You have to consider what being more productive translates to. In this case, since we are talking about software, lets assume that being more productive means t

You have to consider what being more productive translates to. In this case, since we are talking about software, lets assume that being more productive means that you can implement more features of a similar complexity at the same level of quality compared to the guy sitting next to you. Assuming everything else equal between you two, you would expect that you would be paid more. In Joel's model, the only way for this to be accounted for is scope. Since you can produce more features you are now responsible for more features. Assuming that this increase of scope is enough to move you up to the next grade, you would have a higher salary. Otherwise, it could be accounted for with your bonus. But what if you could implement twice as much features, but you required additional over site to manage those features. You have just created additional work for someone else. Before your additional productivity can be utilized, someone else has to help you convert it to something more usable. Depending how needed that other person is, your increase in productivity could result in a net lose of productivity for the team as a whole. When talking about productivity, you need to be specific in what you mean, because productivity is hard to measure and quantify.