Understanding Productivity

The standard economic definition of productivity is “Goods or services per unit of labor or expenses” until 1979, when A.J. Albrecht of IBM published a paper about Function Points, there was no definition of what “goods or services” were the output of software project. The good or service of software is the business functionality provided.

While software productivity is a relatively new subject “industrial productivity” has been a subject of interest for many years. One of the first individuals to study productivity was Frederick Taylor (1856-1912). Taylor’s major concern throughout most of his life was to increase efficiency in production. Taylor decided that the problem of productivity was a matter of ignorance on the part of management. Taylor believed that application of scientific methods, instead of customs and rules of thumb could yield higher productivity. A century after Frederick Taylor most software managers use rules of thumb instead of systematic study.

Several scientists undertook the famous experiments at the Hawthorne plant of the Western Electric Company in 1927 and 1932. They began a study to determine the effect of illumination on workers and their productivity. They found that productivity improved when illumination was either increased or decreased for a test group. They found that when people felt they were being noticed then their productivity increased. They also found that the improvement in productivity was due to such social factors as morale, satisfactory interrelationships and effective management. They also found that the best managers were those that managed via counseling, leading, and communicating. The phenomenon, arising basically from people being “noticed,” has been known as the Hawthorne effect.


The definition of productivity is the output-input ratio within a time period with due consideration for quality.

Productivity = outputs/inputs (within a time period, quality considered)

The formula indicates that productivity can be improved by (1) by increasing outputs with the same inputs, (2) by decreasing inputs but maintaining the same outputs, or (3) by increasing outputs and decreasing inputs change the ratio favorably.

Software Productivity = Function Points / Inputs

Effectiveness v. Efficiency:

Productivity implies effectiveness and efficiency in individual and organizational performance. Effectiveness is the achievement of objectives. Efficiency is the achievement of the ends with least amount of resources.