Assessing efficiency and productivity: Which is more important and how to improve performance

Do you classify yourself as a productive or efficient person, and do they bring you back? For many people it will seem strange that the two characteristics are not interchangeable. So when managers, employees need to measure them, difficulties arise.

What does productivity mean, and what does efficiency mean? How to correctly count them? We answer these questions in this article. It will help you not to leak the budget, hire the right employees and better allocate resources.

What is productivity

Productivity shows how much you made (goods, services) in a certain amount of time.

It is easy to measure, which is why many companies put productivity at the top of the list. Managers calculate this indicator by measuring how many tasks an employee performs during his working hours.

What is efficiency

Efficiency - it's when you have invested a minimum (time, money), and got a maximum (quality results, which satisfied the customer).

What can be considered high efficiency? When you did a cool project in 10 hours instead of 15, because you entrusted the task to an experienced professional, not burdened him with additional routine tasks, so as not to distract.

Productivity - quantity, efficiency - quality

It's interesting that productive professionals are not necessarily going to be effective. How's that?

For example, if a salesperson works 50 hours a week to achieve output, he or she is productive but not efficient. Conversely, if another salesperson works 30 hours a week and achieves slightly less output, he or she is efficient but not productive.

To accurately assess efficiency and productivity, you need to measure both.

How to calculate productivity and efficiency

Performance metrics are useful, but they only provide knowledge of how the department is handling its workload.

Managers keep track of how productive employees are when they count how many products/sales an employee has made during their work time. To calculate productivity correctly, you must divide the total results by the total inputs.

To calculate efficiency, you must divide the time it normally takes to complete a project by the time it actually took team members to complete it.

For example, one designer spends his week doing ten projects for a client. This result can be considered high on average for the team.

But if the designer worked on the project in a hurry, the client may not like the result.

At the same time, another designer performs four projects in the same amount of time, but all of these projects the client accepts almost no edits.

This begs the question: which designer produced more?

Answer: the one whose projects were approved without serious comments. This employee produced more quality results.

It turns out that it is better to have four great projects than ten poor ones.

Which is more important: doing average quality, but a lot, or doing a little, but cool

More often than not, efficiency is more important than productivity. After all, quality trumps the volume of tasks performed. Why have a lot of texts if they are uninteresting and unreadable? Practical, useful, and engaging materials will bring more results. But both indicators are important to check the performance of employees.

Many managers and teams strive for high productivity. How reasonable is this? In fact, this indicator is not always important, but it is still necessary when tracking results.

Productivity shows the approximate number of tasks completed, while efficiency specifies how successfully an employee can handle them.

Hubstaff conducted a productivity study for their clients in 2020. It showed that the average staff engagement rate was 49.6%.

On the one hand, this number shows that they technically spend little time at work. In numbers it looks unproductive.

But during that time, they brought results, and it turns out that they achieved their goals using less than half of their time. It turns out that they work extremely efficiently.

Unfortunately, many managers lose sight of efficiency and track only productivity. Although, if a company starts collecting detailed data, it will be able to predict overtime costs, for example.

Why efficiency is important for business

Have you ever heard the phrase "work smart, not long"? Efficiency is the embodiment of this concept.

Can an effective employee increase his or her productivity? Yes, if they learn to prioritize, learn time management, and understand how important their work is.

Managers should guide team members to focus on efficiency and quality of work rather than creating endless pointless projects.

Quantity and quality are different. If you create raw materials or basic products for other companies, quantity is of course more important. If this is not your case, quality comes first.

Judging employees solely by the volume of hours, rather than their efficiency during those hours, just doesn't make sense. It is better to focus on what helps the team complete projects in a quality, cost-effective way. Less is better.

In the Shtab Task Tracker, you can track and improve team efficiency and productivity in your work with summary charts. To do this, Shtab has task configuration by projects and priorities. Each employee can choose the task display he or she likes: classic agile board, list, Eisenhower matrix and calendar.