At the heart of most performance management systems is a reward program. However, even when we are doing everything else right, rewards can go wrong. Here, we explore five ways that external incentives can damage performance, from destroying altruistic behavior to distracting people from the task. Fortunately, most of these downfalls are avoidable. While not every behavior is suitable for pay-for-performance, we can provide rewards that are rewarding, helping to encourage the behavior we value. (Contains 1 note.)