By using technology to create a form of the leaderboard typical in sales organizations, innovative firms are infusing their workplaces with competitive spirit. Both companies and high-performing employees stand to gain. We call these firms "winners take all" organizations.

Instead of distributing work evenly among employees, winners-take-all organizations allocate according to merit: Better workers take more assignments, and the others get what remains. The model exploits the fact that workers differ dramatically in productivity because of such factors as skills and attitude, which can be hard to assess when hiring. Over time, it may induce low performers to quit, leading to a higher-performing workforce and a constantly rising bar.

Servers at the Massachusetts-based restaurant chain Not Your Average Joe's always know how they're doing relative to their colleagues, owing to a cutting-edge workforce management systemMuse provided by Objective Logistics, Inc. Rather than forecasting demand and staffing a restaurant accordingly, as most systems do, the software tracks waitstaff performance in terms of per-customer sales and satisfaction (gauged by tips). Highly rated servers are given more tables and preferred schedules. By shifting work to its best servers, the restaurant hopes to increase profits and motivate all employees.

We talked with the company's CEO, Stephen Silverstein, who founded the firm in 1994 and Colleen Cushman, one of the restaurant's servers in Beverly, Massachusetts. Here's what they had to say about the system.

HBR: What was your goal in introducing this system?

Silverstein: Servers are our sales force. We thought it would provide insight into an area where we had no data and would drive sales and profitability.

What was the reaction among staff members?

It wasn't as negative as I expected. Many loved seeing their results. This is a helpful tool for servers to increase their sales and tips. After all, servers are commissioned salespeople.

Has it caused turnover?

Very few employees have quit. Some low-performing servers will be asked to leave if we can't help them improve, but losing the weak is good for the company.

What's the financial impact?

It's too early to tell for sure, but we think we will raise check averages by 2% to 3%, from $17 to $17.50 per guest. Based on 60,000 transactions a week, that adds up to about $1.5 million a year; with a 40% margin, the return is tremendous. We've also seen that guests prefer the higher-scoring servers, and since the system should help all servers improve, we hope that guests will be returning more frequently.

Colleen Cushman is a food server in Beverly, Massachusetts.

HBR: How did you rank in your first few shifts?

Cushman: Initially I ranked maybe 15th out of 30 servers. I'd never waitressed before, so my first concern was not dropping anything. But over time I learned to sell, and my rank went up. Instead of just having a customer look over the menu, I'd sell specific items: "This appetizer is my personal favorite." I like suggestive selling. I'm very indecisive, so when I'm a diner and I hear servers describe different options, it helps me decide.

How do you benefit from the rankings?

There are usually 12 servers per shift, so as long as I rank in the top 12, I'll get the shifts I want. Fridays, Saturdays, and Sundays are the moneymaking days, when I want to work.

How do low performers react to the rankings?

They often aren't even aware of the rankings—they're typically not on top of that.

Does your ranking ever fall?

Sometimes. I might get a party of 12 teenagers who want separate checks. Average check size is a factor in the rankings, so that can bring you down.

Note: (Some of the blog entries are copied from the various sites unless otherwise stated)

By:  Serguei Netessine and Valery Yakubovich  (www.hbr.org)

We joke back and forth, but it's nothing intense. For the most part, this system helps everyone get better, and a little friendly competition never hurts.

We believe that the opportunities for implementing winners-take-all systems are plentiful. It's easy to imagine the model's working in virtually any retail or transaction-oriented service business. Wherever there is a best location or a preferred shift, and as long as performance can be evaluated and ranked, companies can realize productivity and profit gains by shifting work to their best performers. And managers, freed from many of the tasks involved in appraising employees, can focus more attention on activities that really count—marketing, promotion, and other efforts that add to a business's long-term value.

This blog post was excerpted from Serguei Netessine's and Valery Yakubovich's article "The Darwinian Workplace" in the May issue of the magazine.