Financial incentives undermine intrinsic motivation. In the 1970s, a group of researchers gave children rewards to do things they enjoyed doing. Many researchers have used this research to say the same link applies to adults in the workplace. It's a big jump to take little kids and extrapolate to the work force. The analysis performed by Gupta and Mitra showed time and again, in studies of workers, that employees performed better when offered more money, whether they enjoyed the task or not.
Financial incentives erode performance quality.
Not enough studies have been done to determine the relationship between financial incentives and performance quality, Gupta said.