Q:

Bounty points for fixing bugs?

Ever heard of a company awarding bounty points for bugfixes?  Making team members work to do the most, as some bonus money will be dependent on it?  Having them split, or pay bounties to others to test, so they don't 'lose' points when it reaches a UAT environment?
I heard this from management for the first time today.  To me, it sounds like a pretty ridiculous approach to software development.  It sounds as if the team members will be competing with each other in a non-productive way, essentially slashing the productivity they've got going now.
Any thoughts?  Have you ever seen something like this actually work?  Did it help or hurt the team?
UPDATE 4/6/11: This approach was cancelled due to feedback from the whole team!  I'm happy to learn that it wasn't just me thinking it wasn't a great idea.

A:

Yes, I really have seen this.
.

A:

Every reward or bounty creates an incentive to "work the system".  Be really careful of the side effects.
Two that I can think of:

If you reward bug fixes the team will discover more bugs.  And spend more time fixing bugs even though they might be really minor defects in favor of producing important business features.
The competition could create some unhealthy behaviour - something along the line of "I won't work on that part of the code because I know I'll loose bug points".  

Generally I like to focus on positive points (i.e. what we have delivered) rather than the negative (i.e. bugs where we screwed up).

A:

It will hurt the team, and the product. Many of the developers will focus on the easiest, most trivial bugs they can find so that they can collect the bounty with the least risk.
Or at the worst, developers will conspire to game the system: http://thedailywtf.com/Articles/The-Defect-Black-Market.aspx
A place I used to work at, shortly after I was eliminated, had a contest to try and reduce the amount of bugs in the code base. The winner would receive a gift card or something like that. All it ended up doing is annoying all the developers because one guy did just what I mentioned: he racked up a huge amount of "fixed bugs", but he focused on the trivial stuff. 
Now, noone wanted to fix any bugs because they couldn't catch up to the leader because all that were left were the real, difficult issues waiting to be fixed.
And the worst part, is that before the contest, everyone wanted to fix all the hard problems, because every developer wanted to ship a high quality project. It took awhile after the contest to restart that enthusiasm. The contest killed that desire for awhile.

