Productivity and efficiency are two key pillars in the operations of any organization. Though they sound similar, they fulfil very different purposes and bring about different results when employed.
Productivity can be defined as the quantity of work produced by a team, business or individual while efficiency is about how well the resources available are used to produce that work. This means that the more resources required in doing the work, the less efficient the process is. Efficiency also refers to the quality of the output; it’s about doing the same with fewer resources whereas productivity is about doing more with the same resources e.g. time or capital.
One of the main differences between efficiency and productivity with regards to performance is that efficiency is about how well, while productivity is about how much. While productivity measures output over time, efficiency measures input versus output.
For example, an organization focused on productivity is more excited about a lot of work being done at a go. It’s about how much produce they can see at the end of the day. If efficiency is what they are focused on, the focus shifts to the quality of output. This means there’s a lot of focus on what has to be put in in order to have the desired output.
Differences between productivity and efficiency.
| Productivity | Efficiency |
| Focus is on the quantity of output | Focus is on quality of output |
| Output is what is used to measure productivity | Resources used in producing output is what measures efficiency |
| Does not consider underlying costs incurred in production | Considers all details of underlying costs and all resources utilized in production |
| Productivity is about how much one performs | Efficiency is about how well one performs |
Reasons for measuring productivity and efficiency.
It is very important for any organization, team or even individual to constantly keep tabs of both productivity and efficiency. Here are 5 reasons why:
1. The right allocation of resources.
Failing to plan is indeed planning to fail. Without constant measuring and evaluating both productivity and efficiency, it’s very easy to put in so much effort in one area and not in another.
Consider a company that processes food and need both quality and quantity checked. For them, there are many resources employed in bringing out the final product; the output. Should there be a shortage of human resource, it will show up when doing the evaluation. This will then inform the decision to allocate more resources in getting more people to work, as opposed to making the assumption that you need more equipment.
2. Consistent progress
Constant evaluation of both efficiency and productivity ensures allows for consistency. Chances of being stagnant are very low in this case. Having consistent progress brings about motivation to keep producing, which has a ripple effect on output.
3. Time-saving
Imagine putting so much energy and resource into an assumed issue within an organization, that’s not the actual issue. Think about an organization constantly investing and working on branding packaging when the actual issue is the quality of what’s being packaged. So much time is wasted as they tackle the wrong issue. Measuring productivity and efficiency will help avoid such situations.
4. Eases decision making
Constant evaluation of both efficiency and productivity ensures allows for consistency. Chances of being stagnant are very low in this case. Having consistent progress brings about motivation to keep producing, which has a ripple effect on output.
5. Easily Identify Improvement opportunity
Measuring and evaluation productivity and efficiency brings to attention the weak areas. Once they are identified, it’s easier to come up with ways to improve. This directly affects both efficiency and productivity.
How do you measure productivity?
Having seen how important to measure productivity, it’s important to now know how to do that. Below are 5 ways you can measure productivity.
1. Daily check-up and evaluation.
Daily follow up of work makes it easier to measure productivity. It becomes easier to arrest an issue early enough, as opposed to a monthly check-up where so much may already be affected. How you work around this in an organization can be custom made to suit your goals and vision.
2. Break down long and short-term goals.
Every organization has what they are focused on achieving. There’s the ultimate vision and goals designed to lead to reaching the ultimate goal. Breaking down the long term goals into short measurable and achievable objectives helps keep everyone on check and increase overall productivity.
3. Employ a system.
Having a system helps in evaluation. It’s difficult to measure productivity if there’s no system. A system will help in trouble-shooting in good time as well as making everything clear at every point. It will also be instrumental in ensuring accountability among members in a team.
4. Feedback
An organization or team that’s open to receiving feedback improves very easily. Feedback allows a team to receive information from clients and other stakeholders on how to better their services. Customer feedback for example makes it easier to make decisions judging from what’s important to the clients, as opposed to using assumptions.
5.External evaluation.
Hiring a firm to help with evaluation will help an organization bring so much to light. External evaluation is often better than internal analysis or audits since it’s without any bias and hence exposes everything that needs improvement without holding back. There are definitely great cost implications that come with using this method to measure productivity, but they are worthwhile.
How do you measure efficiency?
a. Feedback.
Feedback is a method that cuts across both productivity and efficiency. When it comes to efficiency however, the focus is on resources being employed to having the output as desired. While customer feedback is more appropriate for measuring productivity, internal feedback will be more effective in measuring efficiency. This can be done through ways such as getting anonymous feedback from staff members.
b. Evaluating the quality of output.
It is one thing to be able to produce output in thousands, but it’s a different thing to have all the output working as it should. Evaluating the quality of what is being produced is very useful in measuring the efficiency of an organization.
c. Performance scores.
One of the main differences between efficiency and productivity with regards to performance is that efficiency is about how well, while productivity is about how much. Measuring efficiency is about the evaluation of the quality of performance. This means that it’s not just about how much an employee, for instance, is doing. It’s about how the quality of their input affects the overall output quality.
Is high productivity possible if efficiency is low?
Yes, it’s possible to have high productivity even when efficiency is low. This is definitely at the expense of good quality production. In such cases, it becomes about having the numbers, even if it means lowering standards.
For example, a company that produces perfume may realize that the manufacturing process takes so much time due to standards set. This may mean they produce less but with assured good quality for clients. Should they choose to focus on how much they produce, it’s possible to do that by lowering the efficiency of the product.
Ways to improve productivity and efficiency at the workplace.
- Delegate instead of piling all the work on one person. This brings about learning opportunities and maximizes on human resource in an organization.
- Create a conducive working environment. When people are comfortable, they are able to improve production in both quality and quantity.
- Encourage innovation. Allowing and embracing creativity within the organization is an incentive to staff members. This motivates them to produce as desired.
- Equip the team with what they need to accomplish various tasks. It’s important to make available what your team needs to work. Take time to even take them through training whenever they need to gain skills.
- Do not micromanage. According to Robby Slaughter, a renowned workflow and productivity expert, “The best way to encourage productivity is to encourage individuals to take ownership of how they manage their own time and resources.” Giving room for employees to make decisions on their own without constantly following up and questioning is a motivation by itself. It makes them highly effective whether you are present or not and quickens the production process.
Common pitfalls to avoid.
As you go about balancing productivity and efficiency within an organization, there are some common pitfalls that many people fall victim to. Some are easy to rectify and others may take time and resources to reverse. They include;
- Overestimating how much time you have to accomplish a certain task
- Underestimating small costs incurred within an organization.
- Trying to do too much at a time, with less attention to detail.
- Lack of balance between productivity and efficiency. Focusing so much on efficiency may slow down production while the reverse compromises quality.
- Misplaced priorities. It’s important to always be aware of what is important in an organization at a certain point in time.
Now, you may not always have everything figured out, but taking the time to learn these differences will definitely be of help. While on the one hand, it’s important to keep producing, it’s also important to take care of quality. Learning to strike a balance between the two is the point here. Different seasons call for an emphasis on one aspect more than the other, but at the end of the day, each needs as much attention. It works differently for different organizations and industries, so it takes intentionality to always employ the right strategy.