Saturday, May 31, 2014

Achieving Meritocracy

Andrew D Atkin:















We all work for ourselves - not our companies. That is the problem.

In my never too humble opinion, meritocracy is everything. If you can get the right people in the right places, then it's hard to fail. Revolutions become unnecessary as rational reform becomes automatic, corruption becomes trivial and self-sterilising, and mistakes are quickly rectified and learnt from.

A fantastical scenario of course, but it's worth looking at how we might get closer to that ideal.

The most potent disciplining force we know of today for driving a merit-focused reality is, from a general outlook, competitive free markets. But even the private sector is still highly traditional and less merit-focused compared to what it could be, in my view.

Relating to large organisations in particular, I would like to introduce an idea for reforming how the power structure works to the end of optimising merit.

Most would agree I think that virtually every employee in an organisation works first for themselves - not their company. They are only interested in their company's success insofar as it equates to their own. And they are only interested in a subordinate's or superior's success insofar as it equates to their own. This is a problem because it leads to internal competition of the type that leads to unprofessional bias. If you think that's not true then look at the way you choose your words so carefully when talking to your boss - a direct expression of the (rational) fear of unprofessional bias. (I would also describe it as a communication breakdown, but that's getting off track a bit).

Unprofessional bias equates to hiring/firing/promotion/demotion decisions that are not based squarely on merit. This obviously damages efficiency and the bottom-line. Not only do you get more b-grade people holding positions that they shouldn't, but you signal to the more talented that they're wasting their time in the organisation they're in (so they go elsewhere).

The less meritocracy you have, the more toxic your selection criteria becomes. In a worst case (and sometimes realistic) scenario you may have no choice but to be corrupt to even get ahead at all.

So how do we reduce bias and toxic incentives, and improve merit?

One of the best ideas I can think of is to simply externalise personnel decisions so that all final-say recruitment decisions, from the bottom to the top of an organisation, are made by a specialised body that does not run the company operationally and is only answerable to the shareholders. A parallel hierarchy, if you like - an "external court".

The effect of this would be that any subordinate can speak freely (though you would expect respectfully, of course) to any superior because they're no longer threatened by their bosses all-powerful and potentially non-negotiable (and even hidden) opinion. A subordinate can have their trial in an objective "court" for performance appraisals and applications for higher positions. Their professional future will not be dictated by the singular opinions of their supervisors, of which can be bias (or even outright misrepresentative) for any given number of reasons.

What this system would do is simply enhance objectivity and openness in decision making, and that in turn allows for the evolution of a more precise meritocracy. That can only be a good thing - at least if you're a shareholder.

But, you would think that if this was the way to go, then surely we would have done it by now? Surely the shareholders would have woken up to the idea that their in-house 'old boy's clubs' might be taking them for a bit of a ride, and likewise review how their hierarchies are formed?

Nope. The world is a slow learner. For example, shortly after the Asian crises a couple of decades ago I remember seeing a documentary about a company based in Japan. This company had an extreme tradition-based hierarchy that they were forced to reform for their survival. They brought in some recruitment experts from America who were in turn given the power to completely redefine who went where and did what within that company, and of course in the name of objective merit. Sadly it took a desperate situation for the obvious to be actioned in practice. But like they say, turkeys don't vote for an early christmas. Initiatives like this will usually need to come from shareholders. Your executive officers probably won't be interested.

A star company focused on Merit:

My favourite company, Google, is moving in this more scientific direction with their thinking and techniques. Google is so massive as an organisation that it can make a study case out of its own recruitment structure, and to the end of testing to see if they're getting the best results in terms of having the best people in the right places. No traditions and assumptions - just data.

One (great idea) they've introduced is mandatory surveys given to subordinate staff where they rank their managers on given variables. This has apparently been highly effective in increasing managerial performance and transparency, and curiously the act of having these surveys alone has been shown to increase their performance (yep, as you would expect they take more care with how they relate to their staff).

Another curious thing Google has done is tested traditional credentials to see what they're really worth. Their own research has indicated that the on-the-job performance difference between a straight-A student and a 'pass' student is almost negligible. Their findings have induced them to not take grade-point-averages very seriously anymore, and so they don't.

[Good link on Google, here]

(I wonder if they'll test for the value of experience soon? Speaking personally, I would bet they'll find a rapid diminishing-return with that one as well...all depending on the type of job of course).

Conclusion:

But again, look at how long it takes to wait for people to do the obvious. Achieving Merit needs to be taken seriously. The significance of having a company run by the best people you can get is just too important, especially in an age of ever-greater innovation where being competitive is not as easy as just conforming soldier-style to a prior-established structure.

Google understands this only too well and they have taken real action to that end. I salute them. I hope other's will learn from their examples too.

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