Does a Cut-Throat Office Culture Help or Hinder Productivity?

Given that it’s Oscars week, I thought I’d start out with a clip from one of my favorite films, Glengarry Glen Ross, which is not only a great movie, but is also a perfect example of a cut-throat work environment.

Put That Coffee Down!

I’ve used this film to start discussions in class about whether cut-throat work environments help or hurt employee motivation or productivity, and the answers I get from my business school students are invariably mixed. To stereotype, the students from investment banking or sales think Alec Baldwin’s character’s abusive style is right on track, while those who come from nonprofits or human resources are appalled. Those who work in IT simply keep looking at their laptops or smartphones.

I myself have changed my mind about the film over the years. When I first saw it and started discussing it in my courses, I believed that it reflected an unethical and dehumanizing approach to managing people. Refusing to help the salespeople, and pitting them against each other in the sales contest (first prize is a Cadillac Eldorado, second prize a set of steak knives, third prize is being fired), was only going to lead to resentment and retaliation (which does in fact occur in the film).

However, I then left the relatively protected life of a business school professor to lead an executive education unit in which I had bottom-line (“P&L”) responsibilities. After that, I left academia to become a vice president in a for-profit venture capital-funded education company facing extremely short deadlines and the need to innovate in a number of areas simultaneously. 

In both roles, I had to motivate my subordinates to work extremely hard and develop new sets of skills very quickly. I have come to believe that whether a so-called cut-throat work environment is appropriate depends on 1). how it is defined and 2). what the organizational culture is like when managers or leaders introduce such an approach to motivating people. 

Based on my two decades of research on leaders and organizations, I don’t think a literal cut-throat environment, i.e., a zero-sum system in which one person’s success and rewards come at the expense of someone else will ever lead to greater productivity. There will simply be too much of an incentive to undercut one another, leading to overall poor performance for both individuals and the organization. This is even truer when some form of teamwork is required to please the customer or deliver results. However, when individuals are expected to compete against an objective performance standard, then I believe it is perfectly fine to provide feedback and incentives that encourage people to continually improve upon their own individual performance, or the performance of the group. It is even more appropriate to manage this way when complacency or poor performance is present.

I conducted a short survey of people in my network who work in a wide variety of industries and functional areas: nonprofit, education, financial services, and information technology. Their responses to the open-ended question, “What would you do to improve your organization’s reward/performance evaluation system?” were quite revealing. One person reported the classic problem of failing to properly recognize individual performance in violation of official “practice” (how can it be practice if it’s not practiced?):

"Working for a public university, my experience for nearly 30 years (in various staff positions) has been that everyone is given a "merit increase" (which is less than a cost of living adjustment" once a year. The percentage for the past five to six years has been from 0-3%. In one job, I was offered a one-time bonus for a "job well done during the prior 12 months," which was promptly rescinded when I was offered another position in another department. My argument with HR was that the bonus was for the PRIOR 12 months and should still be awarded. They still rescinded it despite "central HR" guidelines that contradicted the unit's actions. The performance evaluation system is also very, very cumbersome and time-consuming to complete and with such a large university, there is little consistency across departments. 

Some departments are known for giving higher base salaries (or increases based on promotion) than other departments based on how budgeting is managed (decentralized).  In another case, the person who replaced me when I left a position was given a salary of $2,000 MORE than what I was being paid despite my 30 years of experience to her five years of experience. There is no rhyme or reason to salaries, performance evaluations, or reward systems in my experience whatsoever."

One CEO of his own startup acknowledged the inherent difficulty in motivating individuals to do their very best while not encouraging counterproductive competitive behavior:

"I am now running my own company. I can say that I have worked in both cultures; one that ranked employees, and another that pitted one against the other. As a high performer in both organizations, I absolutely despised those environments. This is partly why I launched a startup with a goal to nurture a different kind of culture. I am noticing in my startup, however, that certain people absolutely love individual recognition. So, trying to find a way to satisfy those individuals while not making individual performance a focal point of the culture is an interesting challenge."

Although I didn’t receive enough responses to make statistical inferences, in general the majority of my respondents didn’t report working in what could be labeled a cut-throat working environment. 

Perhaps if I had received more responses from people working in financial services or sales functions, more people would have said so. Nevertheless, when the economy improves enough to the point in which greater job mobility is possible, I guarantee that those who believe they're not being adequately rewarded, whether as individuals or as part of a team, will depart where the “closers get their coffee.”