WHEN MERITOCRACIES FAIL

We contend that a democratically-operated organization is normally una ble to sustain a meritocracy (i.e., organization with a reward structu re based on academic and/or professional achievement) because of ratio nal behavior on the part of organization members. Briefly, rewards in democratic meritocracies tend to be based on the preferences of the me dian member rather than the best employees. As a result, these highly productive members either reduce their level of output (''shirk'') - t rading work for leisure - or exit the organization. This dynamic proce ss mediocratizes the meritocracy by reducing the supply of highly prod uctive employees, and the incentives to be productive within the confi nes of the organization.