They are one bozzo away from the disaster. At small scale it is possible to have great consistency among your hires with everybody doing everything and be super productive. But eventually bozzos starts to creep in. Smart people will start feeling frustrated because they are being valued same as who they consider less optimal, less trained, less experienced or less productive. Person A would loose motivation to go extra mile if s/he feels everybody else aren't. It is one thing not to have bonuses, performance ratings and offer just one flat salary but its quite another to offer same salary to everyone.