The problems with appointing on merit. A human capital analysis

Abstract

The principle of being valued, in the employment context, according to effort and talent is appealing. Despite its appeal in principle, a consideration of the construction and application of merit in practice reveal fundamental underlying issues. Examined here in the context of corporate boards, it is argued that the meritocratic ideal can be more harmful than helpful. Human capital (including social and cultural capital) is decisive in merit-based decisions. But human capital is also flawed because measuring people in this way fails to account for structural inequalities. So long as boards are guided to implement and disclose a merit-based appointment policy, without sufficient focus on outcomes, they will continue to lack diversity of gender, ethnicity and socio-economic background. Even to the extent that it is possible to make a truly merit-based appointment, the privilege upon which human capital and merit is built makes truly meritocratic boards an impossibility in the current context. Despite these problems, a lack of feasible alternatives necessitates the continued use of merit. It is argued here that modifications should be made to the meaning and usage of merit in practice in order to mitigate its failings.