Some recent thoughts on reward systems:
The best approach is to have people choose their own benchmarks for rewards and their own rewards - sort of like personal goal setting. I watched a TED talk on the topic of rewards, some research showed that rewards for performance in knowledge work do not get better results - of course we all like rewards anyways. If the reward system is more intrinsic, as the research suggests, then I might be inclined to choose something to be rewarded for like self-improvement in some way. But the rewards for self-improvement are natural and intrinsic, not extrinsic like a trip to the vending machine or a piece of paper with a fancy border. Then it boils down to this - how do you get others to do what you want them to do? Or better yet, how to get others to behave in a way that provides the best benefit of the group (the organization).
First thoughts are that having the knowledge of the goals of the organization will allow individuals to come to the same conclusions. In this way we can clearly see and understand the costs and benefits of our actions. For example, if I know that we need to keep the Project A work light because I have all the information - Product A is reaching end-of-life, we have other things to work on, and Project B is consuming more time than expected - then I can make decisions and act accordingly. Without it I cannot.
Lets take a concrete example where progress is straightforward to measure like digging a ditch. In order to measure progress and have some regular motivation and rewards for achieving goals, we might mark daily goals along the path of the future ditch. That would be a clear visible goal and that mark for can be set for each day according to the time available to dig the ditch. It would be relatively easy to take the length of the ditch and the total time available and divide it evenly. You’d also have to know how much ditch can be dug by the digging team each day. And then there's the real world with its chaotic factors that would affect the overall progress.
I'm not a ditch digging expert by any means, but I have dug a trench or two. Drawing on my limited experience and the power of imagination let's think of a few things that could affect the progress of a digging team. Soil texture - soil rich in clay is harder to dig through than silty soil, rocky soil would difficult as well. Weather - should be obvious. Obstruction density - tree roots, utilities, garbage, old-roads, etc. Health issues, injuries, equipment quality, people, alignment of the planets, etc...
With all of the potential causes of impedance to progress, unless something is obvious (thus preventable or unavoidable), tracking those daily goals will be important to maintaining the pace needed to dig the whole ditch. If the digging team is not meeting the goal for some particular day, how do you solve that problem?
Step one: Find out what the problem is. Why is the digging team not meeting its potential? Without that, you got nothing. Can't treat it like a black box and throw out things you think might work until you find something that does. Well you could, but that could do more harm than good.
Step two: See if the team knows the solution. Often the people doing the work will have an answer that works for them. Perhaps the issue is tree roots slowing them down. They might not have the tools they need to clear them out efficiently.
Step three: Implement the solution. Get the tools, people, system, whatever in place in order to get things on pace.