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It's a case of misplaced metrics. I can't find the name of the paper or the researcher, but I believe it's been shown that when you try to reward/punish some metric of productivity, invariably the employees will begin to maximize that metric, perhaps at the expense of productivity.

Measuring number of hours in the office is not a direct measurement of productivity, and these employees were meeting the metric, but only costing the company money, not making it any.

Incentive structures are tricky.

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>I believe it's been shown that when you try to reward/punish some metric of productivity, invariably the employees will begin to maximize that metric, perhaps at the expense of productivity.

After years of direct involvement in measuring productivity, I would accept that as a general axiom. I've likened it to badly applied wallpaper: push down a bubble and it just pops up somewhere else.

Even if the metric is a direct business metric that it's manaagement's job to optimize (like profitability or number of users)?

I've always thought it would be interesting to see the results if half of everybody's salary (including the CEO and the toner refill guy) was paid by dividends from shares of the company held in trust for this purpose. As in, every year, everyone's pay goes up/down by the same (relative) amount.

What if, in addition, the shares held in trust were a closed pool, requiring employees to give up part of their bonus share to any new employees hired? The expected net outcome of hiring on profitability would then have to outweigh the decreased income from a (very slightly) reduced share of profits.

I'm not certain that this is the ideal system of incentives (i.e. there might be local minima one could get stuck in), but it would certainly be an exciting experiment...

Dan Pink would suggest that if you're trying to drive performance by tweaking monetary incentives, you're doing it wrong. http://www.ted.com/talks/dan_pink_on_motivation.html

So what would you say are the best ways to measure productivity?

I'd say "don't bother". The very act of measuring changes employees' focus from getting the job done to gaming the system. The more that management focuses on the metrics, the more that people are driven to secondary and even tertiary efforts to look productive, rather than spending their energy just doing their jobs.

It triggers an arms race of workers seeking ways to mask their activities and management building ever-more elaborate and invasive metrics to capture them. The end result is that everyone spends so much time and energy on administration that the output of real work actually falls - along with both employee morale and management confidence.

I found myself nodding my head in recognition when I read the excellent essay on lesswrong.com about spammers trying to game PageRank. http://news.ycombinator.com/item?id=1339704

That confirms my bias, which is that it can't be measured directly and the metrics that people try it with usually do more harm than good. But it's very interesting coming from someone with "years of direct involvement in measuring productivity".

Something akin to productivity measurement isn't completely useless, but it should only ever be used: a) to identify and address systematic problems, as opposed to scrutinizing individual performance; and b) in rare cases to identify extreme outliers - but managers should be aware enough of what their employees are doing to know who those people are already.

Unfortunately, that kind of approach doesn't lend itself to a productivity measurement team seeking a high profile for its activities. Nor does ostensibly objective, non-punitive measurement stay that way - it's just too tempting for managers to use it as a stick.

I've been working on different projects for the past couple of years, and frankly I'm glad to be out of the productivity game.

I would say the best way is by the outcomes, by the results. By productivity - be it units produced, share price, value added...

Productivity is not = hours worked.

Yeah but that gets pretty vague pretty fast.

How do you measure a programmer's productivity when you can't estimate exactly (and sometimes not even close) how much work something should take?

I have not seen a software project where there is not enough work for somebody.

What I've found useful, and which worked reasonably well for teams which have been working over a period of time together is to collectively estimate complexity of tasks that must be completed.Say on a scale of 1-5. That gives you a reasonably agreeable scale of measurement (not a universal scale, but the one that the team accepts). As time progresses, you see how many such tasks are completed by any person in a given time frame.

Not that this is foolproof, or that it works right from the beginning of a project, but over a period of time, you tend to get a good sense of how productive each member is.

[Edit: Typo fixed]

Sounds pretty decent, although there is still the problem that it doesn't tell you if someone is slacking off or is simply not very fast.

Nor does it tell you anything about the quality of the work produced. Sometimes a job half done is worse than a job never started!

  It's a case of misplaced metrics. I can't find the name 
  of the paper or the researcher, but I believe it's been 
  shown that when you try to reward/punish some metric of 
  productivity, invariably the employees will begin to 
  maximize that metric, perhaps at the expense of 
  productivity.

You may be thinking of the Hawthorne Effect.

http://en.wikipedia.org/wiki/Hawthorne_effect

I read of it via Joel Spolsky:

http://www.inc.com/magazine/20081001/how-hard-could-it-be-si... which cites a Harvard chap's book as a reference, and

and http://www.joelonsoftware.com/articles/fog0000000070.html which seems based on his experiences at Microsoft.

I believe it's known as Campbell's Law: http://en.wikipedia.org/wiki/Campbell%27s_Law

Thank you. That sums it up pretty concisely, though not very precisely.

I wonder if Goodhart's law is more apt.

http://en.wikipedia.org/wiki/Goodharts_law

This effect is a lot less pronounced in physical labour based jobs, it's harder to portray that your doing things in these jobs. Sure overall your productivity may be down over long hours but the extra time worked makes up for this.

To take this to the extreme I'd say the place you get most value for pushing extra hours is a production line where an employee is repeatedly preforming one simple task.

Actually I would say this is core to the whole issue. Management is still largely stuck in the mindset of a physical labor world. With physical labor if you force people to work 12 hour days you really will get close to 12 hours of work because as long as the body can swing a pick it can... swing a pick.

The brain doesn't work like this, you can't push the brain past a certain point consistently.

Management needs to catch up to the times. We don't pay CEO's millions of dollars to over see a bunch of people swinging picks.

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