Here’s (yet another) great TED presentation – this one is by Dan Pink and is about the mismatch between what science knows and what businesses do to motivate people.
Dan’s point is that rewarding performance mostly doesn’t work and often leads to worse performance.
For tasks that are simple and straight-forward and require no creativity or cognitive skills, extrinsic motivation works fine and promising people rewards for good performance increases performance.
But as soon as a task requires even rudimentary cognitive skills, performance decreases if you offer performance rewards. And the larger the reward, the worse the performance.