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Don’t mix up Productivity, Performance and Efficiency: they are so different things!

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Confusing performance, productivity and efficiency is like talking about “ragù, lasagne, tasty” for a recipe. They are all elements that can make up a dish, even if not necessarily, and whose combinations are not a guarantee neither for success, nor goodness. That is, you can be performing yet not productive, you can also be productive yet not performing, and the only certain thing is that without productivity and without performance you can not be efficient.

Often in my career I meet people, colleagues, companies, managers, who ask me to operate to “increase productivity, in short, the performance, or as they say, the efficiency of the company”. As for the lasagna mentioned above, they are all very distinct issues that deal with different functions within– for example– a company. Let’s see them and understand why they are so distinct and complementary at the same time!

Performance

The performance, from English to perform, has to do with the execution of a certain action, and it has to do with the way someone performs a certain task in order to lead it to success. The better the performance, the better the task is brought to success; and the meaning of better depends on the type of task:

  • for a restorer watchmaker, it may be better to put a watch back in the most functional way possible, at the expense of time for the quality
  • for a runner, better can mean in less time, or be able to run faster to improve and increase the chances of winning any eventual races
  • for a worker in the assembly line, better can mean within a predetermined average time interval for the production of the pieces

I already know that you will be led to think “yes, but the restorer can not take 10 years, and the runner has to do more races, and the worker must guarantee quality”. All true, that’s why the concept of efficiency and productivity comes into play!

Efficiency

Efficiency has a meaning logically derived from its etymology: ex- as an intensive particle, and -fàcere or that produces an effect. In other words, efficiency makes production with a certain intensity (other than effective, which instead represents a certain virtue in efficiency, or an intense production repeated over time, naturally). Therefore, in the cases mentioned above, supposed to maximize the revenue on the basis of the necessary effort, we will have:

  • the restorer will be efficient when he can repair a watch making it working again in proportion to the cost of the repair, taking advantage of the majority of pieces already owned, and the skill shown by the person to produce an effect on the broken clock (that is, make it work again)
  • the runner will be efficient when he will succeed in obtaining certain times in subsequent tests, guaranteeing his body a recovery from the physical stress compatible with the races that the athlete wants to support, or that it is necessary to support according to his own sporting society
  • the worker will be efficient when he will produce a certain number of pieces in his turn, according to the company objectives, and according to the qualitative terms imposed by his company or production line.

Then, starting from performance and efficiency, the Companies, the sports teams, and in any case all the people who want to maximize their performance and efficiency by finding the optimal balance for their goals, are committed to maximizing their productivity.

Productivity

Productivity is the measure of efficiency in the production of a certain effect, performed according to a certain performance. In other words, when companies talk about KPI (Key Performance Indicators) it is said that you want to optimize a particular action or group of actions, able to produce a finished result, obtaining the maximum of a certain set of units of measurement. In short, productivity has to do with the concept of goal, and we will see, as always, according to the examples made above:

  • the restorative watchmaker, may wish to maintain a parcel / performance ratio at a certain value, guaranteeing 90% of success in the restoration, or 75% of functionality with respect to the original object, managing to have minimal revenues of a certain amount
  • the runner will draw up a training and recovery program that allows him to be at the top for 3 races out of 20 in the year, and wants to strengthen his body in order to improve his personal time of X seconds in 1 year
  • the worker will have a maximum productivity when he will be able to produce in his own line a certain number of parts per unit of time, with defects of less than 5 parts per million, to obtain the production bonus guaranteed by the Company

Conclusions

In a very basic way, efficiency consists in the best use of the managed primary resources (and it is measurable). Productivity means maximizing output with the input elements available. Performance is the measure of the quality of the output.

As you will have understood, productivity and performance have operational and economic implications for any company, therefore they should be regulated before defining any measure of efficiency in the production of any result. The greatest benefits of a correct and fair estimate, in the case of any company, are:

  1. the best use of staff and its preservation
  2. a culture based on doing well
  3. motivation and satisfaction at work
  4. better communication (thanks to shared objectives) and agreement with department managers and up to top company managers
  5. identification of rewarding concepts or sanctions (especially if the rules are infringed, for example by sports teams)

Among the main useful consequences that a good design in terms of productivity, performance and efficiency guarantee to those who promote them, there are:

  1. to manage and measure these parameters in detail, considerably improves the control cycle for the definition of HR interventions (Human Resources, or Personnel Management) as non-exhaustive: awards, promotions, substitutions
  2. the presence of simple shared metrics, easy to check and to compare, optimizes productivity and performance because they make clear what to get, to anyone
  3. the overall improvement thus obtained improves the individual, the team, and the entire organization

So, in order: first the performance, to maximize productivity, from which it derives– as simple as that– efficiency. This is why I have chosen to be a team productivity coach: I can connect your performance with your efficiency, improving both, through the optimization of your productivity.

 

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