You wouldn't think much of a doctor who dangled a $20 bill in front of a child with a fever and told him, "You can have this money if you'll just lower your temperature by 2 degrees." In fact, you'd know that you were dealing with a doctor who knew little about the body or medicine.
So what to make of the managers who dangle incentives in front of their people and then say, "You can have this money if you'll just increase profits by 10%." Or the school administrator who tells a principal or teacher, "You can have this money if you just increase average test scores by 10 points."
A management practitioner needs to understand system dynamics that ultimately define outcomes, just as a doctor needs to understand the physical processes that ultimately define states of health or disease.
Particularly in schools, this sensibility seems to be missing. The thought that vouchers, incentives, and ranking of schools will actually transform schools seems to me naïve, and resorting to incentives strikes me as an admission of defeat. If school administrators know what helps children to learn, they should institute this across all classrooms. If they don't know what to do, they should learn rather than admonish teachers.
If you need a clear example of how bankrupt is this approach, look at Iraq. Bush has basically been told by the American people to get things in order there. Unable to create order in Iraq, he's offered inducements to the generals. They, in turn, have ordered the Maliki government to create order. Maliki has, in turn, ordered those below him. And all the way down - from the American press and public to Bush to the Pentagon to Maliki - there is ignorance and inability. No one knows how to create order in Iraq and inducements are not going to make a difference. Not dips or rises in opinion polls, not additional troops or money (or fewer troops or money).
[The example of dangling money before a fevered child comes, if I remember correctly, from Alfie Kohn, whose delightful writing on competition and rewards will likely transform your opinion about such topics.]