The Reality of Carrot and Stick motivation

Both are temporary.

The carrot makes the employees adopt a kind of mercenary mindset. Nothing wrong except that it is too short termed for any sustained impact.

The stick makes the employees fearful, and kind of wreck the culture where you have more lip service than engaged and passionate effort.

The interesting part is that the employees first would feel the lack of energy to move, before any manager or leader.  The manager or leader sooner or later gets the feeling that things aren't moving as fast (a slightly vague term that doesn't always account for the environment factors) as they should, and so proposes more incentives.  

I recall a leader in one organization wanting to put sales people on PIP if they were at 70% of their monthly target. You can guess what those employees got motivated to do.

Surely the revenue an organization earns can be utilized in more effective areas than carrots and sticks?

Your thoughts on this?  What do you think are the best ways to improve performance?