Dan Pink gives a punchy TED talk about the adverse impact of incentives. He reports studies that show that offering incentives will increase performance for routine tasks. But for activities that require creativity or problem solving the bigger the reward the worse the performance.
Hmm, not quite the worldview prevailing in just about every company I’ve come across. As he puts it, there’s a mismatch between what science knows and what business does.
(Alfie Kohn wrote a brillant book on this subject, Punished by Rewards. I heartily recommend it.)
If you want engagement, self-direction works better. People’s intrinsic drive is a far better motivator than extrinsic rewards.