Dan Pink, at TED Global in July 2009, broke tasks, performance and rewards for performance into two groups. With complex problems, financial rewards do not impact performance and seem to dull creativity. Actually, they seem to deter performance. With a simple problem and a simple set of rules, then contingent motivations for performance (like financial rewards) are very effective.
He comes to three conclusions:
The twentieth century rewards that we think are part of business do work, but only in a surprisingly narrow band of circumstances.
“If, then” rewards often destroy creativity.
The secret to high performance is not rewards and punishments, but that a drive to do things because they matter.
There are some great lessons for compliance and corporate governance in the presentation. He explains it much better than I can. Take the 19 minutes to watch the video.