- Create conflict: those who don’t receive incentives may be jealous of those who do regardless of merit. Those who receive incentives might also be upset if they worked harder than others to get the same reward.
- The focus of work becomes competitive instead of being focused on quality and people will only work as much as it takes to earn the incentive.
- It eliminates productivity for everyone except top performers who are more benefited by incentives.
- Incentives can become quite costly as they need to continue to rise on a scale of cost in order to remain effective.
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