rigorous and measured performance reviews semi-annually. Individual consultants were measured based on their contributions to the culture of the organization, the stockpile of knowledge, sales, service delivery, and people management. It was very meretricious and in general it worked extremely well. The one structural challenge arose from the practical realities of major project management.

Periodically we would have a project begin to head off the rails. It might have arisen from some poor performance of key members of our team but usually the problems were sourced on the client side. Their people were not delivering critical path deliverables, there was conflict among their executives, etc. When these situations arose, you needed to put in someone who not only was good at project management and service delivery and billing and collecting, etc. You needed someone with diplomacy and negotiating skills and most critically a strong sense of risk management.

From a performance measurement perspective this created a paradox. You would tend to put your very best people on the most challenging projects with the worst prospective metrics. Projects where simply delivering a break-even outcome might be a huge achievement. So how do you build an objective performance measurement system that rewards people not only based on what they did achieve but also rewards them for what they were able to avoid? We never got to a good systematic solution on that and basically ended up making select executive decision interventions to ensure fairness; a work-around sufficient as long as all participants trust the judgment of the executives but one prone to abuse.

I raise this as an example of complexity in the meritocratic system. Success is as often about problems avoided as it is about opportunities realized but avoided problems are far more difficult to measure objectively. This is another aspect of the Bastiat's issue of the seen and unseen (The Broken Window)