The most comprehensive study ever done on the link between incentives, motivation and performance in the workplace found that incentives dramatically increase individual performance by by 27 percent. Programs aimed at teams increase performance a stunning 45 percent.

92 percent of workers surveyed indicated that they achieved their goals because of incentives. In addition, 57 percent of corporations surveyed reported that objectives were met or surpassed, and 92 percent reported objectives were surpassed, met or at least partially met.

Other findings:

--Incentive programs structured with employee input work best; however, only 23 percent of incentive systems are selected with employee input.

--The most effective incentives extend beyond a year.

--Goals work better if they are specific and challenging, but not "stretch" goals.

The study also introduced a new, diagnostic and prescriptive model that can be used by employers in implementing an incentive system. The Performance Improvement by Incentives (PIBI) model provides guidance on the step-by-step procedures for design and implementation, and allows decision-makers to troubleshoot and correct incentive systems.

The study was conducted over a one-year period using both primary and secondary research that included reviewing all English language research literature on incentives (1960-2000) published in peer-reviewed journals; of the 600 studies reviewed, 45 passed rigorous screening. Other input came from "meta analysis"--a statistical process whereby researchers summarize results of different experiments conducted by different researchers over time--and a survey of U.S. organizations using incentive systems.

The incentive industry is a $27 billion industry.