Whenever people are led to think about what they will get for doing something, they will be less inclined to take risks or explore possibilities, to play hunches that might not pay off or attend to anything whose relevance to the problem at hand isn't immediately evident. In a word, the number one casualty of rewards is creativity. Challenge is typically avoided not because of laziness but because incentive systems encourage concern about what one is going to get. They motivate people to get rewards. The more a manager gets employees to think about what they will earn for doing their jobs well, the less interested they will be in what they are doing.
Rewards turn play into work and work into drudgery.
The first studies to establish this effect were conducted in the early 1970s by Edward Deci at the University of Rochester. By now, scores of experiments across the country have replicated the finding that people who are promised rewards for doing something are less likely to continue doing it when they have a choice as compared with people who aren't promised anything. The problem is that we rely on bribes at all. Of the four explanations offered here to account for how incentives impede performance, not one will disappear just because we manipulate people a little differently. The more closely compensation is conditioned on achievement, the more damage is done.