When Rotman assistant professor of strategic management Hyeun Lee first studied management theory at an advanced level, she came across the assumption that having high-performing peers can improve individual performance.

It didn’t sound right to her. If the workplace is anything like school, she suspected the opposite might be true.

“I have a different set of lived experiences from a different school climate,” she says.

Lee comes from South Korea, where she attended a boarding school during three high school years — students stay in dorms during the week and go home on weekends — and competition was fierce. Everyone in a cohort did the same assignments and tests, and their grades were calculated from their rank within the cohort. Postsecondary institutions looked at these grades, which are really a relative performance metric.

“I began thinking about the conditions where individuals learn,” she says. “Things came to mind about the role of competition, and how competition takes away your agency.”

In her experience, students would egg each other on to some degree. But they also hoarded resources, and the high pressure could lead to strong students losing heart during the school year and seeing a decline in academic performance.

For her study, Lee returned to her high school to see how competition impacts marks, and how friendship and being in the same spheres — taking the same extracurricular activities — influenced outcomes.

She worked with professor Christine Beckman of the University of Southern California, Santa Barbara, with whom she has collaborated in the past on studies on social comparison and how gender impacts boardroom malfeasance, and Rellie Rozin of the University of Maryland.

The study affirmed Lee’s lived experience, showing that head-to-head competition can make some people perform worse, not drive them to do better.

“We’re not machines. We are affected not just by knowledge and information, but by what other people possess and the emotions associated with being evaluated against others,” she says.

Going back to school

Lee thought her high school offered an ideal natural experimental setting to better understand competition. Student performance is tracked via marks and cohort rankings. It’s a highly controlled environment in which students take the same classes and do the same work.

But they choose what after-school activities they join — that’s where they express their individual interests. Additionally, their randomly chosen roommate, whom they see around the clock, may or may not become a good pal who acts as a study buddy or cheerleader. “That friendship piece is something where individuals have a say,” says Lee.

For the study, she assessed 320 students from two cohorts over four semesters, looking at their grades and using surveys and other data to assess whether people were friends with their roommates, and if they were in further competition with them via extracurriculars.

For duos in direct competition, the researchers found one of the roommate’s marks began to sag slightly over time, affected negatively by the pressure of competition. The change was just 3.36 grade points, or the equivalent of the value of one or two multiple choice question on an exam.

“They got a little bit worse,” says Lee. “But the way grades are calculated, that can end up getting you a lower grade, which is important in these kinds of settings.”

The effect disappeared when the roommates had very different interests — say, one was on orchestra while the other worked on the student newspaper — or if they were friends. So when students don’t see themselves as competing head-to-head, or they offer each other emotional and other support, competition gets neutralized.

From school to work

Lee thinks school settings such as this are just as competitive — “If not more competitive,” she says — than high-performing workplaces, so the findings can apply to companies.

She says the use of stack ranking, where employee performance is measured against an entire workforce, the ranking of salespeople against each other, or other head-to-head contests, such as rewards for employees of the month, could trigger a decline in performance for some employees.

If the goal of competition at work is to raise everyone up, it may fail.

Contests between entirely different departments, meanwhile, seem okay, and won’t erode performance in the same way.

What about encouraging people to become friends, offering them a way to work against the pressure?

While Lee thinks this may sound reasonable, what matters is letting people  be themselves, not nudged into certain types of relationships.  “Friendship formation is a way of individuals exercising agency in a setting where their agency to shape relationships is limited by competition, so respecting that agency is critical.”