Competition in the Workplace: 6 Things to Know

6 things to keep in mind about workplace competition

Some business leaders feel that competition drives excellence, while others see gamification as a better tool for improving employee engagement and motivation. In reality, there’s no one-size-fits-all approach to motivating employees. 

Patrice Williams-Lindo, CEO of Career Nomad and an organizational psychology specialist and workplace culture strategist, sees workplace competition as a leadership tool that can yield either positive or negative outcomes. “Done well, it’s aligned to shared goals, psychological safety and real recognition,” Williams-Lindo said. “Done poorly, it’s the fastest route to a toxic culture no one wants to work in.” 

Keep the following six ideas in mind when you’re evaluating competition in your workplace.

1. Competition can spur innovation and creativity. 

In Top Dog: The Science of Winning and Losing (Twelve, 2013), authors Po Bronson and Ashley Merryman argue that when people are insecure and have self-doubt, competition can fuel creative achievement and team innovation. For example, a contest can inspire employees to improve a specific product or service, or two companies can compete to create a better application, website or consumer device. In these instances, competition supports innovation and creativity.

Dian Griesel, founder of Perception Dynamics, believes employees may do their best work when motivated by challenges. “A healthy way to view competition is as a stimulus to deliver your own personal best,” Griesel explained. However, if employees feel unsafe or at risk, their performance may suffer. It’s critical to recognize this difference. Use competitive energy to spark new ideas and improve productivity and efficiency — not to create conflict among your staff.

2. Competition affects team members differently.

Some people wilt and disengage in a competitive environment, while others thrive on challenge and feel inspired.

Consider adjusting the competitive landscape in your workplace to match your team members’ personalities. Team-based competitions may energize some employees, while others may respond better to motivational methods that don’t involve direct comparisons. Instead of ranking individuals, you can encourage employees to compete against a team average or an internal goal.

3. Competition can turn sour and hurt performance in the long run.

Relying on leaderboards and competition as your primary strategy for motivating employees carries several risks. Failing to recognize these risks can lead to a toxic work environment, low morale, decreased productivity and high turnover.

“When leaders use competition to mask bad culture, people don’t just leave — they disengage while staying,” Williams-Lindo warned. “The real job is creating systems that reward collaboration without erasing ambition.”

Here are a few downsides to extreme workplace competition:

• Competitive tactics can discourage the team. Leaderboards and overt competition may demoralize employees, especially new hires or those who haven’t received the same training. Some team members might feel the setup is unfair, which can lead to frustration and workplace conflict.
• Competition can set unrealistic expectations. In a class of 20 students, striving for top grades is a reasonable goal. But in a sales center with 100 salespeople or a call center with 1,000 employees, reaching the top of a broad competition may feel impossible. That sense of futility can lead to disengagement.
• A highly competitive culture can encourage unethical behavior. When someone’s job security hinges on hitting aggressive or unachievable targets, the pressure can tempt them to cut corners — or worse. This is especially true in a dysfunctional work culture. For example, Wells Fargo’s hypercompetitive environment pushed bankers to create millions of unauthorized accounts just to meet quotas.

Research shows that people are less motivated by extrinsic rewards, like competition and cash, and more driven by internal motivators. Extrinsic factors might cause a short-term performance spike, but intrinsic motivation is more likely to create lasting change.

In Drive: The Surprising Truth About What Motivates Us (Riverhead Books, 2009), author Daniel Pink shares research that shows that extrinsic motivation, such as that driven by competition and cash rewards, doesn’t last. However, intrinsic motivation — including the drive to do well and a sense of fulfillment — genuinely drives performance.

Tracey Beveridge, head of people at Personnel Checks, encouraged businesses to tie competition to growth. “For those engaging in a competition you set as senior leadership, you can ensure that there is a tangible element of progression or learning involved,” Beveridge explained. “[This way,] it’s not just a toxic competition to achieve ‘x’ and receive ‘y’ whilst working directly against your colleagues.”

4. Employee performance improvement requires an environment of trust.

Conversations about measuring employee performance must take place in an atmosphere of trust. If mishandled, competition can create fear that derails your workplace, prompting employees to undermine one another instead of encouraging collaboration and joint problem-solving.

Use competition selectively and purposefully. Focus on meaningful goals, and avoid unnecessary contests over trivial tasks, which can sour your workplace culture. This is especially important if you’re managing a multigenerational workforce that includes millennials and Gen Z employees — generations that tend to prioritize culture and purpose over competition.

5. Fair competition is crucial.

People tend to perform best when the competition feels close — when they’re competing against peers at a similar level. Top performers shouldn’t be pitted against average or lower performers, as this can create frustration rather than motivation.

When appropriate groups compete with one another, employees are more likely to feel motivated because they have a realistic chance of success. They’re also more likely to view the competition as fair. In contrast, trying to win first place among 100 employees, especially when you’re new or still learning, can feel discouraging and demoralizing.

6. Competition against yourself can be effective.

People often push themselves to improve by setting personal growth goals or measuring their performance against others doing similar work.

A fitness tracker is a great example of self-competition. As the device counts your steps, you strive to hit fitness and activity goals — you’re competing against your past performance and raising the bar as needed.

Here are some ways to create a work environment that encourages employees to compete with themselves:

• Set personalized performance goals. Managers can tap into employees’ self-motivation by creating a personalized performance management process that allows employees to track goals in real time. Gamification is another effective tool for helping people improve their performance via self-directed competition. By training managers to set reachable goals for employees, you keep your team motivated and engaged, which also helps to improve employee-manager relationships. 
• Offer perks when employees reach a target. Consider incentivizing high performance by offering a bonus or perk if the employee hits their goal. Often-cited research from Harvard Business School found that framing competition as a gain — such as earning a prize, receiving recognition or unlocking a benefit — led employees to feel excited and explore creative ways to reach their targets. In contrast, framing performance as a potential loss — like missing a bonus, facing humiliation or losing a benefit — triggered anxiety and increased the likelihood of unethical behavior. 

Do’s and don’ts of workplace competition

Keep the following best practices in mind when you’re monitoring competition in your workplace. 

Do’s

Heather Lamb, a workplace well-being consultant, encouraged businesses to create competitive challenges that promote cooperation and align with shared values. “Acknowledge effort and advancement in addition to results,” Lamb advised. “Encourage staff members to understand that competition is about developing their greatest self, not about outperforming others.”

Here are some ways to achieve this:

• Offer a positive outcome to those who achieve their target.
• Remind employees to use their individual strengths to achieve their goals.
• Put competition into context by showing how employees’ efforts benefit customers and the company overall.
• Have different levels of competition so people compete on a level playing field.
• Set targets based on improving each individual’s previous performance or general department benchmarks.
• Create a positive sales culture by discussing both successes and failures positively and constructively. 

Don’ts

Lamb cautioned against letting competitiveness devolve into comparison. “Performance and the culture both suffer when employees begin to doubt their own value or feel like they’re always in survival mode at work,” Lamb explained.

Avoid the following missteps when you’re managing workplace competition:

• Don’t deride or humiliate employees who fail to meet goals.
• Don’t pit top performers against newer or less-experienced team members.
• Don’t threaten to withhold perks or benefits from employees who don’t meet expectations.
• Don’t take a zero-sum approach where there are clear winners and losers.
• Don’t promote individual competition when collaboration is the goal.
• Don’t tolerate bullying or trash talk in competitive settings.