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6 Things You Should Know About Competition in the Workplace

Jennifer Dublino
Jennifer Dublino
business.com Contributing Writer
Updated Jul 08, 2022

When does internal competition motivate employees, and when does it turn toxic? Smart competition strategies spur high performance and keep the peace.

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, while 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 is the right approach? 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 feel that gamification is the future of the workplace and can improve employee engagement and motivation. In reality, there’s no one-size-fits-all approach for motivating employees. 

Keep the following seven 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 innovation.

For example, a contest can spur employees to innovate on a specific product or service, or two companies can compete to create the better application, website or consumer device. 

In these instances, competition works in the context of innovation and creativity. In a modern office environment, people may perform better if they feel challenged, but feeling threatened could have the opposite effect. Understand the difference, and consider competition as a way to spur innovation and creativity and boost productivity.

2. Competition affects team members differently.

Some people wilt and become disengaged 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.

TipTip: 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 team members who haven’t participated in specific employee training programs. Many employees can be left feeling 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. But 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 are risking 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. This happened in the hyper-competitive culture of Wells Fargo when bankers created millions of unauthorized bank and credit card accounts to reach targets.

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

Research by Dan Ariely and others shows that even small rewards for competition – like a pizza for the best performer – can actually hurt performance in the long run. This research shows that competing for a prize can create a tiny spike in performance in the first week, but it will drop or even worsen the week after. In this case, competition benefits backfire within a relatively short time.

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.

TipTip: 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 any dialogue about measuring employee performance must happen in an atmosphere of trust. Competition creates a sense of fear that can derail your workplace – introducing a need for employees to hurt each other instead of fostering collaboration and joint problem-solving.

Use competition judiciously. Ensure you’re targeting appropriate goals, and avoid unnecessary competition about trivial tasks that will poison the atmosphere. This is especially important if you have millennials and Gen Z employees in the workplace, as these generations are more focused on culture and meaning, not competition.

5. Fair competition is crucial.

People compete 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 are often driven to compete with themselves. They find motivation in setting personal achievement goals or comparing their performance to the benchmarked performance of someone at their level.

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 good performance process where employees can track goals in real time. Gamification can come into play to 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 (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. 

TipTip: Use the best tools for setting and tracking goals to help manage employee performance and encourage success.

Dos and don’ts of internal 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 goal.
  • Contextualize competition by highlighting how employees’ effort can benefit customers and the company as a whole.
  • Have different levels of competition so that people are competing 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.

Gal Rimon contributed to the writing and reporting in this article. 

Image Credit:

julie514 / Getty Images

Jennifer Dublino
Jennifer Dublino
business.com Contributing Writer
Jennifer Dublino is a prolific researcher, writer, and editor, specializing in topical, engaging, and informative content. She has written numerous e-books, slideshows, websites, landing pages, sales pages, email campaigns, blog posts, press releases and thought leadership articles. Topics include consumer financial services, home buying and finance, general business topics, health and wellness, neuroscience and neuromarketing, and B2B industrial products.