Productivity vs. Efficiency: How To Improve Both at Work

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One of the biggest challenges for any entrepreneur is finding the time to get through your seemingly endless to-do list. Launching a new venture requires consistent productivity and efficiency.

While you may hear some people use the terms “productivity” and “efficiency” interchangeably, they’re different — and understanding the differences between the two can be the key to maximizing both.

The definition of productivity and efficiency

Productivity measures rates of production. It refers to the number of goods (or output) you can produce in a given time frame.

Efficiency measures how many resources you need to complete a given task. In many cases, you’ll reference time when discussing efficiency, as you want to understand how much time it takes to complete the task.

The difference between efficiency and productivity

Productivity refers to the amount of work you can get done in a certain amount of time, while efficiency measures how well you use your resources (such as time) to get a task done.

To track productivity, you hold time constant and look at the total level of output. In contrast, measuring efficiency lets you compare resource usage by holding the task or output constant.

Increasing productivity means you create more products (finish more work) in the same amount of time. Increasing efficiency means you use fewer resources (or less total input) to complete the same amount of work.

Let’s say you have a sales department with two team members. To compare one employee’s productivity to another, you hold time constant (say, one hour) and look at the difference in output.

In this period of time, John makes 10 cold calls while Mary makes eight. In this case, John is more productive because he did more work than Mary in the same amount of time.

To compare the efficiency between the two, you give them the same amount of work and see how long it takes each of them to complete the job.

So, for example, you give each sales rep a call sheet with 50 people. John finishes his list in five hours, while Mary takes six hours and 15 minutes. These results tell you that John is more efficient because it took him less time to complete the same task.

Productivity and efficiency are different, but the two go hand in hand. Increasing your level of efficiency is one of the ways to ensure high productivity.

Effectiveness refers to doing the right tasks or those that are most related to achieving results. Using the previous example, since John was more productive and efficient, you might assume he was also more effective.

But that’s not necessarily true.

Mary might bring in more revenue than John, making her the more effective employee. How might that have happened?

Here are some steps Mary could have taken to be more effective. She might have:

• Spent more time researching her leads and personalizing the calls.
• Prioritized her list to find the leads more likely to convert.
• Suggested higher price tiers or additional services to increase revenue per sale.

Ultimately, productivity and efficiency don’t always guarantee effectiveness. Sometimes they mean you’re good at keeping yourself busy.

Efficiency and productivity in the workplace: Six tips for improving both

If you know how to focus on the most impactful tasks, then adding productivity and efficiency can boost your effectiveness. Here are six best practices to help you increase efficiency and productivity in the workplace.

1. Consolidate software processes

SaaS products help founders and lean startup teams get more work done with fewer people. However, having too many apps can start eating into the productivity benefits they provide.

According to BetterCloud’s 2021 State of SaaSOps Report, organizations used an average of 110 SaaS apps over the year.

Switching between different platforms and software dashboards can be time-consuming, especially for founders and startup employees who often wear multiple hats. Consolidating your tech stack can improve overall efficiency by reducing switching costs and creating centralized data sources.

Grace Baena, director of brand at Kaiyo, an online marketplace for pre-owned furniture, says founders should “look for platforms that let you manage multiple tasks — such as customer tickets, marketing, and hiring — from one place.”

2. Document process before you scale

When you first start your business, much of the work is ad hoc. However, as you grow your workforce, you’ll need standard procedures in place to ensure new employees can achieve a high level of production right away.

Documenting your processes lets you pass on experience and knowledge to new hires by showing them what has worked best.

“Document processes early. When our team doubled in six months, process documentation meant that new hires know what to do 80% of the time,” says Eduard Dziak, founder of marketing publication B2BDigitalMarketers.

Creating scalable processes gives you a structure that can support the addition of new employees, without losing productivity during transition periods.

For instance, you can create a sales playbook that includes your discovery call questions, sales enablement documents, and CRM steps. You can also create checklists for new hires to refer to, customer onboarding steps, and your process for creating and publishing content.

This way, a new employee can immediately start bringing in revenue while they’re getting settled.

Plus, documenting a process can help you review and identify opportunities to improve efficiency.

3. Get rid of excess meetings

In a 2022 survey by Ragan, 59% of respondents listed unnecessary meetings as a top productivity drain, while 56% reported inefficient meetings.

As a founder, you want to avoid spending all day in meetings by blocking out chunks of time on your calendar that you dedicate to work. Try to set boundaries on your time and make sure you have enough hours to be productive.

If meetings are unavoidable, aiming for shorter durations and strict ending times can encourage people to be more efficient in how they communicate.

4. Use time boxing

Time boxing is a tool that helps you optimize your calendar by setting a limited amount of time for a specific task. A study of the 100 most useful productivity tips identified time boxing as the most effective strategy.

If you can’t finish the task in the time frame you set, you move on to your next scheduled block. The idea is to give yourself enough time to get high-quality output but limit yourself so you don’t spend hours trying to perfect every detail.

This time management tool offers several benefits, such as:

• Making you prioritize.
• Limiting opportunities for procrastination

5. Delegate and outsource

As a founder, it can be difficult to transfer control and responsibilities to others as your team grows. But if you don’t learn to delegate, you’ll become the bottleneck in your own company.

If you don’t have a large team you can delegate to, try outsourcing. According to a 2021 Deloitte report, 80% of the respondent organizations outsourced payroll, and 73% outsourced customer service.

You can outsource functions with lower strategic impact and a higher level of repetition to give you more time to focus on high-impact work like raising money. Outsourcing also creates more flexibility in your workforce because you don’t have to hire as many full-time employees early on.

6.  Leverage automation

Jamie Irwin, founder of SEO agency Straight Up Search, recommends entrepreneurs “automate wherever possible, such as appointment scheduling, data entry, and social media posting.”

That’s where SaaS apps come into play again. BetterCloud’s report found that SaaS-powered companies automate 45% of their SaaS workflows and expect that number to reach 80% in the next few years.

As the popularity of SaaS tools rises, automation will become a necessity for companies of all sizes.

Similar to outsourcing, automation removes redundant and repetitive tasks from your to-do list and opens up time for more important work. For example, you can  use AI tools to draft emails, do research, and more.

It helps lessens the amount of brain power you have to use and lowers your chances of experiencing burnout. Plus, it promotes efficiency and reduces opportunities for manual errors.