Subset productivity

· December 8, 2018

Interesting post and comment thread on Arnold Kling’s blog about construction productivity being higher in the Great Depression. 

It reminds me of a note in Patty McCord’s Powerful about Netflix going through a round of lay-offs. Afterwards, they found that their output dropped less than expected - they were more relatively productive than they were before the layoffs because the people they had retained were the strongest fit for what the company was doing. 

There is a huge range between the most and least productive workers, but the causes seem to often be industry, geography or firm specific. I suspect there is some systemic weakness in work-to-worker matching (a large scale coordination problem?), but I wonder whether that problem is even worse as companies scale. Matching for a 100 person company is likely easier than a 100,000 person one, in part because a larger company allows for more specialised roles, and in part because effectiveness becomes more tied to firm-specifoc knowledge.