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Updated May 16, 2024

6 Things You Should Know About Competition in the Workplace

Workplace competition can spur creativity but it can also backfire if not handled correctly.

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Jennifer Dublino, Senior Writer & Expert on Business Operations
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In the ideal workplace, highly motivated employees are everywhere — excelling, working well with peers and striving to stand out through superior job performance. To stimulate individual effort, some companies create a cutthroat culture that measures employees against each other. Others opt for a collaborative culture that prioritizes cooperation and consensus-building. Some businesses use different strategies with various employees. For example, they’ll encourage competitiveness in their sales team and collaboration in manufacturing.

Which approach is right? As with many things related to running a business, it depends. We’ll explore competition in the workplace so you can motivate employees without turning your office culture toxic. 

6 things to keep in mind about workplace competition

Some people feel that competition drives excellence while others believe gamification is the future of the workplace and can improve employee engagement and motivation. In reality, there’s no one-size-fits-all approach to motivating employees. 

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

1. Competition can spur innovation and creativity. 

In Top Dog: The Science of Winning and Losing, authors Po Bronson and Ashley Merryman argue that when people are insecure and have self-doubt, injecting some competition can drive creative achievement and team innovation. For example, a contest can spur employees to innovate on a specific product or service or two companies can compete to create a better application, website or consumer device. In these instances, competition works in the context of innovation and creativity. 

In today’s workplaces, employees do their best work when they’re motivated by challenges. But if they feel at risk, it can harm their performance. It is critical to recognize this difference. Leverage competitive energy to inspire new ideas and elevate productivity and efficiency, instead of causing conflict among your staff.

2. Competition affects team members differently.

Some people wilt and disengage in a competitive environment while others may be motivated and inspired. 

Consider adjusting the competitive landscape in your workplace according to your team members’ personalities. Team competitions may motivate some. However, for others, the best motivation methods won’t directly compare individual performances. Instead, you can encourage team members to compete against the team average or an internal goal.

TipBottom line
To avoid violating employees' rights, prioritize workplace safety, focus on accurate compensation management and ensure a discrimination-free environment.

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

Several dangers are associated with using leaderboards and competition as your only means of employee motivation. Ignoring these dangers can create a toxic work environment, low employee morale, decreased productivity and high turnover. 

Here are a few downsides to extreme competition in the workplace:

  • Competitive motivational methods can discourage the team: Leaderboards and outright competition can be discouraging, especially for new employees or employees who haven’t participated in specific training programs. Some team members might feel the competition was unfair, which can lead to workplace conflict
  • Competition can set unreasonable expectations: If you’re in a class of 20 students, making excellent grades is a very reasonable goal. However, imagine you work in a sales center with 100 salespeople or a call center with 1,000 employees. In these instances, getting to the top of an overarching competition can seem hopeless and employers risk employee disengagement.
  • A highly competitive focus can lead to cheating: If someone’s livelihood hinges on reaching specific, near-impossible targets, it can be tempting to act unethically by sabotaging others or falsifying results. For example, Wells Fargo’s hypercompetitive culture caused a situation where bankers created millions of unauthorized bank and credit card accounts to reach targets.

Research shows that people are less motivated by extrinsic factors ― such as competition and cash rewards ― and more motivated by intrinsic factors. Extrinsic factors may create a sudden performance spike, but intrinsic factors are more likely to generate a long-term behavioral change.

In Drive: The Surprising Truth About What Motivates Us, author Daniel Pink shares research that shows extrinsic motivation, such as competition and cash rewards, doesn’t last. However, intrinsic motivation — including the drive to do well, the urge for a “job well done,” and a sense of fulfillment — genuinely drives performance.

FYIDid you know
When you create an employee improvement plan, specify your expectations in the areas where the staff member needs to improve and offer resources that help your employee feel supported and valued.

4. Improving employee performance requires an environment of trust.

Competition and dialogue about measuring employee performance must happen in an atmosphere of trust. If mishandled, competition can create a sense of fear that derails your workplace, prompting employees to hurt each other instead of fostering collaboration and joint problem-solving.

Use competition judiciously. Ensure you target appropriate goals and avoid unnecessary competition about trivial tasks that will poison the atmosphere. This is especially important if you’re managing a multigenerational workforce with millennials and Gen Z employees — these generations are more focused on culture and meaning, not competition. 

5. Fair competition is crucial.

People perform best when the competition is close — when they’re competing against people like them. Top performers shouldn’t compete with average or low performers in the company.  

When appropriate groups compete against each other, people will be motivated because they have a more realistic chance of winning. They’ll feel the competition is fair. In contrast, competing for first place among 100 employees when you’re new or have no hope of winning is discouraging.

6. Competing against yourself can be effective.

People often push themselves to do better. They do this by setting goals for personal growth or by measuring their performance against others who are doing similar work.

A fitness tracker is an example of competing with yourself. As the device counts your steps, you strive to reach fitness and activity goals, competing against yourself and upping the challenge when necessary. 

Here are some ways to create an environment where employees compete against themselves: 

  • Set custom employee performance goals: In the workplace, managers can leverage this self-competitive drive by creating a personalized performance-management process that allows employees to track goals in real time. Gamification can help people improve their performance via self-competition. Training managers to set reachable goals for employees keeps your team motivated without feeling disengaged and improves employee-manager relationships
  • Offer perks when employees reach a target: Consider incentivizing high performance by offering a bonus or perk if the employee attains their target. Research from Harvard Business School found that framing competition as a gain — such as winning a prize, recognition or benefit — resulted in employees feeling excited and willing to find creative ways to meet their goals. When employees were threatened with losing something (not getting a potential bonus, being humiliated or not receiving another benefit), they felt anxiety and were more likely to act unethically to avoid that negative consequence. 
TipBottom line
Use the best tools for setting and tracking goals to help manage employee performance and encourage success.

Dos and don’ts of workplace competition

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

Dos

  • Offer a positive outcome to those who achieve their target.
  • Remind employees to use their individual strengths to achieve their goals.
  • Contextualize competition by highlighting how employees’ efforts can benefit customers and the company as a whole.
  • 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

  • Don’t deride or humiliate employees who fail to meet goals.
  • Don’t pit experienced top performers against newer or lower-achieving employees.
  • Don’t threaten to take something away from those who don’t achieve their goal.
  • Don’t use a zero-sum approach where there are clear winners and losers.
  • Don’t hold individual competitions when you want people to cooperate.
  • Don’t allow bullying or trash-talking.

Skye Schooley contributed to this article. 

author image
Jennifer Dublino, Senior Writer & Expert on Business Operations
Jennifer Dublino is an experienced entrepreneur and astute marketing strategist. With over three decades of industry experience, she has been a guiding force for many businesses, offering invaluable expertise in market research, strategic planning, budget allocation, lead generation and beyond. Earlier in her career, Dublino established, nurtured and successfully sold her own marketing firm. Dublino, who has a bachelor's degree in business administration and an MBA in marketing and finance, also served as the chief operating officer of the Scent Marketing Institute, showcasing her ability to navigate diverse sectors within the marketing landscape. Over the years, Dublino has amassed a comprehensive understanding of business operations across a wide array of areas, ranging from credit card processing to compensation management. Her insights and expertise have earned her recognition, with her contributions quoted in reputable publications such as Reuters, Adweek, AdAge and others.
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