Guy Kawasaki has posted an interview with Jeffrey Pfeffer, Thomas D. Dee II Professor of Organizational Behavior at Stanton University's Graduate School of Business and author/co-author of 12 books, and I thought that Professor Pfeffer had some worthwhile wisdom to share on the specific topic of incentives:
Incentives should be large enough to provide an occasion for celebrating success but not so large as to distort behavior. And incentives can include recognition and things other than money. Companies get themselves into trouble all the time by being too clever with their incentives.
Words worth noting!