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Divergent Views of Merit Complicate Merit-Based Corporate Practices - Ideas for Leaders
Idea #836

Divergent Views of Merit Complicate Merit-Based Corporate Practices

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KEY CONCEPT

Different evaluation experiences as employees can lead managers to different ideas about merit, complicating efforts for companies trying to establish merit-based processes for hiring, promoting, or rewarding people.


IDEA SUMMARY

Meritocracy is an ideal that today’s organizations strive for. However, the practice of meritocracy doesn’t often live up to the aspiration. For example, studies continue to show that women and minorities are paid less than their white male counterparts.

A study from MIT and Berkeley offers one explanation for why companies and organizations are not living up to their meritocratic goals. The study showed that different managers have different ideas of what constitutes merit. These differences are these different definitions or understandings of merit diverge in terms of content (for example, accomplishments only or accomplishments and personal attributes), metric (for example, qualitative measures versus quantitative measures), and unit (that is, the merit either involves the individual only or the individual and the team).

The source of these different views of merit is found, according to the research, in the evaluation experiences of the managers when they were employees—experiences that for most managers were perceived as either mostly good (leading to positive outcomes) or mostly bad (leading to negative outcomes).

Based on the outcomes, employees form different understandings of merit. Following positive outcomes, employees will include in their understanding of what constitutes merit the decisive factors that led to the positive outcome. Following negative outcomes, employees will exclude in their understanding of what constitutes merit the decisive factors that led to the negative outcome.

For example, an employee who is promoted in part because of his or her likability (in addition to positive actions and results) will consider that personal qualities should be included when deciding merit. In contrast, an employee who loses a promotion to another employee because the other person is considered more likable will consider that any evaluation of merit should exclude personal qualities such as likability. Over time, employees solidify their understanding of merit based on these positive or negative evaluation experiences.

When employees become managers and start to make merit-based decisions, they want to either

  • Reproduce the fairness that they experienced as employees if their evaluation outcomes were perceived as mostly good, or
  • Rectify the unfairness that they experienced if their evaluation outcomes were perceived as mostly bad.

The result is two very different approaches to evaluating merit: focused and diffuse.

Managers who perceive their evaluation experiences as mostly negative will take a narrow, focused approach: they evaluate work actions only, use quantitative measures, and focus on the individual level. Managers who perceive their evaluation experiences as mostly positive, on the other hand, will take the broader, diffuse approach: they evaluate work actions but also personal qualities, use both quantitative and qualitative measures, and evaluate individual performance in the context of a larger whole (e.g., a group or team).

The study was based on in-depth interviews of 52 managers as well as qualitative reviews of a further 56 managers. Of the 52 managers interviewed, 41 worked for the same company, thus ensuring that company or industry characteristics did not explain the different approaches. Both the focused and diffuse approaches were fully represented in the company.


BUSINESS APPLICATION

The results of the study offer important lessons for companies trying to base their hiring, rewards, and promotions on merit. Companies need to pay close attention to how merit is measured and operationalized in the organization. What are the merit-based processes used in the company’s hiring efforts, for example? How are merit-based rewards designed?

What is most important is that companies ensure that all managers agree on a clearly articulated definition of merit. Managers have different personal and professional experiences, and as shown by this study, those different experiences can lead to different concepts of what merit should entail. Left unattended, these divergences among managers will undermine the company’s effort for uniform merit-based practices.


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FURTHER READING

The Production of Merit: How Managers Understand and Apply Merit in the Workplace. Emilio J. Castilla and Aruna Ranganathan. Organization Science (July-August 2020).

https://pubsonline.informs.org/doi/abs/10.1287/orsc.2019.1335



REFERENCES

Emilio Castilla’s profile at MIT Sloan School of Management

https://ecastill.scripts.mit.edu/

Aruna Ranganathan’s profile at Berkeley Haas

https://haas.berkeley.edu/faculty/aruna-ranganathan/

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Idea conceived

August 18, 2020

Idea posted

Dec 2022
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