But many studies show people performing tasks better when offered more money to do so. Financial incentives are punishing. Time and again when examining the studies, Gupta found money generated positive behavior from employees. These results held true in research based on laboratory experiments, work simulations and companies, she said. The relationship between financial incentives and amount of work completed also held true for both boring, repetitive work and work employees reported as interesting.
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.