But companies can actually use a competition to encourage a collaborative environment, says Dick Grote, chairman and CEO of Grote Consulting. Grote has worked with PepsiCo (PEP), and he says management there bases 40% of an employee's annual bonus on how well he or she helps promising colleagues develop their careers at the company. People will collaborate when they're ranked on how well they work with others, Grote says.
Grote claims that one of the benefits of forced ranking and other competitive measures is that it compels managers to actually assess their employees, which many top executives don't do well.
But there are other options. There's nothing that says firms have to be structured to encourage everyone to strive for partner. "In an up–or-out model, the best consultants in the world get pushed out," says Dan Reardon, CEO of global consulting group North Highland.
Reardon's firm takes a different approach, and allows good consultants to keep their jobs as consultants, while other people focus on responsibilities that typically fall to partners, such as sales. Also, Reardon says, all employees, not just partners, have equity in the company. "Part of the core of our culture at North Highland is to have more camaraderie. We want everybody focused on client success, not individual success."
Culture is actually the most important factor when considering whether or not to encourage competition. Executives are always looking around for the best practices out there, says Serino, and some could consider forced ranking: "It's easy to become enamored of perceived success, but then when you try to transplant it, it potentially can get botched."
While there are ways to take the edge off of a business that has a fiercely competitive environment, it's very difficult to turn a company that isn't cutthroat into one that is. And given the benefits many companies are finding from focusing on collaboration, you probably wouldn't want to anyway.
