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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Business Strategy: Do You Believe in Meritocracies or Bureaucracies?

Written By: Carol Roth | No Comments

 In a meritocracy, people are rewarded based on their abilities, skills, accomplishments and achievements.

In a bureaucracy, regulations and systems rule.  People are rewarded based on politics and seniority.

When I worked for investment banking firm Montgomery Securities in the 1990s, it was a meritocracy.  You were given as much responsibility as you can handle and if you performed, you were rewarded financially and promoted.  This created growth and success.

You have to be a certain kind of person to survive in a meritocracy.  It’s sink or swim.  But if you swim, your success has no boundaries.

The firm eventually merged with two very large commercial banks.  These were two notorious bureaucracies.  Every decision required layers of approvals. Those rewarded were those who had been there for a long time, whether or not they were the most effective at their jobs.

When you build your business, think about whether you want a meritocracy or a bureaucracy.

Meritocracies can create an incredible advantage for businesses and allow the small guys to compete against the big ones.

As you choose your business partners, understand what kind of organization they have and how decisions are made.  What kind of individuals and companies do you want to align yourself with?

Article written by
Carol Roth is a national media personality, ‘recovering’ investment banker, investor, speaker and author of the New York Times bestselling book, The Entrepreneur Equation. She is a judge on the Mark Burnett (Shark Tank, The Voice, Survivor, The Apprentice) produced technology competition series, America's Greatest Makers, airing on TBS and Host of Microsoft's Office Small Business Academy show. Previously, Carol was the host and co-producer of The Noon Show, a current events talk show on WGN Radio, one of the top stations in the country, and a contributor to CNBC, as well as a frequent guest on Fox News, CNN, Fox Business and other stations. Carol's multimedia commentary covers business and the economy, current events, politics and pop culture topics. Carol has helped her clients complete more than $2 billion in capital raising and M&A transactions. She is a Top 100 Small Business Influencer (2011-2015) and has her own action figure. Twitter: @CarolJSRoth