Sunday, 5 July 2009

Meritocractic mistakes

Paul Kedrosky has a fascinating post on Infectious Greed about the Peter Principle.
The principle says, of course, that people climb in an organization until they reach their level of maximum incompetence...

Kedrosky discusses a simulation of organisational behaviour with meritocratic promotions and where competence in a new job has low correlation with competence at a prior level.
The authors simulated the preceding in a pyramidal organizational form using a mathematical agent model. Here is the outcome...

not only the "Peter principle" is unavoidable, but it yields in turn a significant reduction of the global efficiency of the organization.
And, of course, random promotions are better for the organisation than meritocratic ones. The source material is here. Now just try telling that to the HR bots...

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2 Comments:

Blogger Dave said...

I haven't read the original paper, but it sounds to me like they are not taking account of the incentive effect of merit-based promotion. Random promotion would remove this incentive.

I think the underlying problem is that higher paid positions in organisations are generally managerial. So, people who are good at doing the work - but not so good at getting others to do it - either get paid poorly or get promoted inappropriately.

That's why I'm an independent consultant. I get paid well for doing the work and don't have to manage anybody.

12:37 am  
Blogger David Murphy said...

You and me both...

The problem I think is mostly at the doer/manager boundary. Being a good doer seems to me to be broadly anticorrelated with being a good manager. So promote the good doers and they don't do anymore, and manager badly instead.

7:46 am  

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