Are Efficiency and Productivity the same?

Both could help Business Profits.

“ , ”

That was the title of an article in the Harvard Business Review by Michael Mankins in 2017.

WHICH IS MORE IMPORTANT – EFFICIENCY OR PRODUCTIVITY?

is usual expressed as the amount of effort in man hours required to accomplish a given task, when compared with the standard in that industry for the task.

In company A, if it takes 15 hours effort compared to the industry standard of 10 hours – activity is 66% Efficient, whereas f Company B does it 8 hours effort they 125% Efficient.

is expressed as the ratio of Output to the Input required. These are typical measured in Pounds £.

For a company C, that generates an Output worth £100 and incurs a cost of £80 (Man power effort, raw materials, overheads, etc), the Productivity would be 1.25

WHAT IS THE DIFFERENCE?

The real difference comes when looking at the strategy to improve the numbers.

, (headcount, hours of effort) — in order to improve profitability.

. Increasing the value of the output for the same input.

It is this difference in emphasis that leads to “Great Companies Obsess over Productivity”.

One way to is with .

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Please see Productivity FAQ page for details on some of the terms / jargon used above.