Productivity vs. Efficiency: Four Ways They Differ, and What Matters Most

“Profitability is coming from productivity, efficiency, management, austerity, and the way to manage the business. “ — Carlos Slim, Mexican business magnate

Most of us know the difference between effectiveness and efficiency. Effectiveness is doing the right things, while efficiency is doing things right. Their intersection yields high productivity. I even wrote a book about it: Doing the Right Things Right: How the Effective Executive Spends Time. But many people remain confused about the difference between productivity and efficiency. Too often, the terms are viewed as synonyms. They’re not. They’re related but certainly not interchangeable. Indeed, in some cases, they couldn’t be farther apart.

Productivity is simply output per unit of time. Efficiency is the best possible output per unit of time: i.e., doing things right. When you do the right things right, you hit your maximum level of efficiency and productivity. For example: If Andy produces 1,000 lines of code in a week while Brad produces 800 lines, it may look like Andy is the more productive worker; that’s true if he has a low error rate. But if his code requires 30 hours of debugging, and Brad’s works the first time it compiles, Brad is clearly far more efficient than Andy — and this plugs straight into his true productivity, his penchant to do the right things right. Ultimately, he’s more productive than Andy, though for some observers this fact may be easy to miss.

Here’s how to tell the difference between plain productivity and empowering efficiency:

  1. Productivity is quantity; efficiency is quality. The biggest difference between productivity and efficiency is simple: productivity measures bulk output; efficiency measures the proportion of output that works as intended. While it’s true, sometimes, that “quantity has a quality of its own,” the statement is more applicable to warfare than business. It’s often wasteful and hinders any attempt to maximize “right the first time” quality.

  2. Productivity is performance; efficiency is how well you perform. Just because you perform something doesn’t mean you do it well, though it may prove workmanlike. Consider daytime TV actors vs. their movie and TV counterparts. Daytime actors produce a new show every weekday. They tend to do a decent job, no knock to them; but movie and TV actors have weeks or months to perfect their work, plus special-effects budgets.

  3. Productivity doesn’t take underlying costs into account; efficiency does. Consider the coding example above. Andy did 1,000 lines of code that week while Brad did 800, so Andy was obviously the winner of the productivity award. But his code was so buggy it doubled the cost of production. Meanwhile, Brad’s code worked right the first time at half the cost of Andy’s. His more careful, methodical work saved money instead of just getting the product out the door ASAP.

  4. Productivity is a raw measure; efficiency is a refined one. Raw productivity shows how much someone accomplished. Efficiency reflects productivity that generates profit and should always serve as an input to productivity planning — so that, ironically, it becomes an output as well. Otherwise it’s Andy and Brad again. Productivity is just output; efficiency includes built-in quality control. It may not help speed productivity, but it ensures that what you produce fits your needs and requirements the first time, so you don’t have to spend more resources fixing it.

Productivity + Efficiency = True Productivity

Both productivity and efficiency matter, but in most fields (especially traditional manufacturing), productivity without efficiency is a business-killer. So, what if you produce 100 machine parts, if only 25 work as designed? Stretching to increase your productivity, whether your product is widgets, computer code, white papers, or archaeological reports, can hurt you more than maintaining a slower, more deliberate pace — because when you work too fast, you make mistakes you then have to spend precious resources to repair. If you don’t, and the products get to customers, who bring the errors to your attention in some dramatic way, then your business takes a hit and so do you. Look what happened to the Ford Pinto in the 1970s.

Do you really want a millstone like that around your neck when you can avoid it by intentionally coupling productivity and efficiency, instead of just assuming if you have one, you have the other? It’s clear that efficiency and productivity must be inextricably linked if you want to achieve true productivity — but they can exist separately, sometimes to devastating effect.

About Laura Stack, your next keynote speaker:

© 2019 Laura Stack. Laura Stack, MBA, CSP, CPAE is an award-winning keynote speaker, bestselling author, and noted authority on employee and team productivity. She is the president of The Productivity Pro, Inc., a company dedicated to helping leaders increase workplace performance in high-stress environments. Stack has authored eight books, including FASTER TOGETHER: Accelerating Your Team’s Productivity (Berrett-Koehler 2018). She is a past president of the National Speakers Association, and a member of its exclusive Speaker Hall of Fame (with fewer than 175 members worldwide). Stack’s clients include Cisco Systems, Wal-Mart, and Bank of America, and she has been featured on the CBS Early Show and CNN, and in the New York Times. To have Laura Stack speak at an upcoming meeting or event, call 303-471-7401 or contact us online.

Here’s what others are saying:

“What I enjoyed most about your presentation was that it was not only engaging but also practical in application. I’ve read everything from Covey’s system to “Getting Things Done,” and you presented time management in a way that is the easiest I’ve seen to digest and apply. Thank you for helping our system today!”
—John-Reed McDonald, SVP, Field Operations, Pridestaff

“Laura is an incredible speaker who takes practical information to improve productivity and efficiency and makes it interesting and fun! She has a great sense of humor and completely engaged our corporate and sales team. Laura motivated everyone to take steps to make their lives more productive and efficient.
—Molly Johnson, Vice President Domestic Sales, Episciences, Inc.

“Ms. Laura Stack’s program received the highest scores in the 13-year history of the Institute for Management Studies (IMS) in Cleveland! From the 83 participants, the workshop received a perfect 7.0 for “Effectiveness of the Speaker” and 6.8 for “Value of the Content.” Managers especially valued learning about task management, how to minimize interruptions, organizing with Outlook, prioritizing, effectively saying ‘no,’ how to set boundaries, and recognizing self-imposed challenges to time management.”
—Don Gorning, Chair, Institute for Management Studies Cleveland