Why meritocracies like Enron crash and burn

By Dr. Henry Wong Meng Yeong | Wednesday, October 3, 2012 at 2:21AM

Mug shot from 2004 of former Enron CEO Jeffrey Skilling. Photo courtesy of WikipediaA basic tenant of management is: “You cannot manage what you cannot measure.”

This costly myth has given rise to meritocracy, where selection is based purely on merit. This can be by way of education (qualifications and grades attained) or experience (skills) sought. But with meritocracy, conduct and values are overlooked.

Based on his academic record and experience, Jeffrey Skilling, who was largely responsible for the spectacular rise and fall of Enron, was brilliant -- a B.S. in applied science, MBA from Harvard, and one of the youngest partners of McKinsey. He was suitably qualified to fill the seat of the CEO but eventually became most famous for being among the most crooked CEOs. This was the result of selection based on education and experience with no consideration of character.

Confucius placed cultivating ethics and values above literacy and schooling. Young people, he said, should be filial to parents at home. Outside the home, they should be polite and respectful to their elders. They should be guarded in speech and check that they are trustworthy, and while constantly keeping on good terms with all, yet fostering closer ties only with those with integrity. Only then, if time permits, should they study the classics.

Curiously, education in Chinese is 教育. The first word 教 means instruction, teaching (from school). The second word 育 refers to rearing and cultivating values and ethics (from home). One is not considered educated unless one has proper values and upbringing in addition to having been schooled.

But how do we measure values? They aren't quantifiable. One is either honest or not, and there is no gray area between the two, much as one cannot be slightly pregnant! Honesty and trust, for instance, are not dependent on the amount of money one is tempted with. If one is honest, regardless of the amount in question, one will not pilfer or steal or succumb to bribes.

Therefore my own maxim is “Not everything that can be easily evaluated is of value. But everything of value can be easily evaluated.”

Meritocracy has its downside if selection is based purely on academic grades or experience, with no consideration given to conduct or character, ethics or etiquette.

Confucius said the accomplished scholar is not like a utensil, which is of use only in a limited way. Therefore selecting unethical people with the requisite skills alone for the job is likened to choosing a utensil.

What then are the values Confucius would value? The discussion continues.