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In this animated video of his talk, Dan Pink claims performance incentives do not work, and can actually lead to worse performance.

In summary, he quotes two studies (which he unfortunately does not name) where people are asked to do a task, and receive a higher bonus if they do it better. What they both find is that as long as the task requires at least rudimentary cognitive skill, the bonus does not lead to improved results. In fact, if the bonus is high enough, it actually leads to people performing worse.

Does this view present the current scientific consensus? Does anyone have any links to good studies (preferably meta-studies) on this subject?

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    How do you define and measure "if they do it better"? Basically this means introducing metric, and smart people will play the system to maximize these metric. Yet metric don't show you whole picture, not even significant part of it. For example it's been commonly known, that rewarding software developers based on metrics totally hinders productivity. Not sure if there are any formal studies to prove that though.. – vartec Jun 21 '12 at 10:03
  • @vartec: I haven't watched the video for a couple of years, but my recollection is that they failed according to the specified metric - i.e. the one that the person should have been explicitly maximizing. – Oddthinking Jun 21 '12 at 11:47
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    Paper #1: D. ARIELY, U. GNEEZY, G. LOWENSTEIN, &. N. MAZAR, Large Stakes and Big Mistakes Federal Reserve Bank of Boston Working Paper No. 05-11, July. 2005; NY TIMES, 20 Nov. 08 – Oddthinking Jun 21 '12 at 12:01
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    Paper #2: URI GNEEZY and ALDO RUSTICHINI, A Fine is a Price, Journal of Legal Studies, vol. XXIX (January 2000) – Oddthinking Jun 21 '12 at 12:05
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    @vartec - the "smart people will game any metric" is an axiom for anyone who found StackExchange by following Joel Spolsky's blog :) What more studies do you need if Joel says so? :) – user5341 Jul 11 '12 at 10:52
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The relationship of financial incentives to performance quality and quantity is cumulated over 39 studies containing 47 relationships in the study 'Are Financial Incentives Related to Performance? A Meta-Analytic Review of Empirical Research' (http://www.researchgate.net/profile/Atul_Mitra/publication/232559540_Are_financial_incentives_related_to_performance_A_metaanalytic_review_of_empirical_research/links/0f317533773cf0d1ea000000.pdf). Per this metaanalytic study, financial incentives were not related to performance quality but had a corrected correlation of .34 with performance quantity. Setting (laboratory, field, experimental simulation) and theoretical framework moderated the relationship, but task type did not.

Overall, this study underscores the generalization of positive relationship between financial incentives and performance. It emphasizes the wisdom of designing incentive systems carefully; it also highlights the utility of including financial incentives as integral components in theoretical frameworks of organizational behavior and the management of human resources.

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