I don't really understand how a raise can reduce motivation, unless you're so high up that there are no more possible raises/promotions possible in your field. Say you're not an employee but self-employed/run your own a business, it's much clearer - the more you do, the more money you can make to compensate your labour. There's nothing more demotivating than working your ass off and then not getting a raise, or getting an insufficient one. This should be painfully obvious.