Internal Competition: Business Booster or Morale Buster?

Largely, we live in a winner-take-all society. An NFL team can battle its way through a grueling regular season and intense playoffs and still be tagged a loser for coming up short in the Super Bowl. In the workplace, many businesses draw heavily on sports metaphors to encourage the “thrill of victory and the agony of defeat.”  So not surprisingly, many companies see internal competition as a way to inspire motivation and boost performance. This mentality embraces the idea that competition causes the cream to rise to the top. But does it?

Evan Rosen, in his article “The Hidden Cost of Internal Competition (Business Week, February 24, 2010), acknowledges that competing with colleagues has become ingrained in many corporate cultures. He suggests that internal competition can cause employees to focus on the wrong things and spend their time, creativity, and energy trying to undercut each other rather than drawing on the collective IQ to find the best solutions to the organization’s problems and challenges.

Further, Jeffrey Pfeffer and Robert Sutton, in “The Perils of Internal Competition,” (Stanford Business, November, 1999), suggest that companies all too often create a “racetrack” where only one person, group, or department” can win.

Of course, not all competition is unhealthy and it can motivate under the right circumstances. Here are some suggestions for minimizing the destructive effects and helping inspire superior performance.

Create an environment of trust and affirmation in the workplace.

 Companies that embrace the “star” mentality, spending excessive time and energy on recognizing individual performance, set themselves up for potential backstabbing and subterfuge among employees. Internal competition is doomed to failure in organizations that David Lee (MaineBusiness.mainetoday.com/blogentry.html) in “The Mindful Manager” calls “shark centric.”  If your company has a look-out-for-number-one environment with little collaboration, internal competition doesn’t stand a chance of being healthy. Trust must start at the top and permeate the entire organization, as evidenced by the freedom to make mistakes, deliver bad news without fear of retaliation, and share credit without giving away an advantage.

Develop competitive situations where more than one person or team can win.

 Create events that allow for more than one winner. Everyone who exceeds a certain goal, for example, wins. So the competition is against the goal rather than against each other. Or, reward the top five performers without providing special recognition for number one.

I am familiar with one organization that rewards the percentage of participation in a charitable fund raiser rather than the amount raised. Then, the department that comes closest to 100% participation shares in ice cream or pizza that the organization provides. If more than one group ties for the highest participation, then both groups win.

 Reward collaboration.

 Even in competitive sports, “assists” are an important part of the game. Find ways to acknowledge people who share information, provide timely help, and go out of their way to make others in the organization more productive and more efficient.

From time to time create task forces to research other companies and develop tools to help their coworkers do their jobs better. Then recognize their accomplishments and enlist their help in suggesting coworkers for the next task force when appropriate.

 Avoid contests that encourage cheating or sabotaging rivals.

 Let’s say that departments are competing for perfect attendance and some absences just don’t get reported. Or a sales rep talks customers into placing an order that he or she can cancel after the contest ends. If you are going to create competitive events, involve employees in establishing the ground rules and brainstorm ways to keep participants from circumventing the process and thus the intent of the competition. Certainly the objectives need to align with the company goals and the results need to be more significant than those that would have occurred without the contest.

 Focus on external competition.

 Rosen points out that ozone, outside the atmosphere, creates a protective shield from the sun’s ultraviolet rays, but inside the earth’s atmosphere causes pollution and damage to our lungs. Keeping competition outside the immediate workplace can develop a sense of teamwork that allows an “us against them” rallying point. Even two different offices in the same company can engage in contests to create rivalries that don’t work directly and engage with each other every day.

The healthiest competition, however, is outside of your own company. Whether it’s another organization or the current difficult environment, encourage your employees to win against forces that threaten us or that grab a share of the market that should be yours.

We can’t completely eliminate competition in the workplace. Some temperaments seem by nature competitive, and people, in general, will never perform equally. In any organization, certain people will have innate and developed abilities and internal drive that result in outstanding achievements. Our goal should be to make all employees feel that they have equal access to success and recognition and to generate an environment that enables people to do their best.