Rule 14: Competition

The Competition Rule:  Avoid Unnecessary Competition Between Participants

A frequent oversight, and one with substantial underestimated negative impacts, is the creation of performance management plans that motivate direct competition between co-participants of the plan.

Of course, in some obvious cases, this is the desired result.  However, for the vast majority of incentive/bonus/merit reward plans, especially where base salaries are a high percentage of total compensation, co-participant competition will disrupt desired standard work behaviors, warp desired business processes, foster distrust and uncertainty, and poison morale.

Instead, incentive/bonus/merit plans should target workforce member’s competition vs. their goals; their own “business as usual”. 

Incentive plans oriented towards “If I Win, You Lose” will not have the desired positive results, and will more than likely generate negative outcomes.  “Win-Win” oriented approaches in goal-setting and performance incentive/bonus/merit pay-outs should be fostered and rewarded within the framework of the plan.

Finally, an enterprise-wide holistic approach should be taken to ensure that incentive/bonus/merit plans don’t create intra-enterprise rivalries, or open conflict, that generate lots of genuine effort but result in cannibalization of business, alienation of customers, and failure to achieve enterprise-wide objectives. 

There is little point to having two or more operating divisions fight against each other, when they’d be far more productive joining forces, aligning priorities and resources, and going after real competitors.

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>>> Rule 15