Most business owners use productivity and efficiency interchangeably. However, the two may depend on each other but are quite different. What is the difference between the two, and how can a company benefit from focusing on productivity rather than efficiency?
Organizations should focus more on productivity rather than efficiency because greater productivity means more output, sales, and revenue growth by minimizing labor and resource costs. A business, however, requires a balance between both to thrive.
Organizations have been overfocused on efficiency for the past few decades, especially after the industrial revolution. However, continuing with the same mindset isn’t beneficial for business survival. To strike a balance between efficiency and productivity is the key. Let’s see how that can be done.
What is Productivity?
The first step to understanding why productivity is more for organizations than efficiency is delving into the meanings of these terms.
Productivity can be simply defined as a measure of output per unit of input. It entails doing more work with the same amount of resources, so it helps minimize labor costs. To put it simply – it is the output per hour. It measures the amount of work that gets done within an hour.
Productivity gains occur when an organization produces more outputs with the same level inputs or uses fewer inputs to produce the same number of outputs. In other words, improved productivity means working smarter and getting more done in less time.
It also includes eliminating or reducing activities that cost the organization unnecessary time and money, increasing work output, and contributing positively to revenue growth. A productive employee is highly motivated and tends to achieve more in less time than an unproductive one.
What is Efficiency?
While productivity focuses on completing tasks, efficiency is about getting things done quickly and right the first time. As mentioned before, it’s about getting more work done with less time and resources.
Efficiency exists when an organization achieves maximum productivity with minimal wasted effort or resources. Efficiency is also important in the workplace to minimize errors and focus on the quality of work.
From this perspective, it would appear that both concepts are equally important – however, there are key distinctions between the two which set them apart in practice.
Productivity Vs. Efficiency – What Should Be The Focus?
The industrial revolution encouraged business owners to take an efficiency-focused approach to business.
For over three decades, these owners focused on efficiency tactics like spans and layers analysis, Six Sigma, and process reengineering, and they used these to great benefit to gain profits through efficiency.
Companies like Ford, General Electric, HP, and Honeywell successfully identified and rectified inefficient processes in their operations using these methods.
However, the business dynamics and environment have changed and the practices from the late 1900s and early 2000s have been exhausted and applied to their fullest potential.
Today, business leaders are more focused on being productive rather than efficient and are trying to strike a balance between the two.
While trying to do work quickly with the added pressure of getting it right the first time, employees can often make more mistakes and cost the organization.
Productive employees, on the other hand, can focus on tasks and then take short breaks to produce quality work in more quantity.
According to research by the Harvard Business Review, some of the best companies in the world are 40% more productive than others.
The productivity mindset helps organizations focus on employees and their capabilities to build a workforce that is inspired and achieves more than employees that are just satisfied with the status quo.
How to Improve Productivity In Your Business?
Now that we’ve established, businesses today need to focus more on productivity than the age-old efficiency-driven best practices. Let’s dive deeper into what it means to be a productivity-focused employer and how you can increase your organization’s productivity levels.
Team Performance Over Solo Performance
A well-oiled and productive team will benefit your organization more significantly than one super productive employee. The key to doing this is to empower your employees.
No employee should be able to or feel like they can make decisions or develop solutions in isolation. You can create teams within teams and create an environment ripe for collaboration.
When employees from different backgrounds, capabilities, and skill sets come together, the result is highly productive workflows and effective solutions to the organization’s problems.
Productivity brings employees together, and the entire organization benefits from their collective thinking. All this creativity and diversity would be lost if the focus was getting things done quickly and individually.
Maximize Your Best Talent
All employees aren’t equal, which a good business owner knows and leverages for greater productivity. All organizations have employees that go the extra mile and are star performers. They are what drive the rest of the workforce to achieve excellence.
Companies that are more productive than others know how to use their top talent in critical business roles to drive higher productivity levels and increase their revenue.
Now, many employees have the potential to become top tier talent, but it takes time and effort on the management’s part to get them there. However, this time and effort will be an investment with high returns for the organization.
When employees enjoy what they do and the work is related to their future professional growth, they tend to be more productive.
Managers should stay close to their employees and constantly stimulate their need to be better and excel at what they do.
1-1 conversations can spark this need when asked the right questions and given goals aligned with each employee’s strength.
Research suggests that an inspired employee is 125% more productive than those who are just satisfied with what they do. All it takes is that little nudge and a challenging environment to create more high-functioning employees for your organization.
Stop Getting In The Way
We’re sometimes the biggest enemy of our businesses. How? By creating unnecessarily complex processes and checks for employees just because we want to maintain a certain level of control.
When a company is young and small – it can change things overnight and adapt. However, as it grows, so do the number of steps and processes to get things approved and executed. Unfortunately, these “best practices” can be frustrating and hinder productivity in the workplace.
A study suggests that an organization can lose up to 20% of perfectly productive hours due to these unnecessary processes and steps, otherwise known as red tape or organizational drag.
Focus on identifying these tasks and eliminating them. Here are a few things you can work on:
- Keep the meeting’s agenda focused and limited to 30 minutes
- Remove unnecessary employees from meetings
- Encourage short, crisp, and action-oriented emails
- Get rid of instant messaging apps and limit written communication to emails
- Organize all documentation in one easily accessible location for all employees
- Remove roadblocks and empower line managers with approval authority
Promote the “Less is More” Mentality
We live in changing times when the definition of a standard work week has changed dramatically over the past few years. Many countries like Finland and New Zealand are trying shorter work weeks and seeing great results. The standard 40-hour work week was a practice developed some 80 years ago, and somehow, it is still applicable.
Productivity has nothing to do with more time spent at work. Today’s employees are more conscious of the work-life balance, and they get motivated when given more off time to spend on friends, family, and their own selves. Look at Luxembourg, for example; it is the most productive country in the world, with employees that average out at 29 hours of work every week.
Companies can improve the work-life balance and increase productivity by allowing employees to work on flexible schedules. As long as work gets done and targets are achieved, employees should be able to choose their own schedules.
Encourage Focus
You may be in awe of employees who can do multiple things simultaneously, but this is rare. Even if they are natural at multitasking, their productivity is still taking a hit. Studies show that employees focusing on one thing at a time are more productive than those who multitask.
Encourage employees to practice deep focus and eliminate distractions in the workplace. Help employees learn how to get rid of distractions when working, so they can produce high-quality work and do it faster. Create small areas in the workplace where employees can focus on the more serious and business-critical tasks.
One way of doing this is to group similar tasks together and knock them out in sections dedicated to them during the work day instead of trying to do two tasks of different natures together and going back and forth between different processes.
What Limits Productivity in the Workplace?
Now that you know what to do to be a more productive organization let’s also spend some time identifying where you may be lacking in this regard. Here are a few reasons why your employees may not be as productive as they should be:
Stress
Did you know that almost one million employees have low productivity due to workplace stress, which costs organizations more than $600 per worker every year? Employees want to give their best and excel at their jobs. This often becomes counterproductive as they try to do too much at the same time and often end up failing.
Workplace stress and anxiety is the biggest killer of productivity. Overburdened employees engage in multi-tasking, which produces low-quality work. Ultimately, they cost the organization in time and money spent on rectifying their errors.
No Recognition
Employees thrive on rewards and recognition. No one likes to keep working and producing great results without being recognized and rewarded for it. When an employee feels undervalued by their organization – their morale drops, and so do their productivity levels.
Fortunately, it is easy to give recognition. Managers can make it a habit to send out a nice email when an employee does well or have a set pattern for evaluation and recognition. Even something as simple as using encouraging words of gratitude can serve as a pick-me-up from employees.
Any form of recognition will keep your employees motivated and discourage them from applying for jobs elsewhere. Otherwise, you will continuously risk losing your most valuable asset, i.e., your employees.
Bad Organizational Structure
You’ve got processes, policies, and workflows all in place, yet your productivity levels are still subpar? Why is this happening? Well, one reason can be bad optimization of these workflows. Workflows are built to increase accountability and collaboration between different departments.
When departments within an organization do not align and work independently, you have a recipe for disaster. Smooth transitions and knowing who is responsible for what is crucial for achieving milestones and executing work on time with minimal waste.
Visual processes and workflows to improve synchronization within teams and between different departments. Everyone should be on the same page and know exactly who is working on what. Try incorporating some Agile methodology principles like holding regular scrum meetings to ensure everyone is aware of the projects’ progress and responsibilities.
Burnout
At the end of the day – employees are human, and no matter how super productive they are, they can get exhausted. Sleep deprivation, being overburdened, and a lack of regular breaks can cause a dip in your employee’s concentration levels. This dip ultimately causes a lack of productivity.
Encourage your employees to speak out when they start to feel burnt out, and at the same time, help them take time off to freshen their minds. A healthy working environment that cares for the employees’ mental health is the foundation for a more productive organization.
Frequently Asked Questions
How is productivity calculated?
Dividing the outputs produced by a company by the inputs used by its production or manufacturing units gives you the productivity of that organization.
What are the four types of productivity?
Capital, material, labor, and total factor are the four types of productivity. The above-mentioned tips will help you increase and improve these.
What are productivity skills?
Productivity skill is the measure of work done in a specific amount of time and the ability to produce a better quality of work than the time and resources spent.
Final Thoughts
A productive team is a happy team, and a manager that focuses on productivity rather than efficiency is more likely to have happier employees and a content workforce.
By promoting productivity in the workplace, managers are also encouraging innovation and creativity; two key ingredients in any recipe for success.
What’s more, when employees feel valued and appreciated they are far less likely to leave an organization – meaning that focusing on productivity can help with staff retention levels, as well as boosting morale within the company.
Increasing productivity over efficiency is definitely the new way of doing business in today’s era. We hope that our tips above help you achieve this. Identify the factors that reduce productivity in your organization and actively work towards improving them.
