Motivation Crowding
How bonuses destroy motivation?
When people do something for well-meaning, non-monetary reasons – out of the goodness of their hearts, so to speak – payments throw a wrench into the works. Financial reward erodes any other motivations.
Financial incentives and performance bonuses work well in industries with generally uninspiring jobs – industries where employees aren’t proud of the products or the companies and do the work simply because they get a pay cheque. On the other hand, if you create a start-up, you would be wise to enlist employee enthusiasm to promote the company’s endeavour rather than try to entice employees with juicy bonuses, which you couldn’t pay anyway.