Productivity vs. Efficiency - What’s the Difference and How to Measure Each?

Productivity and efficiency are both considered core pillars of top-performing and fast-growing companies, yet would you know how to define each and identify the differences?

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Even though they are terms often bandied about in a work setting, few of us really understand what is meant by productivity or efficiency. There’s also a tendency to confuse one term for the other or use them interchangeably to mean the same thing.

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In this article, we want to put the debate to rest and demonstrate the key differences between productivity and efficiency and how you can measure each in your team using workplace monitoring tools.

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How to Define Productivity and Efficiency 

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Before we tackle the subject of how to measure both productivity and efficiency, we all need to be on the same page regarding the definitions of each word.

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Productivity

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What is productivity?

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When we refer to productivity, we’re not talking about some vague concept of busyness or hustle culture. Productivity is, first and foremost, a metric - a way of measuring performance.

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Essentially it’s a way of knowing how much you have accomplished as an individual, team, or organization as a whole. 

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Why is it important for businesses to improve productivity? Without a metric of productivity, it would be exceptionally challenging to identify growth within a company and take effective action to make progress.

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Typically, productivity is measured in terms of how many deliverables you can complete in a given time frame.

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Here’s the formula you would use to calculate productivity:

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Total output/total input = productivity

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Example: You’re a content writer, and in your first month at your new job with a content marketing agency, you are able to produce five blog posts a week. After month two, you reflect on your progress and note that you can now produce seven blog posts a week. Your productivity has objectively improved since your output has increased over time. This doesn’t guarantee the quality, though as you may cut corners to hit your new target.

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Efficiency

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Efficiency is how well you can leverage the resources available to you to complete a job well.

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Efficiency is what you get when you strip a process of everything that makes it complex and streamline your operations as much as possible to increase speed.

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Here’s the formula you would use to calculate efficiency:

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Hours expected to work/hours worked = efficiency

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Example: You’re a content writer and your content manager informs you that while the quality of your writing is of a high standard, you need to be more efficient with your time. They instruct you to finish seven blog posts in four days, rather than taking the whole week. Your efficiency will have improved in this scenario, yet this raises questions about whether the quality of your work will remain the same.

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The Complete Productivity vs. Efficiency Breakdown

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If you’re still wondering exactly how to tell the difference between the two terms, bear with us. There are various factors at play in this discussion, and we’ll cover each now to give you a clear idea of what each term means and how to measure them effectively:

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1. Output vs. Speed

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While you can’t reduce productivity and efficiency to output and speed respectively, at the core of this discussion, that’s what we’re talking about.

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The calculation for productivity is to divide total output by total input, thereby giving you an idea of how much work you’ve managed to complete within a specific timeframe. In the case of efficiency, the calculation factors in how quickly you completed work based on your initial expectations, which implies that it refers to the speed of your output.

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To reiterate, there’s more to the terms than output and speed, but this is the first (and most straightforward) differentiating factor to digest.

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2. The Cost of Greater Performance

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When you talk about the difference between productivity and efficiency, there isn’t a right answer as to which is best to focus on in your team.

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While productivity leads to greater overall output, it doesn’t factor in the cost to your company or the employees involved. For example, the content writer who wrote seven blog posts in a week might be close to burnout and the articles she produced could be strewn with grammatical errors and typos - which ultimately costs the company time.

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Efficiency, on the other hand, does factor in the costs of greater performance and seeks to cut down on these costs for a more streamlined approach to boosting output. Yet the more efficient approach might lead to a lower overall output which could mean you fall short of certain objectives.

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3. There’s a Middle Ground

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While we could go on about the differences between the two terms, it’s important that you know there’s a better way than pursuing either productivity or efficiency.

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It’s called slow productivity, and it’s a middle ground between the two taking the best of both productivity and efficiency.

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Focusing too much on productivity can have a knock-on impact on employee wellbeing and ultimately lead to burnout. Focusing too much on efficiency can reduce your overall output and leave you playing catch-up to meet your goals.

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When you prioritize slow productivity and focus on monitoring home workers, you can get the results you’re looking for while using fewer resources and putting employees at less risk of burnout.

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Use Insightful to Measure Slow Productivity

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If you want to embrace a culture of slow productivity whereby you ease off the gas and allow your employees the freedom to work at their own pace, you need a business internet monitoring software system for tracking time data and measuring tangible results.

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With employee tracker software Insightful, you can track output as a result of hours worked. That way, you can build a clear picture of both individual productivity and efficiency using insightful reports, and make changes based on concrete data.

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As the best software to monitor computer activity with full transparency, Insightful lets you instill your employees with greater accountability which in turn should positively influence their output.

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Online tracking software and activity monitoring can help you implement changes such as introducing no-meeting days or mental health days and see how they affect the bottom line regarding output. Instigate a slow productivity revolution in your team while ensuring you’re still hitting your strategic goals day after day.

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