"I'm not sure why people set up such incentive structures. Is it greed?" I think it comes down to managerial laziness and social discomfort. Giving someone a

"I'm not sure why people set up such incentive structures. Is it greed?" I think it comes down to managerial laziness and social discomfort. Giving someone a bad performance review or dealing with poor performance is inherently an uncomfortable social interaction. Once a manager acknowledges that someone isn't meeting standards organizations usually have a process by which they need to help that person improve or eventually fire them which is a lot of extra work for that manager. In other words it is a way to force managers into dealing with bad employees instead of letting problems fester.