Employee incentives

We have been thinking about employee incentives. Admittedly, we pay
good salaries, especially given the current employment climate, and
our employees seem happy. We provide a pleasant, interesting working
environment. Still, the question's been raised about how to increase
their stake in the company, and reward them for geniunely good work.

Various ideas have been tossed around. For instance, we know how many
hours people worked on each project, so we could offer some revenue or
profit sharing from each project's income stream depending on how many
hours they put into it. Then again, there's the question of how hours
spent relate to real contribution. The usual sort of profit sharing
scheme, we worry might be not particularly directly motivating, more a
nice bit of icing that's taken for granted. Whereas, bonuses for tasks
completed well seem a bit like a doggie treat model of reward. Options
to equity are another possibility, but I'd prefer not to have to fiddle
with the company structure and other hassles to accommodate that.

Issues include that we do want to differentiate somehow for good
performance, but we don't want things to seem too arbitrary or cause
resentment, and we want things to happen fairly automatically. Also,
we tend to try to keep a fairly flat and flexible "command structure",
even with people's "rank" depending upon which project one's talking
about.

That all sounds pretty vague. I'm tempted by the "if it ain't broke,
don't fix it" strategy, and I'm not exactly sure what the perceived
problems and goals are, but these sorts of issue have been popping up
at management meetings, and I figured that maybe people here have some
idea of what sorts of schemes tend to work or not work, in terms of
being genuinely rewarding, not too much hassle to administer, etc.

Context: we're a small software company, that tries to use a bunch of
proprietary generic technologies as the basis of a wide variety of
specific products.

-- Mark