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1 The workplace can be a fun place to be and having fun doesn't mean a decrease in productivity. 2  Money is the ultimate incentive, but adding fun incentives into the mix will motivate the team to success.  Taking time to get to know each other outside of the workplace can be hugely beneficial to making the office more fun.
The best way to do this with a bad employee is to frame the conversation as an opportunity for you to get to know each other better, and to remind them that your goal is to help and support them. Keep it non-confrontational; my goal in dealing with problems on a team is to keep everything neutral or positive.