Financial incentives - destructive?

 Not sure if this is the right category to post this under but hey, I'll give it a try.

I've just watched the TED-talk "Dan Pink on the surprising science of motivation" and would love to hear what other people make of the conclusions he presents.

What he says, essentially, is that the traditional carrot is not only, as I remember Drucker writing, difficult to use with a high risk of reward inflation, but actually counter productive. Knowledge workers that work with a material incentive gets blocked and perform worse than knowledge workers without a material incentive.

Pink seems to be able to back this up with quite a lot of empirical evidence.

I immediatly start thinking about the (sales - or fundraising really but I guess the same rules apply?) organisation I work within, we swear by a salary that is made up by a base salary, a performance based provision and a financial reward for loyalty/longevity. Looks like we're doing it all wrong? =/