Efficiency vs. Productivity

• Efficiency refers to the amount of effort and resources people put into work, while productivity is all about the amount of work done over a certain period of time.
• Productivity is proactive. Efficiency is reactive.
• Productivity is about achieving the best output no matter the situation. A company becomes more productive when they’re focusing on doing more with their current resources. Efficiency is more about survival.

Let’s say your company can process 40 documents per hour. A company focused on productivity would try to increase the number of documents they can produce in that hour.

So, your people have worked hard and are now able to scan a total of 50 documents per hour. They have just become 25% more productive.

Whether they have 6 hours or one hour, the productivity-focused company can still work at the same pace. They still produce as much as they can, even if their total numbers drop due to cuts.

Let’s say your company, which can now process 50 documents per hour, gets its budget slashed. Now, the company is trying to do the same amount of work (50 documents processed per hour) with fewer resources to process them. This would be the time to focus on efficiency.

In a perfect world, companies would try to be both efficient and productive. Companies should always be looking for ways to do more with what they have while doing the same amount of work with less waste.

That being said, most successful companies put their primary focus on productivity, not efficiency.

Productivity helps companies do more, while efficiency helps companies do the same with less.

If a company is going to focus on making anything more efficient, it should be all of the tedious work that needs to get done but doesn’t really help the company grow.

• Productivity Formula

Total Output / Total Input = Labor Productivity

• Efficiency Formula

(Standard Labor Hours / Amount of Time Worked) x 100 = Efficiency