This recent article suggests that employees may be motivated by the anticipation of either rewards or punishment.

Part of the conclusions reached in this study are dangerous (in terms of potentially doing damage to a business) and strong evidence that incentive professionals should be consulted when designing employee recognition/incentive programs. There is no support (based on research) within the Incentive Marketing world for punishment or penalties as part of a structured motivational program as they are counterproductive. Obviously, if employees are not performing their basic duties, they risk termination. But best practices in motivational theory involve a carefully structured program that (ideally) measures an employee’s performance against a goal or their own previous performance, or some other standard, with positive rewards when results are achieved.

The study clearly points out that rewards, the perception of being rewarded, and the lasting effects of getting unanticipated bonus awards, are motivating and stimulate the powerful feeling of reciprocity.  The article then suggests that this may be a zero-sum game which is clearly not the case if the program is set up properly.  Some workers will always underperform and, as the article points out, may do worse if punishment is built into the program.  This is why you should never use your “incentive program” to punish people.  Reward for positive outcomes and offer unexpected bonuses for going above and beyond and leave punishment out of the equation.  The methodology described in this study/article was the problem.