Over the short term, competition among employees and teams may stimulate increased performance. Over the long term, however, it can lower productivity by destroying the desire to collaborate. And most work demands some level of cooperation—in very few instances can work be done in isolation.
The necessary collaboration is not limited to teams within the same function; it goes further—it entails cooperation across disciplines. The same problems that happen between employees in competition also occur on a much broader level. Competition between group managers resembles rumbles between street gangs for turf. Information is hoarded. Ideas, though good, are refused. The not-invented-here mentality overrides the productivity or profitability improvements that might come with implementation of someone else’s idea.
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Many managers don’t deliberately create the conditions for competition among their employees. When siblings spar with one another, it’s often a result of feeling deprived of attention, affection, feedback, or approval from one or both parents. Competition among employees may be due to the same feelings of neglect.
Because of competitive feelings, employees not only won’t help peers but may even go out of their way to trip other colleagues up.
Competition entails both offensive and defensive actions. Offense is the effort your employees might put into scoring against their competition. And in most instances, this does stimulate higher performance although that increased effort doesn’t necessarily benefit the organization. Where competition entails defensive actions, there is no question that it can create problems for a department, division, or company as a whole.
Those who suggest that "a little healthy competition can’t hurt" are thinking only of offensive tactics and forget that even these efforts, if out of alignment with corporate goals or values, can hurt the organization. When the employee wins, the organization may lose, if not in the short term, then in the long term.
So the offense component of internal competition is problematic. On the other hand, the defense component is always injurious, prompting anti-collaborative, anti-cooperative behavior.