In today’s workplace, rewards and recognition programs are often seen as essential tools for boosting performance and engagement, however when recognition is overly focused on individual achievements such as naming “top performers” or celebrating the “most outstanding” employee, it can have unintended consequences. Rather than encouraging healthy ambition, these approaches can breed unhealthy competition that damages morale, undermines collaboration, and erodes trust among colleagues.
This blog post explores the hidden risks of reward systems that emphasize individual glory over team success, and offers insight into how organizations can balance recognition by valuing both individual contributions and collective achievements to support a thriving, psychologically safe workplace.
How Recognition Can Lead to Unhealthy Competition
While the desire to be seen and appreciated is natural, recognition programs that highlight only a select few can unintentionally shift employees’ focus from shared goals to personal gain. Terms like “best in class” or “employee of the month” may seem harmless, but they often signal that only the highest achievers are valued, sometimes at any cost.
Here are six (6) ways that this kind of reward-driven competition can harm individuals and the broader work environment:
- Increased Stress and Burnout
Employees may push themselves beyond sustainable limits in pursuit of top recognition, sacrificing rest, well-being, and work-life balance. Over time, this leads to chronic stress, anxiety, and burnout.
- Loss of Morale
When recognition is limited to a few, others may feel invisible or undervalued, especially if their steady, behind-the-scenes efforts go unnoticed. This can cause disengagement and a drop in overall motivation.
- Erosion of Team Spirit
A focus on individual achievement discourages collaboration. Employees may prioritize personal wins over team success, or rely too heavily on high performers to carry the load.
- Suppression of Creativity
Competitive environments often reward outcomes over innovative thinking. This can discourage risk-taking and stifle fresh ideas that don’t immediately produce standout results.
- Information Hoarding
In an effort to maintain a competitive edge, some employees may withhold valuable information, slowing progress and undermining team effectiveness.
- Unhealthy Workplace Culture
When an Employee of the Month Program emphasizes competition over collaboration, it can unintentionally create unhealthy rivalry among staff. Instead of inspiring excellence, employees may start comparing themselves to one another or feeling overlooked and undervalued when recognition seems unfair or arbitrary. Over time, this dynamic can foster resentment toward peers. Some employees may even withhold help to improve their own chances of winning. As trust and teamwork erode, morale drops and turnover increases, as employees who feel unseen or demotivated begin to leave.
Making Room for Both Individual and Collaborative Recognition
Recognition and rewards can still be powerful and positive motivators but they must reflect the full range of contributions that drive success. This includes recognizing individuals for their effort, initiative, and impact without losing sight of the collaborative context in which most work gets done.
Individual recognition still has a place, particularly when it:
- Acknowledges personal growth, innovation, or resilience.
- Highlights how an individual helped others succeed.
- Reinforces behaviors that align with team and organizational values.
When done with care and balance, recognizing individuals can inspire others, without creating unhealthy competition and especially when paired with inclusive, team-based appreciation.
Three Inclusive Recognition Practices That Promote Team Culture
Here are a few simple, effective ways to broaden your approach to recognition:
- Peer-to-Peer Recognition Systems
Create a “Team Shout-Out Wall” (virtual or physical) where employees can acknowledge colleagues who supported or collaborated with them. This encourages appreciation from all directions, not just top-down, and reinforces team-oriented behavior. - “We Succeeded Because…” Presentations
After major milestones or project completions, invite teams to reflect and share a short presentation on how collaboration and support contributed to their success. This shifts the narrative from “I did this” to “we did this together.” - Storytelling Around Collaboration
Use team or company meetings to highlight real stories of effective teamwork. Emphasize the process, such as communication, creative problem solving, and mutual support rather than just the final result. This helps embed collaboration as a key part of high performance.
Final Word
Unhealthy competition often creeps in unnoticed, fuelled by well-intentioned recognition programs that overemphasize individual performance, however when the spotlight is widened to include shared efforts, peer support, and a balanced view of individual contributions, the culture shifts from rivalry to unity, from stress to support.
Leaders who recognize both what gets done and how it gets done create the conditions for healthier, more engaged, and more resilient teams.
At Nu Era Talent Development Group, we help growing companies design people practices, including recognition and reward programs that support collaboration, engagement and performance without creating burnout or rivalry. We build cultures where people feel valued, where teamwork thrives, and where employees love to work.