Our company is a team of about 10 people; all of us are salary. One of our developers continues to come in at 10-11AM rather than the designated start time of 8AM. Instead of punishing this person for their tardiness, our boss wants to install a time-clock and make us all use it and make us hourly...

I doubt that installing a clock would encourage the employees.

Your boss may talk to the employee who don't start to work at the designated time. Installing a clock may stress some of his employees and disgrade their workflow and not increase it.

Nobody likes to work under pressure, installing a clock is like informing repeatly to the employees when it is supposed to be done. What he could do it's encourage them to go work at the designed time or if they come half an hour before, they don't have to start working at this time and relax before working.

Installing a clock is more efficient when the workflow is low and the employees don't work at their 100%, at this time I think in the enterprise you work, the problem is the employee not the work environment. Encouraging the employee may do something great than ignoring his late arrival.

This is my point of view, I'm not the CEO of a big enterprise but I know that it's not the solution to resolve this problem.

So he's going to pay overtime?

@d4ng3r0u5 Or knowing him he will enforce a no-overtime policy, but then get upset when things aren't done as quickly as they were before.