Stories of competitive workplaces are naturally quite provocative, conjuring up images of high octane law firms or blue chip consulting outfits. McKinsey is famously an ‘up or out’ firm, where if you do not advance, you are counseled to leave. Jack Welch, former CEO of GE also famously promoted a culture wherein the bottom ten percent of employees were let go.
This Darwinian approach to human resource management—and corporate culture, really—may be compelling to some managers, especially in light of some of these companies’ successes. However, be cautious when considering introducing competition into your own workplace. First, let’s explore some of the potential positives.
Potential Benefits of Competition
Competition may increase productivity, it’s true. Sometimes competition can help light a fire under a workforce. The idea of regularly being compared to your peers is a strong motivator to work harder and longer to keep your position.
Along the same lines, competition can increase efficiency. In an effort to be more productive, employees find ways to be more efficient in their work processes. In all likelihood, this may lead to overall efficiency increases within the firm as employees surface and help to fix issues negatively affecting their productivity.
There is a strong chance that the productivity and efficiency boosts can create a bump in revenue. By incentivizing performance among employees and helping to focus promotional efforts on top producing employees, there is a probability that more contracts will get closed, more products will get designed, implemented, and shipped, and more customers will accumulate.
The Negative Effects of Competition Probably Outweigh the Positive
While the short-term effects of fostering a competitive workplace can be appealing, it’s important to consider the potentially negative effects. Competition often focuses employees on themselves instead of their employer. Since their performance is being judged in relation to other employees, they may not be as cooperative with coworkers or look out for the best interest of the company if it gets in the way of reaching their numbers, or whatever performance metric they are being graded on. Imagine Susan sees John, a fellow employee who is doing something that she knows a shortcut for—would she be as inclined to help John if it meant that she would have stiffer competition, even if the company benefited from John being more productive? Competition can create a bunch of lone wolves versus a collaborative pack.
Competition can also cause stress. I used to work at a high-volume winery tasting room where everybody’s sales numbers at the end of the day were posted on a wall in the break room. You could see exactly who sold what, and how much of it. It put a spotlight on you if you weren’t selling as well, and your position on the sales floor subsequently suffered (try making your numbers when you’re tucked away in a back corner station like some sort of reclusive hobbit).
What those numbers on the wall didn’t do was reveal the culture it created on the sales floor, where other sales people would occasionally swoop in on your customers, talk them into buying one more bottle (in addition to the three you already sold them) and then re-write the sales receipt with their name on it. This created a culture where the name on someone’s sales slip mattered more than the customer’s experience. I remember one of my friends, a very knowledgable sales associate, eventually moved on to a non-competitive tasting room where they valued customer experience above sales and where he could spend more time with customers in an unharried environment.
By it’s very nature, a competitive workplace environment may alienate good employees who appreciate collaboration more than one-upmanship. While these employees may not always deliver the biggest numbers, they’re often the glue that holds an organization together and they can develop very strong relationships with customers over the long term. Being ranked in the workplace is stressful, just like a never ending game of musical chairs.
Besides, collaboration, which is somewhat antithetical to competition, can produce an environment where the whole is greater than the sum of its parts. If your company were ever in crisis mode, that collaborative culture might well be the thing that gets you through. Based on this, it’s better to keep the competitive spirit focused on your company’s actual competitors, rather than between its own employees.
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