5 Ways to Promote Healthy Competition Competition can be a catalyst for innovation for innovation and improvement. So, don't squelch it at your company.

By Doug and Polly White

Opinions expressed by Entrepreneur contributors are their own.


At a business event we hosted, a teamwork consultant was making a presentation about his company and the work that he did. To illustrate his theory on collaboration and teamwork, he asked the audience to participate in an exercise involving, of all things, thumb war.

Related: 6 Ways to Build Healthy Competition at the Office

Thumb war involves two people linking to each other, thumb in thumb, and then using those digits to simulate fighting.

During the exercise, we paired up into two-person teams and followed instructions to play for 30 seconds. At the end of the session, we revealed how many rounds of thumb war each team had played.

Most teams had completed between two and four rounds. The consultant noted that we could have played more games had we decided to cooperate -- that team members could have taken turns "pinning" each other, to complete more rounds ahead of the 30-second deadline.

While he was correct, we participants couldn't help thinking, "Where's the fun that?" By eliminating the competition factor, he had traded in an enjoyable activity for one that would be mechanical, repetitive and boring.

That thought in turn made us ask, "Are today's organizations focused on collaboration at the expense of competition?" Don't get us wrong, we are for collaboration and teamwork, but not if that means banning healthy competition. Competition motivates people to achieve more, to push past their limits. Competition also inspires innovation and improves quality.

Related: 10 Ways Competition Can Improve Your Business

We believe that sometimes competition gets a bad reputation. But, competition is absolutely necessary in entrepreneurial organizations. To promote healthy competition in your organization, practice these strategies.

1. Teach and promote healthy conflict.

Competition can create conflict between and among employees. Jockeying for limited resources may cause tension. However, when a team's members understand how to have healthy debate and share their opinions openly, competition becomes a catalyst for innovation and improvement. Teaching healthy conflict is the first step.

The leadership team of a mechanical firm we worked with met weekly but didn't accomplish much. Team members didn't voice their true opinions or hold one other accountable for accomplishing tasks. Members resisted making any negative comments that might cause conflict with their teammates.

To turn this around, we used the lessons from The Five Dysfunctions of a Team by Patrick Lencioni to teach the group how to have healthy conflict. It didn't happen overnight, but the team has since broken out of its artificial harmony and is much more productive.

2. Reward your best performers.

Nothing will demotivate your best employees more than feeling that you don't appreciate excellence. If you reward all your employees in the same manner, why should people work hard to differentiate themselves? Rewarding people equally, regardless of performance, will eventually create an environment of mediocracy.

We worked with a large government institution. Its compensation system was designed to reward "exceptional" performers at a higher-than-average rate and one higher than that given below-average performers. However, when we looked at the performance ratings, we found that more than 95 percent of the employees were rated "exceptional."

Obviously, the system did nothing to motivate top performance. Instead, management rated almost all of the more than 500 employees exceptional, so that the employees would receive the top increase each year. We worked with management to learn how they might give more accurate ratings. In addition, we met with all employees to talk about the new expectations and changes to the system.

3. Set stretch goals.

Your employees should compete not just with others in your organization or your organization's competitors, they should compete against their previous efforts. Continuously raising the bar and setting loftier goals will help your employees be their best.

We work with a small service firm. Its employees have grown steadily over the past five years. When we became involved with them, we challenged them to push themselves to achieve higher revenue levels. They came back with true stretch goals. We then helped them put together a plan to make the goals a reality.

By the end of the year, they had missed their stretch goals by only about 5 percent. However, they still reached the highest revenue level in their firm's history and have continued to push for higher levels each year since then.

4. Give honest performance feedback.

The greatest gift you can give to your employees is your honest opinion of their work. Telling an employee when he or she does well or else misses the mark will increase performance. We have written about this previously.

Employees need both rewards and consequences to perform well. An environment that is skewed heavily as overly positive or negative will result in dysfunction. We have found that most employees want to be recognized, contributing members of a winning team. To understand how they contribute and achieve such recognition, they need feedback.

We worked with a director of a non-profit who tended to practice conflict-avoidance. She could not give negative feedback to employees. Instead, she would complain to senior volunteers about the things her employees would do that she didn't like. Sometimes she would get those volunteers involved in passing along her performance suggestions to the employees.

However, most employees had no idea that they were not performing to the director's expectations. By the time we got involved, the situation with one of the employees was too damaged to save. Despite our efforts to repair the relationship, in the end we helped the director to terminate this person. Since then, we have worked with the director to improve her conflict-resolution skills. She is making progress.

5. Find opportunities to play.

Most of us have participated in some kind of sports activity. Whether it is Little League or a pick-up basketball game, games teach us how to have fun competing, how to win gracefully and how to lose with honor.

We have a client who created a series of games to boost healthy competition among his employees. The games take place each year over a two-month period. The activities range from darts, ping-pong and air hockey to golf and basketball. Employees sign up for the activities of their choice. They keep score and post the results for all to see.

At the close of the game series competition, the owner awards the winner a trophy at a companywide meeting. The games are an event that the employees look forward to each year.

Related: What Tech Entrepreneurs Can Learn From the Startup That Beat Google

Competition, then, is likely important to the success of your organization. To promote healthy competition at your company, follow the five strategies above. You can reap the benefits of competition without destroying teamwork and collaboration.

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Doug and Polly White

Entrepreneurs, Small Business Experts, Consultants, Speakers

Doug and Polly White are small business experts, speakers and consultants who work with entrepreneurs through Whitestone Partners. They are also co-authors of the book Let Go to GROW, which focuses on growing your business.

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