Note: I spent most of today crafting a conference talk—on system dynamics!—so this essay is short and sweet.
Some companies foster competition among their employees. A canonical example: bell-curve performance reviews, especially when paired with “culling” of the bottom 5% or 10%1, pit employees against each other tacitly and implicitly, if not explicitly.
On the other hand, ask people about their best work experience, and they may mention feeling like an integral part of a successful team, working alongside others toward a common goal aligned with their values.
Worrying about which teammates will even be around next year, or how you can outdo your teammates to get a better rating and bigger bonus, can undermine teamwork.
Competitive pressures versus true teamwork
This doesn’t mean cooperation is absent at companies with over-competitive incentive structures:
Employees may cooperate if collaboration is one of the principles rated in performance reviews (so they cooperate to out-compete).
They may cooperate if they perceive doing so as advantageous over the long term (if you do this for me now, I’ll do that for you later).
They also may cooperate if they don’t buy into the company’s competitive ethos (although these employees are unlikely to stay long at an employer that doesn’t share their values).
But in some of these situations, cooperation may be surface-level and easily overcome by individual goals.
So, how can a company foster true cooperation and a work environment that attracts other cooperators (if, in fact, that’s the type of employee they want)?
But shouldn’t rewards be merit-based?
Yes, of course. Performance ratings and incentives are, like everything else, a balancing act. A couple of ideas:
Performance ratings should be fair and honest but not highly constrained to a curve.
Each person should receive a rating for team performance as well as a rating for individual performance.
In this type of system, if your team has no outstanding performers and doesn’t achieve most of its goals, no one gets a top rating.
Conversely, if your team is viewed within the company as a group of superstars and also hits its goals out of the park, why not give each person the top rating and bonus they deserve? Great people don’t necessarily love competing against their teammates for resources; why force them into that position?
Yes, having a team performance component means that an apparent superstar whose team doesn’t achieve its goals might be negatively affected—but they would also be incentivized to find ways to improve the team’s performance, or to leave the team.
(Note: the option to leave the team assumes the company hasn’t implemented another counterproductive policy: that a good performance rating is required in order to transfer. Outside of egregious misbehavior, every employee who wants a second chance elsewhere in their company should be free to seek one.)
Isn’t that rewarding underperformers?
Underperformers aren’t getting massive bonuses or promotions; just a second chance. And that’s valuable because there are various reasons why they might be underperforming. For example:
An employee might be not that good at the role they were hired into—but they might do much better or even become a top performer in a different role (I’ve seen it happen).
Bad managers can sometimes hamstring good employees’ performance. Allowing an employee to transfer elsewhere within the company and try again with a new manager (assuming they find a team that wants to on-board them) can improve the employee’s and company’s performance and also can serve as a signal to senior management, because bad managers will tend to lose a relatively large number of employees. Ineffective teams should be disbanded or the manager replaced, but that can only happen if senior management is aware of it.
Of course, this discussion of second chances isn’t complete without acknowledging the possibility that an employee who is rated underperforming might have been a so-called “hire-to-fire,” as documented in this article in Business Insider.2 That practice is despicable and is also a blaring alarm that "cull the bottom" policies don’t just undermine cooperation, they simply do. not. work. Teams may attempt to route around the damage, but in doing so they can damage innocent people’s careers, morale, and future prospects. The entire model is wrong.
Over-fitting the curve
So much of business has become more complex than it needs to be. Hire people who you think will do a good job. If they do a good job individually and as part of a team, reward them without competitive games or forced conformation to artificial curves. If their team is holding them back, let them transfer. If their performance is lacking, give them a second chance on a different team if another team is willing to give them that chance. If they still don’t do a good job, fire them.
And what an inappropriate term; employees aren’t poultry in a factory farm.
It’s not clear how common or widespread this practice is among companies, but it seems like an unintended second-order effect of “cull” policies and attrition goals.
Stephanie -- This had all the qualities of a great post because it caused me to pivot and examine it through the eyes of a longish career. Your system orientation seeps into a lot of what you write and that is great. Perhaps more later as time avails.
I worked at GE for several years, so I can say that I have lived through a competitive-collaborative environment. I think that a zero-sum game mindset drives this pattern in most organizations. Every organization wants to have high performance teams, but the incentive structure is does not support it. I like your point about "collaborating to out-compete". I have seen this play out many times.
Personally, I favor openly competitive work cultures to passive-aggressive work cultures. I have been in both.
As long as we value monetary compensation as most important, you will see this dynamic continue.
I would love to see a system dynamic model on this topic!