I am often puzzled by the idea, that employees will become much more effective, if a proper reward-system is implemented. Research consistently shows, that external motivators like punishment and benefits, doesn't incent people to do their best.
There's a really nice piece in the Washington Post on this:
Rewards and punishments guide the lives of most Americans. Young children are given stars for putting away their toys, kids earn a few bucks for mowing the lawn, and teens are told they will be grounded if they get in trouble. For adults, stock options, raises, demotions and firings become different kinds of carrots and sticks. Beliefs about the utility of rewards and punishments in motivating human behavior are deeply ingrained, and most people don't know that more than 100 research studies have shown that motivating people in this manner can have the unintentional effect of undermining their internal drives.
Intrinsic motivation and internal drive is the key to make something remarkable. If I purely do something for a reward, I'll most likely only the amount of work needed to reep the reward. Even worse... a rewardsystem will introduce a state of competition between me and my co-workers.
It has even been proven that introducing rewards, will dampen the internal drive to do something. If you introduce payments for work that was previously con amore, you actually dampen the original excitement.
"If I pay my kids to do their homework, I am saying, 'You will get this if you do your homework,' but I am also saying, 'Homework is not likely to have intrinsic rewards,' "
It's difficult to let people be driven by their own internal motivation. It seems easier to hand out money, than to explore and build and grow people around you.
- Jens Poder