Stanford psychologist Mark Lepper sought to understand what happens when we reward joyful activities, so he asked two groups of school kids to draw with crayons on paper. One group was told in advance that they will be given a medal for taking part or playing. The other group was not made any such promise.
The researchers returned after a short interlude of a few weeks and gave the groups crayons and paper. The group which was given a reward drew less than the group which was not given any such reward. Explaining this Mark Lepper argued that reward reduces enjoyment as it is generally given for activities that are within the realm of work. The moment something is rewarded it takes away the possibility of it being fun, for why else would it be rewarded? This is the reasoning that Lepper attributes to the group of children who are rewarded for this work. This effect has been replicated many times.
Rewards in the long run tend to destroy the behaviour that they seem to encourage in the short run. Can rewards have a positive impact at all? It turns out surprise rewards and a pep-talk boosting the contribution of the person go a long way in fostering the work you would like people to do. However, there are effective ways of rewarding people if the work they are doing is important and is considered hard, so employees working on a deadline for a project would definitely respond better to a reward than just a pep talk, but that approach with a student in a class or a volunteer at an animal shelter might be counter-productive.