The task of the good leader is to teach what the right thing is. Good leaders also understand that while we are intrinsically motivated to make the world a better place to live, we also have another need. That need is to survive. Out of that fear, we don't always do what we think is right or what we think would make the world a better place to live. One of the great challenges, personally, for organizations and for leaders of teams, is to find a harmony between our need to make the world a better place to live and our need to survive.
Good leaders understand that people absolutely can be and are motivated by fear.
They also understand that motivating by fear is incredibly destructive. When people are afraid, they literally can't think and can't be depended on to do the right thing. Good leaders do all they can to drive out fear. They understand that when a manager manages with fear, it's because he is afraid. Fear is the enemy.