27 Feb 2020

IN DAVID MAMET’S film, “Glengarry Glen Ross”, a group of American property salesmen are forced into a contest to maximise sales. The top two will get prizes; the bottom two will be fired. The play comes across as a critique of the corrupting effect of “dog-eat-dog” capitalism and putting performance above all else. But is competition between employees an effective way of improving overall outcomes for business?

Jan Woike, from the Max Planck Institute in Berlin, and Sebastian Hafenbrädl, of the IESE business school in Barcelona, try to answer the question in an article* for the Journal of Behavioural Decision Making. They tested whether performance ranking helped or hindered group effort.

Their approach was to use a “public goods” game in which participants are given tokens which they can invest. They had the choice of investing in an individual project or investing collectively. Two different versions of the game were played. In both games returns were higher if everyone collaborated. But in one version, investing in the individual project improved the relative ranking of the participant, even though the returns to both the individual and the group were lower.

Participants in the game included some students and some experienced managers. The researchers observed no significant difference...

Read the full article here.
This content was originally published by The Economist: Business. Original publishers retain all rights. It appears here for a limited time before automated archiving. By The Economist: Business

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