You may have seen this video before: Dan Pink speaking about "Drive: The surprising truth about what motivates us". As suggested by the title, the results may not be what you expect.
Typical "management" practices holds that rewarding the behavior that you want, and punishing the behavior you don't, results in better performance. As a result, many believe that if you reward your top performers (bonuses) you'll get better performance overall.
The Federal Reserve Bank funded research to examine this, to see if it holds true today. The summary: as long as the tasks were strictly "mechanical", bonuses worked as expected, and boosted performance. But as soon as the tasks required even rudimentary thinking, the "reward" system resulted in poorer performance. I'll let you watch the rest of the video for more.
Pink gives this key about motivating people: Non-reward is a non-motivator - if you don't pay people enough for the job, they aren't motivated. But if you settle that, there are 3 factors for better performance, and personal satisfaction:
- Automony - self direction, it's better to get out of their way.
- Mastery - people want to get better at what they do, it's in our nature.
- Purpose - making a contribution.
On a personal note, I found his example of free / open source software in talking about "Mastery" & "Purpose" to be right on.