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Productivity vs. Efficiency: Which One is More Important for Your Business

by aliciajohnson10021994
Workforce management software

Workforce management software : When discussing performance, we frequently come across the words – productivity and efficiency. However, managers and team members find it challenging to understand the essential distinctions between productivity and efficiency, much alone learn how to quantify each.

You can choose to look at the incorrect metrics for your company if you don’t know the distinction between these two phrases. Both these metrics in the discussion are closely related to workforce management and time & attendance tracking software.

This article will help demonstrate how and why you must distinguish between the two. But, first, let’s take a look at productivity in more detail.

·        Productivity

Productivity is a measure used to evaluate the performance of an individual employee, team, or business based on the number of outputs (goods and services) produced and the number of inputs (time or energy) required to generate them.

Since productivity is relatively easy to quantify, many firms strongly emphasize it. For example, the number of deliverables a team member produces over a predetermined number of working hours can be used by managers to calculate employee productivity metrics.

·        Efficiency

Production of goods and services with the least amount of waste is called efficiency. Waste here can refer to various things, including lost time, resources, and money. Efficiency focuses on how well products are produced, whereas productivity assesses how much a team member can generate.

High efficiency is the ability to complete tasks with the fewest resources possible. As a result, the output from an efficient workflow will be of higher quality, but it may take longer than a very prolific process.

Difference between Productivity & Efficiency

Quantity vs. quality is the key distinction between productivity and efficiency. Efficiency examines the quality of each production, whereas productivity focuses on monitoring the number of outputs. It is crucial to note that highly productive workers aren’t always highly efficient.

For example, a salesman is productive yet ineffective if they put in 50 hours per week to reach quotas. Another salesman works 30 hours per week and is efficient yet unproductive if they fall just short of their quota.

To evaluate a team member’s performance, you must consider both productivity and efficiency. Calculating each is ultimately the only way to know for sure.

Calculating Productivity & Efficiency

Many startups haven’t integrated performance evaluation and time & attendance tracking software. Here is a tip for them. Follow this simple and effective manual calculation method until you automate the same with digital transformation.

  • Being more productive means using fewer resources. By dividing total output by total input, you may determine genuine productivity.
  • Managers may determine efficiency by dividing the average time to finish a project by the amount of time each team member spends on it.

Many managers monitor productivity rates by comparing employee productivity to hours worked. But it does not need to be a manual procedure. A good digital automation tool can eliminate the need for physical labor in this procedure.

Automated productivity measurement is possible with staff productivity tracking. Team members’ time tracking is captured by much automated time & attendance tracking software while they work on projects and tasks. This may be a quick and inexpensive way to gauge remote workers’ productivity.

Although useful, productivity indicators can only provide a limited amount of information on how your team handles its task.

A team member may, for instance, spend their whole workweek producing 10 graphic design projects for a customer. The other team members may view this production as being very productive. However, clients could reject the work if those initiatives are hurried because management prioritizes productivity over efficiency.

Which team member produced more if a different member of the same team generated four designs in the same amount of time and the customer approved each one with only minor changes?

What’s More Important, Productivity or Efficiency?

Efficiency is typically a more crucial indicator for employers to monitor since it looks at the quality of work instead of just the quantity. Both measures, nevertheless, are important for gauging employee success.

Many managers and team members strive for high productivity, but are we pursuing the wrong metrics? Not always, although it is crucial to keep an eye on both productivity and efficiency while monitoring outputs.

The quantity of work accomplished is measured in terms of productivity. Efficiency is a more accurate indicator of how effectively a worker can do a task. According to a Productivity Benchmark Report in 2020, our clients’ average activity rate was 49.6%.

This statistic suggests that workers work fewer hours than they do not. This would be regarded as being ineffective.

One can counter that workers were incredibly effective. This data implies they achieved their goals with less than half of the time they spent clocking in, assuming they generated enough outputs to maintain their employment. An activity tracking technology may, in principle, enable you to cut back on overtime expenses.

Of course, there are a variety of additional factors to consider. We advise managers to dig deeper into their productivity measures because of these different viewpoints.

You ought to try to gauge production and effectiveness. Many managers, however, ignore efficiency and simply monitor production.

Get a Time & Attendance Tracking Software

Having a time & attendance tracking software can ease this aspect of your business management with automation. It saves a lot of man-days for your managers, team leaders, and the HRs. However, you must do proper research before settling for one tool that fits your needs. It should ideally match your

  • Budget
  • Feature-requirement
  • Employee strength support
  • Multi-platform presence, etc.

So, get a time & attendance tracking tool now. For that, check out Mind Workplace, the ultimate workforce management software for your entire employee lifecycle management.

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