CAD Managers generally want to encourage growth in their CAD users. Here are some ideas I have either tried or heard of over the years.
One I heard about at the 10th Autodesk University in 2002. I forget the name of the instructor, but he helped run Disney's Imagineering. He regularly gave proficiency tests to his users and tracked their efficiency. The reward and punishment was this. At review time he might tell you there are 300 users here and you are number 12. I am giving you the old number 12's PC, which is much faster. He may also say you are number 300, I hope we do well this year for your sake. He also sorted his users into differing groups that got increasing benefits with rank. To some extent "good user = good PC" has happen most everywhere I have worked.
I also had a college professor that would hand out exams and papers highest grade first to lowest grade last. Everybody in class knew you did the worst or the best. This is a real good motivator to not be last.
In the end I think a happy employee can beat a talented one most any day. The ideal is to have a talented and happy employee. Every employee is different and is motivated by sometimes very different things.
So what really works? You do. A good CAD Manager not only knows what psltscale and ssmautoopen is, but is also a good judge of people, and can help them be the best they can be. A good CAD Manager will push when it is time to push and back off when it is time for that.
How do you know what time it is? 25% you are that kind of person, 75% experience. You been there, make it easier on them and it will pay you back 10 fold.