There was an interesting recent HN discussion on perverse incentives: http://news.ycombinator.com/item?id=4921954 http://news.ycombinator.com/item?id=4921954.

There was an interesting recent HN discussion on perverse incentives: http://news.ycombinator.com/item?id=4921954 http://news.ycombinator.com/item?id=4921954. I suspect there may be many unintended and harmful consequences with this kind of arrangement. By focusing the majority of the rewards (or the easiest and lowest-hanging way to achieve rewards) on hours worked, people are incentivized to sacrifice quality for quantity of work - working "dumb" instead of working "smart." People who loudly advertise their accomplishments (play the internal politics game) would get ahead in this system over people who instead focus all their energy on actual work. And given that every person keeps track of his/her own hours, you're probably even more likely to have founders disagreeing with each other over hours worked. Even if you're fundamentally honest, you still have a strong bias towards overestimating your own contributions and # of hours worked.