Know the game, change the game

Our way  of thinking about leadership, management and organisation is confused, contradictory, and fraughtwith danger. We are seriously self-deluded through the idealised models of status and hierarchy we hold in our minds and implement in our organisations. The first leaders, manager and organisations to realise this will be tomorrow’s winners.

This is what has happened. One of the triumphs of the industrial era was the realisation that there was an alternative to the arbitrary and capricious rule by power, nepotism, grace and favour that preceded it. This alternative was the arational hierarchical order comprising logically nested  roles and responsibilities, protected by inviolable rules. Add to this the logic of market competition and the theory says the best people will rise to the top of organisations, having triumphed in a series of fair and open tournaments. In other words, quality and efficiency are guaranteed by the winning combination of hierarchy + meritocracy. Right? Wrong. Let me show you how and why.

Many organisations pursue this dream but all around you can see how  it has broken down – people view their company career systems with a mixture of cynicism and fatalism. What is going wrong? A false theory of meritocracy is being superimposed on an instinctive order of authority.

The false theory of meritocracy

The theory of meritocracy that people are trying to implement is one in which people achieve their potential on a linear scale of quality – the very best alpha sits at the top of the organisation, with a team of betas reporting into him (occasionally her), and so on down to the omegas working the machines, dealing with the customers etc. When you put it this way, it becomes obvious what’s wrong with the theory, and also with the practice.

There are three reasons why what I am calling “the false theory of meritocracy” doesn’t stack up:

First, it allows no scope for learning. It suggests that people once graded retain that value. Merit can be neither enhanced nor diminished.  This is plainly false. It is the same logical problem that drives the infamous Peter Principle – the macabrely comic idea that people rise to their level of incompetence and then stick. This principle makes us laugh because it brands us all as  incompetents. Luckily, even if we are initially clueless on assuming any new position, we do get the hang of it and improve. Leadership has to be learned, even by the most naturally charismatic individuals, and indeed the least. .

Second, it ignores the fact that our value or talent depends upon circumstances. We all have areas in which we have a greater or lesser chance of showing off our capabilities. And since we live and work in a constantly changing world, for a true theory of meritocracy to operate we would need to be continually re-assessed according to what challenges are uppermost. This does not seem to happen. Advancement in organisations operates on the ratchet principle. There are occasional demotions but mostly movement is upward on a one-way ladder, with occasional exit points where people are pushed off the steps into the void.

Third, we cannot rank order people validly on a single merit ladder that can then be fitted to a hierarchy: As destined for leadership, Bs for middle management, and Cs for lower positions. Life is not so simple. Nor are people. Many HR professionals will protest that this is not what they do. They will point to their organisations’ multi-dimensional appraisal systems and competency models, designed to steer people into the slots that fit them best. Yes, ok. Some do, but in others the reality is  a heavily-disguised charade. A selection committee or agent looks at all the mass of data about a group of people and makes A vs. B-type decisions. People get labelled. Jack is proclaimed to be a “winner” and Jill a “loser”  and Jack gets the slot. Moreover, Jill’s “failure” sticks to her thereafter as is she is of less merit. And, by the way, sometimes people are entered “invisibly” into these contests – via a boss’s mental shortlist –  emerging as winners and losers without ever realising they were in a contest in the first place.  

As these three points illustrate, the system can’t work in practice when attached to the classic corporate hierarchy. In a business of some 15,000 people with an average span of control of six or seven is it really true that there is only one “true” alpha, six betas, 40 gammas, 300 deltas, 2,000 epsilons and 13k zetas? 

No, no, you may protest, that’s not how it works. This is simply a market for scarce human capital and a device to motivate employees. That may be partly true, but it carries a potentially heavy cost, and can become a motivational disaster. It means that we need to admit that all too often we are operating make-believe meritocracies. People pretend the system is working while privately rueing its imperfections. But it goes deeper than that. The idea of a simple linear meritocracy is a disease of thought and belief, lodged in many people’s minds. It is the idea that an ordered hierarchy of merit is the way things should be. Why? Because it is instinctive and part of our primate legacy.

Poisonous consequences

Consider the consequences of the false theory of meritocracy for the managers who believe it; or believe that itshould be true, if we could only make it work properly. This belief has a devastating effect on attitudes and behaviour and is the cause of many of the worst politics we see in business.

Managers’ minds are poisoned in three ways:

1. They look at their bosses and say to themselves, this person is not as good as he ought to be. How come he has authority over me? He is clearly not my “superior” (though, tellingly, we routinely use this label for bosses).
2. Bosses look at some of their subordinates and wonder whether they are in their rightful positions. It can make even very senior people feel anxious and threatened to think, “these people are actually as good as me, and some are even better”.
3. They look at themselves and wonder, am I really good enough for the position I am holding? Some may obsess the other way: I am much too good for this position. Either view is a frightful distraction from the job in hand.

These three poisons have three potentially deadly consequences, prompting thoughts such as the following:

• I am not going to give this so-called superior of mine any more help than I have to. He has the position and the rewards – let him prove his worth without my assistance.
• I had better watch out for the people who would pull me down and keep them at a distance, for example, by ensuring they are absorbed with assignments that do not allow them to shine.
• I had better be incredibly busy; proving to all and sundry how truly indispensable I am. I need to ensure I get the credit for everything good that happens round here, and that my boss can see that I’m too good for the position I’m in now

This may sound exaggerated but working on executive programmes my team of coaches and I see plentiful evidence of these abuses, neuroses and stratagems. Many are small scale, but almost every working executive has witnessed the worst extremes over the years – bosses who compulsively lay waste to all around them, except their most avid supporters. And often one can see that a boss’s destructive bullying is borne of a deep-seated insecurity about their value. Less visible, but equally well-known to psychologists, is the inversion that is called “the imposter syndrome” – people in authority walking around with the sense that they are acting out a phony identity; they are not worthy of their positions. These poor souls become masters in the art of concealing the bubbling subcutaneous anxiety constantly nagging at them.

Non-corrupted forms of meritocracy – where people are flexibly allocated to roles according to their “fitness” for them – are the aspiration of  many firms, using the armoury of modern human resources management. But much of it gets corrupted by performance management methods – the sophisticated assessment methods, focused performance indicators, appraisals and incentive pay all seem only to reinforce the false theory, for standing at the end of all these processes is a person who judges that  Joe is “better” than Jack. Even if this is not intended, because the false theory is in people’s minds, the aura of alpha over beta hangs over them like a bad odour. 

The random model

What would an alternative system look like? Well, one option would be to allocate roles to people on a random basis. To do so would have some interesting consequences, especially for leadership. Two real life examples come to mind: academia and family business. In the former, my world of the business school, you generally get to be head of a subject group on the eeny-meeny-miny-mo principle – the moving finger stops and points at you. You do your allotted years of service in the role before it rotates to a colleague. In family firms where one generation succeeds the last it is “the gene lottery” that does the randomising – you have the right name and are willing to do the job. The advantage that both have is that they are free of the delusion that they were chosen because of their qualities, apart from maybe crossing a threshold of competence. If they are wise this turns out to be an advantage, for the leader is now more able to make a truly dispassionate assessment of their strengths and weaknesses and then do the right thing. The right thing, of course, is to surround yourself with talent and see your role as  bringing out the best in everyone around you, for them and for the organisation as a whole. As one well-known family business owner/manager said laughingly to me: “I can afford to appoint the very best professionals because I know I am secure in my job”. 

Actually, randomness is a lot more present than we might think. Most successful executives will admit they got to where they are partly because at some point in their career they found themselves in the right place at the right time, got a lucky break, hooked up with a powerful sponsor or mentor, got handed a juicy assignment. All of us can look around at the less fortunate and say, there but for the grace of God go I. All one needs to do is flip a switch in one’s mind, turn off the false theory of meritocracy and say, let’s forget this global alpha and omega pecking order. We all have different qualities. All any of us should ask right now is what can I do from the position that I’m in that will add value.

This takes us to a quite different model of leadership, away from dominance and superiority and more towards diversity and a stewardship approach to leadership. The leader is now motivated to say: What matters is what I am responsible for in this position, and what I can do to raise the performance of people around me. This is the model that prevails in the arts, the military, and a number of professions. The platoon commander knows his role is not to outshine his men, but to enable them to function as flexible integrated unit.  It is much the same in the theatre. As one director said to me: “It’s not my job to be better than the actors but to turn them into a cohesive ensemble and then help them achieve a great performance.”

This state of mind can be cultivated anywhere, and it is especially needed in corporate hierarchies. The false theory of meritocracy causes too many managers to be continually looking over their shoulders – striving to prove themselves, and spending only a fraction of their time working to enhance the capabilities of others. But let’s be clear about how  embedded is the status quo. In large swathes of the economy traditional hierarchy will continue  to persist – it’s the most efficient way of generating consistency and control. However we don’t have to let it infect our minds with unhelpful fictions about human value.

New organisational forms

But suppose we can move away from the traditional hierarchical model. What would a true theory of meritocracy look like? It would acknowledge that we all have multiple talents and motivations, and that we all can learn and improve in most of the roles we are placed, though how much and how fast will vary. It would need to recognise that we live and work in a world where some things are pretty constant but that many other features change. That includes us – people’s profiles of talents and interests change with time. This means that for optimum efficiency, motivation and well-being, we should be constantly reviewing the fit we have with our positions. Coordination and control can often be achieved by organic flexibility, where on a particular task the best suited person takes the lead. This is the jazz band model – players are both leaders and accompanists. In a true meritocracy we would worry less about  move up or down than about  where and what.  In this world “up” does not mean “better” so much as “more” – responsibility, accountability and authority perhaps. The model is suggestive more of a lattice than a pyramid in organisational design: flat, with a broad equality of reward, to avoid constant competition for seniority for its own sake. We would rather create a world where people compete for the chance to exercise their talents.   

Do such organisations exist and do they work? Yes – Google, WH Gore, Opticon, Chaparral Steel and others have experimented successfully with team-based cultures, dissolved hierarchies, spontaneous self-organising projects and the like. Yet, there are numerous complaints about matrix management and other complex forms and people readily retreat into more traditional hierarchies. Why? They have less uncertainty, lower transaction costs, and they latch on to human hierarchical instincts.  

One organisation that has tried to do this is The Flight Centre, a phenomenally fast-growing global travel agency. Its Australian founder, the radical charismatic “Screw” Turner, read my 1998 article “How hardwired is human behavior” in the Harvard Business Review and decided to organise the business on evolutionary principles into “families, villages and tribes”. A store is a family – self-managed teams with intense cooperation and reward sharing. A cluster of shops is a village – sharing resources and helping each other. A tribe is a cluster of villages, not exceeding the magic number 150 (the networking capacity of the human brain), again sharing resources and celebrating their identity as an entity. It engenders tremendous employee commitment, cooperation, belonging and satisfaction.  

Gender, hierarchy and the future of organisation

If these models work so well, why aren’t there more of them? It is because we are also hardwired to pursue status, and this instinct is very easily played upon by organisations. Some technology companies in Ireland, for example, during that country’s fast chase for growth in the 1990s and 2000s, actually introduced unnecessary extra layers of grades to satisfy the needs of technical talent for a sense of advancement. The kibbutzim of Israel, founded on fiercely democratic grounds, always struggled to contain informal hierarchy and the needs for dominance hierarchy among their male members. Yes, there is a gender twist to this state of affairs.

Although status is important to both sexes, men are hardwired to pursue it in quite different ways to women. Gender stereotypes apart there are typical real visible differences. Men have a competitive league table approach to hierarchy.  Women tend to focus more on inclusion and exclusion than on who’s up and who’s down. Men know the game, love the game, and play the game relentlessly and often cynically as Carly Fiorina, one-time CEO of HP discovered. In her autobiography Tough Choices she recounts how in her early career at AT&T she discovered with horror how managers crudely used the merit system to trade favours – I’ll advance your man if you advance mine.  She sighs fervently: “I was getting my first glimpse of how prejudice can linger in an organisation, and why a meritocracy is so difficult to achieve”, and spends the rest of her career striving to uphold the principle.

In playing the game men will accept without question the authority of a man they consider inferior, but bide their time or play tactical games, including some of the poisonous ones considered earlier. They are the victims of the false theory of meritocracy – that they and others can be assessed on the simple alpha to omega scale, for this plays into their ancestral primate instincts for contest, dominance and pecking orders. 

Women lack the same presumptions. This has good and bad consequences. The good consequence is they much more readily accept equality with others and take part in cooperative relationships and ventures. The bad consequence is that they often tend to handle authority with ambivalence – failing to play the dominance game with the same confidence as men, and misjudging status expectations of others. A lot of this is because they are themselves subject to conflicting expectations from men and women operating in a largely male world. No wonder there are so few women in the upper echelons of business. Not only are they disadvantaged in the playing of competitive dominance games, but the ethos surrounding them is often deeply uncongenial to women.

Yet, it is said the future belongs more to women than to men – which is certainly true if you accept that the new shape of business and organisation is value-based, non-hierarchical, collaborative and multiplex, rather than linear, competitive, instrumental, focused and specialised. Globalisation and information technology are making the traditional model look more and more antiquated. 

So why is the traditional model so persistently preferred? There are many alternative ways of organising to deal with most challenges facing a business. The disturbing answer is that structures and systems are chosen by the people who prefer them, and the people who do best in them. That’s a circle of course, and points the finger at male leaders. They will sustain the systems in which they succeeded.  

Is there hope for change? I predict that we will see a plurality of organisational forms emerging to meet the new complexities of our era. In many of these women will, for the first time, have opportunity and advantage, but men will not give up their competitive arenas without a fight.

London Business School - Strategy Review