Performance-enhancing compensation practices and employee productivity: The role of workplace bullying Al-Karim Samnani a,b,c , Parbudyal Singh b,c, ⁎ a University of Windsor, Odette School of Business, 401 Sunset Avenue, Windsor, Ontario N9B 3P4, Canada b School of Human Resource Management, York University, Toronto, Ontario M3J 1P3, Canada c School of Human Resource Management, York University, Toronto, Ontario, M3J 1P3, Canada article info abstract Performance-enhancing compensation practices are designed to increase employee productivity through greater accountability, while highlighting performance differentials across employees. While productivity increases may occur, these practices can also stimulate an unintended consequence: workplace bullying. In this paper, we present a typology and conceptual model that explore the boundary conditions under which performance-enhancing compensation practices may result in bullying behavior with differential effects on target and perpetrator productivity. We propose the mediating roles of individual competition and stress between zero-sum pay systems and workplace bullying. In our model, we propose that perpetrators will realize increased productivity. This increased productivity will be generated through instilling fear in the targeted employee to compete for output, which will increase the perpetrator's relative ranking. As a result, targets will tend to suffer decreased productivity. We conclude with a discussion of the theoretical contributions, practical implications, and offer directions for future research. © 2013 Elsevier Inc. All rights reserved. Keywords: Performance-enhancing compensation practices Workplace bullying Employee productivity Individual competition Stress 1. Introduction An organization's compensation policies and practices are integral to its success (Gomez-Mejia, Berrone, & Franco-Santos, 2010; Huselid, 1995; Lawler, 2003). Compensation plays a number of key roles in organizations including signaling employee worth, attracting potential job incumbents, and retaining existing employees (Gerhart & Rynes, 2003). Furthermore, while intrinsic motivators are important, extrinsic motivators such as pay continue to represent a central role in explaining why individuals are productive in the workplace (Dulebohn & Werling, 2007). In sum, compensation systems represent a critical influence and driver of employee attitudes and behaviors (Rynes, Gerhart, & Minette, 2004; Sweins & Kalmi, 2008). The effectiveness of a compensation system, however, depends, to a large degree on how it is designed, among other factors. In what is now considered a “classic” in the Academy of Management Journal, Kerr (1975) illustrates a number of cases in which the behavior hoped for is not the behavior that is actually rewarded. Kerr's illustrations highlight the importance of carefully designing compensation systems in order to avoid rewarding the wrong behaviors. Moreover, Kerr's article illustrates how undesirable behaviors may in fact be the ones that are unintentionally rewarded. Using politics as an example, Kerr describes how voters want candidates to be frank about the specific sources and use of funds for their proposed programs; however, they punish candidates who in fact do so. Consequently, this leads candidates to be vague about their goals and speak in general terms about how they intend to achieve their proposed programs. Candidates will be inclined toward these latter behaviors because the reward system punishes those who articulate operative goals, while in turn rewarding those who speak about these programs vaguely (Kerr, 1975). Compensation systems in organizations can generate behaviors that are similarly counterproductive. Human Resource Management Review 24 (2014) 5–16 ⁎ Corresponding author. Tel.: +1 416 736 2100x30100. E-mail address: singhp@yorku.ca (P. Singh). 1053-4822/$ – see front matter © 2013 Elsevier Inc. All rights reserved. http://dx.doi.org/10.1016/j.hrmr.2013.08.013 Contents lists available at ScienceDirect Human Resource Management Review journal homepage: www.elsevier.com/locate/humres