How do you balance healthy competition with a happy culture?

Embracing competition, protecting culture

Research, evidence and experience tell us that healthy competition within organisations is critical at inspiring employees to achieve their potential. A level of rivalry within teams, between departments and across entire organisations can help accelerate innovation, improve productivity and increase profitability.

But it can also create a toxic environment where individuals and teams work against one another, damaging themselves and the organisation.

To experience only the positive benefits of competition, growing companies must ensure that internal rivalry doesn’t damage company culture, and it all starts at the top.

Collaboration v competition

Competition describes the battle to control a limited resource. Externally, this could be the customer’s attention or the contents of their wallets. Internally, it could be managerial attention, investment, or access to opportunities.

On the battlefield or in the boardroom, competition pushes us. Psychologists have found that rivalries fire something inside that can elicit a strong physical and psychological response, “activating” us. Our bodies and minds are primed for action in such a heightened state, and we achieve more.

At work, competition can increase innovation, with a 2019 study finding that “inducing a sense of competition through competitive reward structures and IT-based “gaming elements” helps improve team effort and subsequent performance.”

When managed correctly, internal competition can help “motivate individuals and teams to strive to be the best”, say researchers.

In the same paper, the researchers state that collaboration among teams can “result in effective problem solving through knowledge sharing and innovation”, they advise.

So, which is best?

There’s a tendency among academics, managers and leaders to see collaboration and competition within teams as mutually exclusive, but that’s wrong. Evidence suggests that organisations can achieve more by embracing the positive aspects of internal competition and collaboration, but there are challenges.

“Internal competition leads to higher quality projects,” state researchers writing in the Journal of Economic Behavior & Organization, “until the need to compromise to facilitate collaboration undoes these gains.”

The crucial factor for organisations is to find a way to harness the benefits of competition while reducing any compromises demanded by collaboration. Academics have even coined the term “coopetition” to describe the ideal blend of cooperation and competition, and it’s being implemented by some of the world’s biggest and most exciting businesses.

Balancing priorities

Competition among teams can be a highly effective tool to motivate staff, but only if individually and collectively employees feel secure, says Google.

Like us at Saragossa and other progressive firms, Google sets individuals and teams Objectives and Key Results (OKRs) to motivate them. But, unlike other companies, Google provides total transparency. It’s an approach we embrace, too, with our 16-point appraisal process the subject of a future article.

OKRs are designed to stretch targets that Google admits might make people “feel somewhat uncomfortable”. They’re also open to everyone, enabling every member of the organisation to see who’s performing and who isn’t

The OKR system facilitates competition and motivation, but it’s also grounded in the broader aims of the business. “OKRs can enable teams to focus on the big bets and accomplish more than the team thought was possible, even if they don’t fully attain the stated goal,” they state.

Individually and collectively, OKRs demonstrate how everyone contributes to an organisation’s common strategic goals while motivating them to achieve more than they thought possible. It’s competition grounded in collaboration.

Existing in a state of ‘coopetition’ can put a strain on employees, teams and leaders. However, when competing and collaborating, individuals need the support of a great team. Google has spent years attempting to define what makes the perfect team, rigorously documenting its findings here and in this fascinating New York Times article.

“What mattered was less about who is on the team, and more about how the team worked together,” they found. So Google defined five core attributes of a successful team.

  1. Psychological safety
  2. Dependability
  3. Structure and clarity
  4. Meaning
  5. Impact

The search engine giant dug deeper to define simple rules that make better teams. In the end, they came up with three:

  1. Establish a common vocabulary
  2. Create a forum to discuss team dynamics
  3. Commit leaders to reinforce and improving

A team that can communicate effectively and openly can deliver under pressure. Leaders set targets but also create barriers and provide protection for teams. Whether competing or collaborating, they’re bound together by a shared culture.

Growing pains

Organisational growth poses perhaps the biggest challenge for leaders who must maintain a coherent identity across buildings and barriers. Google’s OKRs provide a structure and a focus for individual and collective actions and a measurement of their impact, but how can smaller organisations achieve the same?

It’s a question we’ve asked ourselves at Saragossa as we expand our UK operation into new premises and open our first US office in Chicago. To manage the change, we’ve provided every employee with a framework that supports them to achieve their potential, with goals and targets, to ensure they’re motivated to achieve the best results for our clients.

Central to our culture is an understanding that staff communicate, collaborate, and compete to benefit our business. So, whether our team are in our UK office, US office or working at home, they remain integrated and inspired to do what’s best for our business and yours.