Sports doesn’t hold monopoly on high-stake tournaments

Tournament competition brings out something in people that can be difficult to quantify. Take Tuesday’s Men’s NCAA Tournament Final. A freshman — who scored 10 points or more just four times this season — led the Duke Blue Devils to a national championship.

Turns out most people, including Duke’s Grayson Allen, get a surge from competition. The phenomenon, according to one Emory professor, goes beyond the basketball court.

“There’s all kinds of evidence that people get a kick out of winning, even when a prize is not attached,” said Goizueta Business School Accounting Professor Kristy Towry, who researches behavioral economics.

“With a prize, it’s even better,” she adds.

Often equated with athletics — especially in March — where it’s largely viewed as a positive, tournaments have a mixed view in the business world.

Economists view a tournament format as a filtering out of common uncertainties, Towry said. If a sales team is competing in a tournament, every member is on a level playing field and would be affected by a change in economic conditions in their market.

Psychologists, meanwhile, say tournaments trigger competition even if money is not a factor.

Damage can be done, though, with tournaments, Towry cautions. It reduces a willingness to cooperate, especially if helping colleagues is a central part of a job. In settings where employees have a social connection, a tournament could be particularly detrimental.

“You increase the likelihood of collusion to a lower standard,” Towry said.

That theory hinges on the notion that a high-performing employee in a competition only has to perform better than the next employee, who could be considerably less talented. The high-performing employees don’t have to push themselves and may not reach their potential.

A 2012 Wall Street Journal article credited former General Electric CEO Jack Welch as someone who “championed” the concept in the 1980s. He called it the “kindest form of management.”

Exxon is also well known for utilizing the system, Towry said. Other firms, she adds, have used various forms of a “rank and yank” formulas, where a certain percentage of lower ranked employees have jobs yanked from the company payroll.

That practice has dwindled in popularity in recent years. GE, for example, phased it out in the mid-2000s. The Institute for Corporate Productivity reported that while nearly 50 percent of companies surveyed in 2009 instituted “forced ranking,” that number dropped to 14 percent in 2012.

The Wall Street Journal also notes that it’s difficult to track changes because companies have renamed programs with “gentler” titles like “talent assessment” and “performance procedure.”

Towry, however, said there is a lasting effect on companies who employ the tournament-style programs.

“It affects the type of people who get attracted to these types of companies,” she said. “It attracts more competitive employees, because they think they can win.”

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