One more book report: Yesterday I picked up Daniel Pink's newest book "Drive," a treatise on motivation. His point is interesting: A reward system based on carrots and sticks, i.e. rewards and punishments, will ultimately detract from producing good results. Pink backs up his assertions with decades of research from psychologists, much of which has been ignored because it did not fit into the rewards idea that has been most commonly held by managers.
More rewarding to most people is a sense of satisfaction in the task and a feeling of how the individual task contributes to the greater good. Of course, as Pink says, that assumes that the usual compensation (salary and benefits) are not only adequate, but perceived as fair.
Pink, who has written two other major books on the work world, opines that managers should replace an "if, then" philosophy (if you do XXX, then you'll get a bonus) with now, that (as in now that the project has been completed on time and is excellent, gift cards to everyone).
His book includes a lot of practical advice, but I haven't gotten that far yet. Will update when I do.