We all are born with intrinsic motivation. A baby doesn't need the reward of strained carrots to learn how to crawl or talk. In fact, at no stage of our life do we learn more quickly than at this one - transformed from nearly comatose bundle to bouncing, running, jabbering person in just a couple of years.

But intrinsic motivation is gradually destroyed by a series of destructive forces encountered at school and work. Children are given incentives to learn - gold stars and A's. Although there is no evidence that such incentives actually enhance learning, there is lots of evidence that such incentives dissuade children from learning. Short term, the inducement of a reward makes a child do more of the rewarded activity. Longer term, such inducements actually convince children that, sans inducements, this activity is not worth doing. (Imagine a child who spoke whenever his mother smiled and said, "Good boy! You can talk!" but talked only for such rewards. Presumably, we teach activities we'd like people to continue doing.) One thing that children learn is that learning is not worth doing for its own sake - a ludicrious conclusion akin to concluding that eating, sleeping, or hugging is not worth doing unless we're rewarded for it. Learning is intrinsic to being human and it takes an elaborate and medieval educational philosophy to change this.
Worse, grades and rankings in school further the damage. It has always been - and will always be - true that there are variations in intelligence, learning styles and the speed of learning in any group. Nothing we can do will end such variation. Bad managers latch onto this inevitability as if it matters - as if they can do something about it. They spend all their energy trying to codify rankings, tweaking the standings, focusing on who is excellent and who is merely good. Such effort is proof that they lack the simplest understanding of systems and human psychology. (Or, to be fair, are teachers or supervisors forced by their system to engage in these rituals that will someday be written about with the same disbelief we use to write about rain dances or drowning witches.) The more people focus on rewards and rankings, the less they focus on the tasks we're rewarding them for doing. Again, repeated studies have shown that such rankings make people less creative and result in lower quality work. People who are distracted do not do their best work.
Good managers understand that there will be variation but focus on the overall system. Sure, Ariela did better at math than Sam. So what. Look at the distribution for the entire class and look for ways to move that upwards. Maybe the introduction of new methods will move the curve upwards. (And if you use hands on methods instead of verbal ones, you may find that Sam is suddenly doing better than Ariela. Ranking is largely a function of method and task. Differ the methods or task and a very different ranking emerges.)
Great managers understand that tapping intrinsic motivation is much better than forcing extrinsic motivation.
If you have children forced into such a system, coach them through this. This is a game they have to play, but one that they should understand as a game with perverse rules. If you are a policy maker, work to lessen the insistence on grades, rankings, and even rewards. No matter who you are, read or listen to Alfie Kohn. (I'd recommend W. Edwards Deming but for all his genius, he was never terribly accessible.) Kohn has the audacity to actually point to research, rather than folk lore, and point out that the emperor of education has no clothes. Quite simply, research does not support current methods - a sorry fact that should could continue in no other domain but this: NASA, the Pentagon, the Federal Reserve, the EPA would never continue to get funding were they to so thumb their noses at empirical data. Alas, failures in methodology are merely blamed on the children who obviously are not trying hard enough.