Most people in capitalist countries such as the United States probably believe that the economic system should be and is a meritocracy. In addition, an increasing number of organizations emphasize meritocracy as a core value and establish meritocratic systems (e.g., pay for performance), in part to eliminate bias and increase the perception of fairness in the workplace. Unfortunately, Emilio J. Castilla of the Massachusetts Institute of Technology and Stephen Benard of Indiana University argue that meritocratic values and practices--if not implemented carefully--may actually increase bias rather than decreasing it. They call this "the paradox of meritocracy."
Their underlying logic draws from psychological research on bias. First, organizational emphasis on performance may increase the tendency to apply stereotypes about competence. Second, because most people try to avoid appearing biased--both to others and to themselves--they behave in a biased manner only when they are confident that the behavior will not be seen as biased. When working in an organization that stresses meritocracy, decision-makers feel confident that their actions are unbiased and will be seen as unbiased. This is precisely the situation in which their biases are most likely to affect their behavior. Thus, organizational emphasis on meritocracy may both stimulate the tendency to apply competence-related stereotypes and provide the cover needed to act on the stereotypes.
Past research has revealed gender and race pay disparities in organizations that emphasize meritocratic procedures, even when controlling for human capital (e.g., experience). However, because the meritocratic practices already existed in the studied organizations, Castilla and Benard point out that we cannot know whether the disparities occurred in spite of the meritocratic procedures or because of them. The only way to distinguish between those two possibilities is through experimental research, which they report.
The participants in their experiments were business graduate students, most of whom had and/or liked jobs with supervisory responsibilities. They were given information about three [imaginary] employees who worked at the same job in the same unit and had been evaluated by the same supervisor. Based on the supervisor's evaluations (ratings & comments), the participants allocated $1,000 in bonuses among the three employees. This two-stage evaluation system was used because it is becoming increasingly popular, in part because it is believed to limit discretion. The participants were told either that the organization's core values emphasized meritocracy or that the values emphasized use of regular evaluation procedures. …