Dank Pink is author of a great people leadership book called 'Drive. He has delved into the world of what actually does 'drive' people and provides great insights for innovative business leaders to leverage.

In summary he shares stories from MIT scientific studies that were funded by the USA Federal Reserve Bank. The studies identified surprising results when looking at students solving a series of challenges. They scaled incentives based on performance just like a common bonus incentive scheme in companies.
The results basically showed that; For mechanical skills the performance incentive scheme worked as expected; that is, greater performance then greater the reward. For "Rudimentary Cognitive Skills" the results showed that the "larger the reward, the poorer the performance"
The results were quite a surprise so they replicated the experiment in Rural India. The three tiered incentive scaling was low performance - 2 weeks salary, medium performance - 2 months salary, high performance - 2 months salary. Sounds like an awesome incentive doesn't it!! AGAIN the results were contrary to expectations that is;

1. For people offered the medium reward did no better than those offered the small reward

2. For people offered the high reward they actually were worse off than the those offered the medium reward"

   So despite all good intentions to prove their original hypothesis correct - that there is a direct correlation between incentive and performance - the studies time and time again show that for any tasks more complex than a simple "If then, you get that" scenario - performance incentives don't work!

   The other money paradox they found is that "if you pay people enough so they aren't thinking about the money then they are thinking about the work". How cool would that be!
   In conclusion what they discovered were three factors that contribute to better performance and personal satisfaction;

   1. ~ Autonomy - "the desire to be self directed"

   1. ~ Mastery - "the urge to get better at stuff...because it's satisfying

   1. ~ Purpose - "drives inherent desires to contribute to a greater drive"

   As a business leader you can innovate your world of work by creating highly engaged people simply by helping them tap into these three key motivators. A workshop exercise we do with new teams and mature teams at least annually is called Strengths, Passions and Motivations. It's a fun bonding exercise that helps the leader get to know the teams drivers, and the team to relate to each other on a human level rather than just a task level.

   For some more information on leading greater engagement at work I recommend the below;

   The Job Crafting Exercise™ helps you make your job more engaging and fulfilling. The idea is to view your job in a new way — as a flexible set of building blocks rather than a fixed list of duties. Using this perspective, you create a visual plan for redesigning your job to better suit your values, strengths, and passions. ~ http://www.centerforpos.org/2011/07/the-story-of-the-job-crafting-exercise/

   The Surprising Truth about what motivates us Dan Pink Video
   ~ 10 minute animated version of Dan Pinks Surprising Truth About What Motivates Us ~ 50 minute video of Dan Pink - Drive: The surprising truth about motivates Us

   Gallups Strengthfinder 2.0 http://www.strengthsfinder.com/home.aspx Check this great animated snap shot of which highlights great initiatives Atlassian, Australia is doing.