What Is Efficiency? - Deepstash

What Is Efficiency?

If your company is efficient, that means it is especially capable of producing desired results with little or no waste with very few resources.

  • If you’re able to produce the same amount of work with less time and resources, you’re being more efficient.
  • If you use more time and resources but produce the same amount of work as before, your performance is less efficient.

Therefore, efficiency is simply the quality and degree of effectiveness at which a company is being efficient.

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MORE IDEAS FROM Efficiency vs. Productivity

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.

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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.

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  • Productivity Formula

Total Output / Total Input = Labor Productivity

  • Efficiency Formula

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

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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.

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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.

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What Is Productivity?

The dictionary defines being productive as, “having the quality or power of producing especially in abundance.” Those who are concerned with productivity are trying to make the most output with the resources they have.

  • For example, if they have a large budget, they’re trying to produce the largest amount of work possible. If they have a small budget, then they’re still trying to produce the largest amount of work possible.

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RELATED IDEA

Productive vs Efficient
  • Productivity measures how much you do or produce within a given timeframe.
  • Efficiency is about being productive with less effort.

To be more productive in a way that won't burn you out over time, you have to understand how to be more efficient. Productivity often leads to working harder, while efficiency focuses on working smarter.

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Measuring Employee Productivity

Fixing employee productivity in the industrial age, when most workers were handling machinery and it’s parts, was a tedious but doable process. The managers had to fix the people who were making mistakes or were inefficient through systematic management.

Today, in the age of software and intellectual property, when half of the workforce is made up of knowledge workers, the old practices are of no use.

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Productivity is Personal
  • What works for me—or Jeff Bezos, probably will not work for you. And even if it does, it will probably change one day.
  • There is nothing wrong with learning new systems of efficiency. But at the end of the day, productivity is a very personal thing

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