Having worked in retail sales where a significant portion of my pay was based on performance... there are a lot of problems with performance based incentives. They inevitably get people to focus on only the one or two aspects those are based on, while everything else suffers. They almost always end up punishing individuals that have any sort of outside situation like needing to take sick time or simply taking vacation time.

If all you give a shit about is work, which is not mentally healthy in most cases, especially since were talking about employees here not business owners and partners that are invested, that works for some people. Usually those that are trying to escape their life outside work are the ones that works best for, and that says a lot.