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Focus on employee retention by invoking Price’s Law

Have you heard of Price’s Law? It may improve your employee retention?

employee retentionDerek Price was a British physicist who is credited with identifying the mathematical relationship between (1) literature on a specific subject, and (2) the number of authors in the subject area.  Price’s square root law (or simply Price’s Law) states that half of the publications in a subject area come from the square root of all contributors. So, if 100 papers are written by 25 authors, five of those 25 will have contributed 50 of those 100 papers.  Price’s Law is obviously related to academic research and reporting, but I have observed an interesting parallel in the world of work.

Price’s Law at work

Repeatedly, in departments and in organizations, I have noticed that there seems to be a small number of people who seem to get the most work done.  If I may go as far as invoking Price’s Law – half the work is done by the square root of the total number of employees in that department or division.  So if the sales team has 10 people, half the revenue seems to come from three people in the group.  If the first-line tech support team has 15 people, four people seem to respond to and close about half the support tickets.  What if you have an organization of 100 people – do 10 of them get half the work done, and the other 90 the remaining half?  That’s a scary thought!  Now I know that Price’s Law doesn’t exactly compute in every situation, but my point is that this ratio seems to generally apply – which is, a handful of people get the most work done.

If we can agree on this (even if you don’t agree with my assertion about Price’s Law), then it leads to a very significant issue.  Do you, as a leader, know who your top performers are?  Do you know who makes up your square root?  And perhaps more importantly, are you recognizing and appreciating what these people bring to your success?  My unfortunate experience has been that far too often, leaders take this hard work and productivity for granted.  Not intentionally, but usually because they are too busy to stop and recognize great results.

If you don’t focus on recognition, your employee retention will suffer

Yet, sadly, if you don’t focus on recognition, your employee retention will suffer.  These top performers, the very ones you need and want to keep, are the same ones that will find it the easiest to walk out the door and find work elsewhere … often with your competitor.

So think about how Price’s Law may apply in your department, division or organization, and deliberately and thoughtfully identify your top performers.  Then make it point to let these people know that they are appreciated.  Recognition is an important factor in employee retention, so make it work for you.

If you’d like specific tips and ideas on how to show your appreciation to your people, then be sure to access our video tip series on this topic — 33 specific strategies, each one an individual practical idea on how to motivate your employees.  Go to the Motivating Employees Video Series.

But please also share your thoughts here.  Is Price’s Law true in your organization?  Are you showing your appreciation to your top performers?  If not, what’s stopping you?  Please share your perspectives by commenting below.

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