Price's Law Debunked

Price's Law says, roughly 50% of the work is often done by the square root of the total number of people involved.

A few weeks ago, I read a post about how a company can let go of so many employees and still function well. The post associated that with Price's Law and explained how.

I decided to look at what Price's Law is.

Price's Law says in many creative or knowledge-work contexts, roughly 50% of the work is often done by the square root of the total number of people involved.

This rule-of-thumb highlights the inequality of productivity distribution: a small group of "top contributors" often produces a disproportionate share of the output.

Price's Law is widely cited today in organizational contexts and was first introduced in Derek J. de Solla Price's book Little Science, Big Science (1963). In this work, Price observed that approximately half of the publications in a scientific field were produced by the square root of the total number of authors. That is it—one research in one area. The original work focused specifically on scientific publications and author productivity, not organizational productivity, as it's commonly applied today.

As usual, we used the outcome of an experiment in another domain because it was easy to understand and sounded clever. We all believe we and a few others in our close circle are productive while the rest of the company slacks.

Let's do a thought experiment to demonstrate how nonsense it is as a "Law" for organizations.

Thought Experiment

At Acme Corp, life begins with 10,000 employees working at full capacity. The organizational output is 100%, as expected when the team operates at full strength. According to Price's Law, things aren't as evenly distributed as they seem. The math tells us that the square root of 10,000 (just 100 employees) is responsible for producing half of the work.

Now imagine this: the company leadership decides to make some cuts. They fire the 9,900 "least productive" employees, leaving only the top 100 behind. It's a bold move, justified by the belief that these star performers can sustain the business. But here's the catch—output doesn't scale evenly. By slashing the workforce, Acme's overall productivity has halved. What once was 100% is now just 50%.

But why stop there? Determined to optimize further, management applies Price's Law again to the remaining 100 employees. The square root of 100 is 10. So, another 90 employees are let go, leaving only the top 10 to carry the company's weight. Once again, productivity takes a hit. This second round of cuts reduces the remaining capacity by half, leaving Acme at just 25% of its original output.

Acme Corp now has only 10 employees left, and their combined output is one-quarter of what the original 10,000 employees once achieved.

In other words, each of the 10 most productive employees would produce 25 times more than the average output of the 9,990 employees who were let go. So, have we just stumbled upon a new "25x rule"? What happened to the celebrated "10x rule"?

Conclusion

There is some truth to the fact that each employee does not equally deliver work. However, Price's Law is further from the truth regarding organizational productivity.

I understand why we like to simplify things. Still, as Einstein said, "Everything should be made as simple as possible, but not simpler."