Is a Competitive Work Environment Effective?

A competitive work environment is only helpful and effective in certain circumstances. We'' analyze the subject in the following article.

Written and verified by the psychologist Valeria Sabater.

Last update: 05 October, 2023

Is a competitive work environment effective? Managers and experts in the field of organizational psychology will say yes. However, they’ll add important nuances. This is a playing field where you have to know how to level and promote employees because if it’s done improperly, the results are disastrous for companies and human capital.

A few hints of competitiveness at work are stimulating, but the same can’t be said about a culture based exclusively on this principle. We must bear in mind that some workers, due to their personality, don’t adjust to this dynamic. Also, this strategy is often the source of conflicts, stress, and poor productivity. So, with all this in mind, let’s take a look at the pros and cons.

What’s a competitive work environment?

A competitive work environment is one that guides employees to feel motivated and challenged in order to outperform their peers and excel. However, in many companies, this same dynamic isn’t explicit, but rather, underlying. Most of us compete for recognition, bonuses, or promotions.

As Daniel Goleman explains to us in his book Focus: The Hidden Driver of Excellence  (2013), every employee is forced to compete at some point.

In an increasingly complex, dynamic, and changing world, individuals, social groups, and organizations end up competing with each other to obtain a position or the goals that are proposed. The following are some characteristics of this type of scenario:

• Constant competition and rivalry among workers.
• Very demanding work environments dominated by pressure.
• Rewards are given to those who demonstrate higher goal achievement.
• Constant mechanisms are applied to evaluate the performance of employees.

Is the competitive work environment effective?

There’s a general idea in the field of organizations that defends the suitability of fostering such environments. This principle is justified by the need to boost productivity and innovation and improve corporate performance. Now, the question is this: Is a competitive work environment effective?

The short answer is: Only in certain circumstances. Not all work environments nor people themselves benefit from a competitive organizational policy. As an article from the University of Beijing indicates, in order to determine if these challenging dynamics are useful, both the personality of the employees and the climate of the teams themselves must be taken into consideration.

And competition in humans is one of the most complex variables that exist. Below, we’ll explain in detail in which circumstances it’ll be beneficial and in which circumstances it’ll act as an obstacle.

Positive aspects of labor competitiveness and how to make it beneficial

In particular scenarios, a competitive work environment is effective. We know from research published in Personality and Individual Differences that a worker with these traits brings innovation to the company. This internal motivation is correlated with commitment and the desire to excel, along with the harmony among the objectives of the organization.

They are, without a doubt, high-value characteristics, but they’re not characteristics that all individuals present. What’s more, sometimes a person may be competitive, but if the culture of the work environment isn’t conducive, they’ll feel frustrated, under-rewarded, and criticized. The positive aspects that this dimension contributes are listed below:

• Higher performance.
• Promotes innovation and creativity.
• Workers are rewarded for achievements.
• It encourages employees to establish new skills and competencies.
• Individuals may be inspired by the work of their peers.
• Leads the company towards a position of greater relevance in the market.
• Competitiveness can give the employee a dose of drive and motivation.

How to make the competitive work environment effective

There’s a very interesting study published in the Journal of Experimental Social Psychology that invites us to reflect on the effectiveness of competitive work environments. Many times, in order to be successful, we must surpass those who helped us at some point; those same colleagues who facilitated our skills and development. They’re common experiences that happen almost every day.

For these dynamics to occur without conflict, companies need to take care of their promotion and competitiveness mechanisms. Companies are responsible for creating a climate where employees can compete in the best circumstances. Let’s see what the keys are:

• Value employees.
• Reward their efforts.
• Offer strategies to manage stress.
• Don’t underestimate those who show less competitiveness.
• Combine objectives based on cooperation with competitiveness.
• Give the appropriate mechanisms so that employees can progress.
• Inform employees of the company’s competitive policies and culture.
• Foster a group culture and not just individual competitiveness.

When is a competitive work environment not effective?

A competitive work environment doesn’t work in those organizations sustained in a ruthless culture oriented only to the achievement of objectives. When productivity is prioritized and the conditions and well-being of the employee are overlooked, problems arise. As we well know, this is a dynamic that appears in a good part of the working world.

Some examples of circumstances in which this approach isn’t suitable are those that we’ll list below:

• The work environment is stressful and very demanding.
• Not everyone is comfortable in competitive settings.
• The company lacks clear work mechanisms and good organization.
• The employee is perceived as a worthless and replaceable piece of the organization.
• Competitiveness isn’t effective if workers perceive each other as rivals.
• It’s also not effective when competing just to keep the job, without any other reward.
• If the achievement of objectives is prioritized over the mental health of the employee, it’s not useful either.

What are the effects of a highly competitive work environment?

One of the main effects of a highly competitive organizational environment is interrelational conflict. The National Institute for Occupational Health in Oslo published a very enlightening analysis on the subject. These problems caused between co-workers due to competitiveness often lead to sick leave. In addition, the following consequences are possible:

• Stress and anxiety appear.
• There may be dishonest or unethical conduct.
• Workplace bullying dynamics can arise between colleagues.
• High competitiveness may reduce productivity and innovation.
• Sometimes, competitiveness translates into conformism. There are many who, due to their personality, avoid these dynamics and prefer to skip this type of challenge by doing the bare minimum.

The benefits of the employee guided by internal competitiveness

At this point, we already know that a competitive work environment isn’t always effective. We understand that organizations are responsible for orchestrating and taking care of mechanisms in order to ensure that this dimension is ideal and achieves good results. Likewise, there’s no denying that, in such a challenging social context, companies must adapt to these unforeseen surges in the best way possible.

In this vein, it’s worth highlighting a relevant psychological dynamic. There are employees who show great personal competitiveness that’s not motivated by external factors. There are people whose work is driven by internal improvement, by taking on constant challenges and conquering them; in this way, they build their self-concept.

This personality factor is of great relevance for work settings, as long as the companies themselves take care of the conditions to value and promote these behaviors. Dysfunctional companies abound, and there are those that don’t appreciate the human component and prioritize productivity exclusively.