Is productivity or efficiency more important in business?


We often think of productivity and efficiency as two sides of the same coin. But for strategy, they’re both very different. Efficiency is about doing more with less while productivity is about doing more with the same resources. 

Despite growth in the service sector, the lack of productivity in the UK is causing the economy to stall. And Brexit certainly isn’t helping. The OECD warned the UK’s GDP growth rate will slip to 1% at some point in 2020. So when many businesses are struggling to grow, should the focus remain on efficiency or move to productivity?

Efficiency thinking

For the last three decades, efficiency has dominated management thinking. It’s been the focus of almost everything we do, likely due to the rise in technology over the years. Six Sigma, spans and layer analysis, and process re-engineering are all classic tools to help managers uncover where their businesses are wasting vital resources. However, this almost always comes down to labour hours or materials which are unnecessary to produce the same output. 

Where there is a lack of growth, like for many in the present economy, efficiency often comes from workforce reductions. Despite all the technology we have to minimise the number of worker hours and speed up processes, efforts to boost efficiency aren’t producing the same results they once did. 

Is digital transformation driving efficiency?

Some people disagree with the idea that technology is a cure-all for our inefficiency woes. They argue it isn’t the technology which is directly responsible for improved efficiency. Rather, new technology forces managers to reevaluate their business processes and think about new possibilities for their capacity to work.

This theory definitely holds some standing considering technology doesn’t always make processes more efficient. 55% of people said they spent 16 hours a week processing documents like emails, manuals, presentations, or contracts. This adds up to over three hours per day. Almost half of respondents (45%) said they spent four hours each week just following up on documents to see if they were received, approved, or acted on.

Moving towards a productivity mindset

If efficiency isn’t the answer to growth, perhaps productivity should be the focus. Rather than managing headcount and cutting things down to the bare minimum, we can instead focus on removing the obstacles to productivity. This means we can:

  • Eliminate drag – Most employees want to be productive but poor processes get in their way. Minimise the emails, documents, presentations, and chasing up which takes time out of their day. 
  • Assign star players to critical roles – When there are a few star players, they can have a disproportionate impact on execution and performance. But if they’re in roles which limit them, they won’t be effective.
  • Inspire our workers – Almost every employee can bring more to their role, but very few are sufficiently inspired to do so. Inspired employees are 125% more productive than those who are simply satisfied. 

Technology isn’t useless

While some say technology doesn’t directly lead to efficiency, it holds some of the best tools to help you execute your growth strategies. You can use technology to further your productivity mindset by using it to remove the obstacles to productivity.

Great software will make communication simple, reducing the need to spend time chasing up documents by invoking a simple, automatic notification system. Software which boosts productivity focuses on better forms of communication like instant messaging with automatically updated mailing lists and read receipts to avoid miscommunication and boost understanding. 

You should opt for software which uses data to inform management on employee productivity.  You can also use this data to provide accurate feedback in employee reviews to build goals and inspire employees to boost their productivity. 

Moving towards a productivity mindset might be the best thing for modern businesses. While technology isn’t always the driver, it is one of the most effective tools to drive growth.

Inform People offers large businesses a software solution to remove the obstacles to productivity. Inform People boosts communication and automation, and helps you use data to make informed decisions for a large workforce across offices, countries, and regions. Get in touch with us here to speak to one of our team.

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