Productivity is the measure of efficiency and performance. Many organizations have been using this metric to find ways to help employees become more productive in their daily tasks. In the 1950s, sociologist Derek J. Price developed an equation that could help managers and business owners gauge how productive an organization is. This equation is now known as Price’s Law.
What is Price’s Law?
Price’s Law is an equation that states that the square root of the total number of contributors to a given task is equal to the number of high contributing individuals. This number is usually referred to as the “power law”. For example, if there are 100 people who are contributing to a task, the power law will determine that the square root of 100, which is 10, will equal the number of high contributing individuals.
Price’s Law can also be applied to any task or project, regardless of its size. For example, if you are planning an event that requires 1000 people, the power law will still be used to gauge the number of high contributors. In this case, the square root of 1000 is equal to 31.62.
Why is Price’s Law Important?
Price’s Law is important because it can help managers and business owners assess the productivity of an organization. In other words, this equation can be used to determine how many people are performing above average in a given task and how many are performing below average. Knowing this information can help managers and business owners better allocate resources and ensure that everyone is performing to their maximum potential.
In addition to assessing productivity, Price’s Law can also be used to identify key contributors within an organization. This can be helpful for assessing the performance of individual employees and for setting appropriate rewards for exceptional performance.
How Do You Calculate Price’s Law?
Calculating Price’s Law is relatively easy. All you need to do is take the number of total contributors to a task and find the square root of this number. This will give you the approximate number of high contributors to the task. For example, if a task requires 20 people, the square root of 20 is approximately 4, meaning that there are approximately 4 high contributors to the task.
It is important to note that this equation is only an approximate measure of productivity and should not be used as a replacement for more detailed methods of assessing performance. However, it is still a useful tool for gauging the performance of an organization and individual contributors within an organization.
Conclusion
Price’s Law is a useful equation for assessing the productivity of an organization. It can be used to determine the number of high contributors to a given task as well as identify key contributors within an organization. By understanding and utilizing this equation, managers and business owners can ensure that everyone is performing to their maximum potential and allocate resources accordingly.
Sources: http://www.sociology.soton.ac.uk/research/themes/teaching_learning2/prices_law.html https://www.investopedia.com/terms/p/priceslaw.asp
Tags: Science, Mathematics
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