Bonus for Productivity?

The Whole Idea Is A Little Insulting

Scholtes' /The Leader's Handbook/ says that motivation through reward is insulting -- it assumes that you have been withholding effort all this time, waiting for someone to offer you an incentive to actually do your work.

Hadn't really thought much about it before.

But yes, it does assume you have effort on tap that you're not applying to your work.
And yes, it is a little insulting.
And yes, you could intentionally hold back until offered another bribe (but just enough not to be punished).

Everyone wants a little more money, but P. Scholtes notes that it's out of alignment with the idea of humanitarian management who realize that the employees are their greatest asset.

Not Only That, But It Doesn't Work

Likewise, Daniel Pink reports that rewards for knowledge workers tend to have the opposite effect of that intended. It might not be a good idea for programmers and managers in non-manual-labor fields.

Pink does mention that the system works great for physical labor.

Then How Do We Reward Team Members? 

At Industrial Logic, we have bonuses.

We have a health-n-safety bonus which we spend making our lives better. Some pay gym memberships. Others buy standing desks or treadmills or bicycles to help them keep fit.  It's not guaranteed every year, and the amount reflects profitability or generosity instead of performance.

We also sometimes have a profitability bonus, split evenly across the board, to celebrate another great year. We don't count on them, but they've been helpful to us as well.

The bonuses don't buy loyalty or effort. They're congratulatory and helpful rather than transactional.

Do you have any stories to share about your great (or awful) bonus system?

What do you feel about what Pink and Scholtes have to say about knowledge workers and bonus programs?