I think I need to move to SD.
I have worked with so many HR depts over the years... HR should be reinterpreted as the repository for the Horrifically Redundant. They dictate the pay raises, but leave no room for rewarding excellent workers. So, the younger generation look around an see that the hard workers get paid the same as the lazy... answer, be lazy.
I feel for ya.
1) You could offer the whole team a pizza lunch for meeting higher monthly production targets.
2) Out of your own pocket, offer bonuses to those who have exceeded expectations.
3) Offer the hard workers the option to go home early on Fridays, say half day, with pay for completing all assignments early. (MAKE SURE they are completed to spec) The lazy will find ways to beat the system.
Just a few suggestions anyway. Good Luck.
"The problem with Socialism is, eventually, you run out of other peoples' money." - Margaret Thatcher
“I would rather be exposed to the inconveniences attending too much liberty than to those attending too small a degree of it.” - Thomas Jefferson