3 Management Models of The Past, Present, and Future: Part 2

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​​“In most meritocratic organizations, the words ‘Of course you are right’ are rarely uttered”
— Julian Birkinshaw & Jonas Ridderstrale, Fast/Forward

By William Ballard

In last article we talked about the management model known as bureaucracy and how it favors position over competence, and even over the emotional driving factor of an organization.

This week we are going to talk about the second management model known as meritocracy, which tends to favor competence and intelligence over position, and that of the emotional element.
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​​One Business Consulting Firm, Built Solely Around
​The Ideals of Meritocracy

Last week we spent some time in the Industrial Age, if we are to move a bit further down the twentieth century time line, one business leader that may come to mind is that of Marvin Bower — the organizational architect of McKinsey & Company.

Photo Credit: Sualci Quotes

McKinsey embodies the very ideals of meritocracy. Mr. Bower became head of McKinsey back in 1937 and develop a set of principles that are still recognizable throughout the organization today.

In fact, professionalism was at the core of Mr. Bower’s worldview. In essence, what all this meant was he had a single-minded focus towards his clients. In other words, even though the organization may have several clients that they are working with at a given time, they always treat each client as if they are the only client they are working with at the moment.

Related Article: The Key to Succeeding in The New Business Landscape of The Future (Part 1 of 2)

In addition, his single-minded focus-ness was also geared toward ensuring his employees operated with the utmost integrity. Not to mention their deep-rooted expertise in their particular disciplines.

Mr. Bower, essentially, developed a “One Firm” policy where the entire expertise and knowledge base (competence of each staff member and employee) of the firm could be accessed and utilized on every client’s unique needs and challenges.

Because of this, he placed huge importance on human capital — hiring the most skilled and competent people, promoting within, and emphasizing continuing professional development.
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Meritocracy Defined

The term meritocracy is certainly not as well-known as bureaucracy, but for the purpose of this article, it all focuses in on one key principle: knowledge or competence is more highly favored over position or title.

In short, when it comes to Mr. Bower’s point of view, and certainly in that of the McKinsey leaders of today, what people in the firm know becomes much more important than where they are placed on the organizational chart.

Now, with that said, it is important to know and understand that McKinsey& Company does have a chain-of-command, like any large firm (bureaucratic structuring), but lower-level consultants are actually encouraged to challenge their superiors if they disagree or have a potentially more creative idea than that of their senior colleagues.

In practice, this means it is the team member with the most creative and innovative idea, the most intelligently stimulating argument, and not the one with the highest ranking position within the hierarchy of the organization, whose ideas prevail.
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The Meritocracy Ideals of Academia and The University System
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Leaving that of a typical business structured organization (more profit and loss focused), and considering the system of an academic institution, where meritocracy is also equally common, there is some great insights to discover.

Some professors may “head” a certain academic department, which on paper would mean that they are “in charge of” the activities of ten to twenty faculty members, however.

​In reality, the majority of faculty members do their own thing. For instance, if the Department Head or Department Director was to call a meeting, the faculty would decide whether or not attending the meeting was in their best interest or merited any of their professional time.

Related Article: The Key to Succeeding in The New Business Landscape of The Future (Part 2 of 2)

And if a course of action was necessary— such as hiring a new professor — they would listen to the Department Head’s point of view, insert their own, and then assess each view throughout the day to determine which direction the department would go.

For anyone that is more use to a traditional bureaucratic structure, the structure of a meritocracy type of organization would probably look more dysfunctional and perhaps even appear like that of a spirit of anarchy.

​However, for Information type firms — where creativity, innovation, and empowerment are favored — the meritocracy management model has become the de facto standard.

To that end, even though the meritocracy model is an improvement from the model that superseded it, it still has its shortcomings and flaws.

​Therefore, what are the pros and cons of the meritocracy management model?

The Pros and Cons of Meritocracy

This type of management model works best in businesses where deep-rooted knowledge makes all the difference. For instance, besides universities, professional service firms like law, consulting, accounting, banking, engineering; or IT firms, telecoms, or medical science; as well as creative environments like advertising or publishing is where this type of management model would be most ideal.

Of course, these are the types of industries that currently dominate the business landscape. But, believe it or not, the same type of management logic applies to other levels of analysis. In fact, countries, such as Singapore, view meritocracy as one of the guiding principles for formulating public policy.

​However, despite all of this, meritocracy organizations do have a number of notable failings and challenges as the paradox of having access to so much information is actually making us that much more ignorant presents itself.

Related Article: Professional Goals: To Move Up, Step Out

The first key challenge is that, at times, competency becomes important, not for the sake of the organization in meeting its quarterly goals and annual objectives, but rather just for its own sake.

What this means is that the most sophisticated, most intelligent, or technically advanced solution is the one that prevails. Even though this may sound like a good thing, often it means an organization or department can overshoot things and find themselves trying to implement a solution that is over-engineered, and therefore over-budget.

In conjunction with that, the importance of competence, just for its own sake (know-it-alls), can also create internal friction. For example, when competence is favored over all other factors, it becomes each individuals goal to be the “smartest one in the room,” and it is not unusual to find that nine out of ten people in that room believe they are, indeed, the smartest one.
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Photo Credit: Stanford University Press

“What constitutes merit is not always objectively clear; in neither a business nor an academic setting do the less acclaimed automatically acknowledge the superiority of the arguments proposed by those apparently smarter. In most meritocratic organizations the words ‘Of course, you are right’ are rarely uttered.” — Julian Birkinshaw & Jonas Ridderstrale, Fast/Forward (AFF)

​A second “con” of meritocracy type organizations is that they move at an un-desirable speed. They agonize over seemingly simple decisions. In fact, I was once told by a pastor of mine, when we were discussing the ideas of marriage, that the simple decisions I make now (as a single guy), may take only 30 minutes, but when you get married, could end up taking hours.

You see, in meritocracy type organizations they tend to operate by building consensus overtime, one person at a time, which means they put a lot of time in internal reviews and proposals.

The need for discussion from the collective, especially those at the top, end up getting bogged down into internal procedures and bureaucracies.

“If bureaucracies suffer from the shortcomings of even a benevolent dictatorship, meritocracies display the same disadvantages as those of a democracy.” — Julian Birkinshaw & Jonas Ridderstrale, Fast/Forward (AFF). 

In conjunction with the last point, meritocracy type organizations often fall short in the emotional department. In fact, such organizations like these tend to be more rational and analytically minded and come off being insensitive to the feelings of others. In other words, they tend dodge themselves from such arguments that pertain to emotional appeals.

Related Article: 9 Key Ingredients to Cooking Up The BEST Kind of Plan for Your Business Venture

Where a bureaucratic organization favors position over all else, and totally disregards the emotional appeal, a meritocracy organization — that favors competence over everything else — will, in practice, hurt more peoples feelings rather than encourage them and build them up, or acknowledge those feelings altogether.

The third shortcoming of that of a meritocracy organization is that they tend to praise the individual ahead of the overall group. Consider the idea of an organization that is made up of a “Battle of the Brains Royal,” with the focus on the individual that wins the championship and earns the belt.

If the paradox of progress that Julian and Jonas present in their book, Fast/Forward (AFF) is true, and we are becoming relatively more ignorant due to the influx of access to information, the truth is: All organizations must put a greater emphasis on collaboration rather than constant competition. “…a culture with ‘united minds ‘ rather than a ‘mind your own business’ mentality. Know-how needs to be complemented with know-who and a new attitude.” — Julian Birkinshaw & Jonas Ridderstrale, Fast/Forward (AFF).

Final Thoughts

Clearly, the principles of a meritocracy organization are indeed a step-up or improvement to that of a bureaucracy, but it is not the end of our journey.

​To truly understand the business landscape of the future, we must look closely to the final management model, which, in essence, fills the gaps both bureaucratic and meritocratic organizations tend to leave open.

As analysis are beginning to make clear, the organizations of tomorrow are more apt to be made up of Independent Contractors or Contributors — 1099 employees — and will be more focused on the competence of the the collective rather than that of a single talented individual.

With that said, next week I’ll be covering the third and final management model of this three part series that I think you are going to find very interesting. You won’t want to miss it.

This article was first published on Medium. 
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Hi, my name is William Ballard! 

​I'm the Founder and CEO of William Ballard & Associates, LLC, where we work with incredible business owners and entrepreneurs like yourself every single day. We are big believers in the fact that the key to business success is effective business planning and courageous execution. With that said, we encourage you to schedule a call with us to discuss your business goals, and to see how we might be able to help. ​

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