Bonuses definitely work when the employee can control the outcome - in other words where there is a close correlation between extra work and a bonus.

If they can't control the outcome bonuses cease to work. I used to work for a company that based it's bonus on the share price at the end of the financial year. Of course we had zero ability to effect it. So the first year, everyone worked hard believing that we were affecting the company profits, and hence the share price. The profits rose, share price didn't (I think at the time Wall Street were downgrading all companies in that sector), and because of that, the bonus was small. Guess what the employee effort was in the following year?