Everyone believes in merit. Everyone believes they make fair decisions. Yet unequal pay persists, despite merit-based systems, affirmative action and diversity policies. Why?

Castilla and Benard found a ‘paradox of meritocracy’ when they investigated this question. Over a series of experiments, they found that when an organization promoted itself as a meritocracy, managers awarded male employees larger monetary rewards than they did female employees with identical performance ratings. In organizations where merit is promoted as a cultural value, managers appear to become more confident that their decisions are impartial and so they invest less effort in avoiding the application of stereotypes, creating the paradox. Managers’ unconscious stereotypes are more likely to be triggered, and their pay decisions become less fair.However, when managers know that their decisions are open to scrutiny and they will be held accountable for making fair decisions, they do. Organizations are more likely to live up to their claims of meritocracy where organizational accountability and transparency measures are in place, that is where:

  • There are process accountabilities that clarify responsibilities and criteria for pay decisions,
  • Managers are accountable for the fairness of their pay decisions and results, and
  • There are designated forums in which pay processes, decisions and criteria are visible and reviewed.
Applause to CEOs like Mark Benioff at Salesforce and Lara Poloni at AECOM who introduce real accountability and transparency systems to back up the rhetoric.
Castilla, E.J., and Benard, S. (2010). “The Paradox of Meritocracy in Organizations.” Administrative Science Quarterly, 55, 543-576.
Castilla, E.J. (2015). “Accounting for the Gap: A Firm Study in Manipulating Organizational Accountability and Transparency in Pay Decisions.” Organization Science, 26(2), 311-333.
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