Productivity vs Efficiency: what is the difference?

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When people talk about productivity and efficiency, they use these words as they have the same meaning, but in reality they have a different focus. Hence, people must understand this differences to avoid misunderstandings.
Nowadays, when many companies want to grow, their leaders have to create a productivity mind-set in their organizations and cut all possible barriers. Yet, this approach differs from the focus on efficiency, that is strongly related to a management thinking that was dominant during the last decades. However, all these aspects are very important if a company wants to boost profitable growth. But what exactly do we mean when we say “productivity” or “efficiency”?

Productivity shows you the rate at which products are being developed or a task is being completed. For measuring productivity, you have to take into account some additional aspects such as the type of work, is it a physical or office, does it require some special requirements.
Efficiency is the comparison between what is really being done or produced and what can be done, taking into account the same amount of resources (money, time and labour). In other words, efficiency measures whether there is any waste in your company.

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Productivity is about working smarter, not harder, while efficiency is doing more with less. Productive organizations are working on increasing their performance by changing the way people work to be more effective and reach better results. In regard to productivity, the assumption is that there is future work to do to raise value. So when an organization focuses on improving its productivity, they typically focus on things that matters to the customer in order to drive results that are required for an organization.


If a productivity is about doing new things, creating value and results,efficiency is lowering the costs. It focuses on reducing the cost of the work by finding cheaper way to do the same thing, it has an assumption that there is some waist to be cut. By recognising the potentialities for future value, management creates contexts to engage its people in what would happen to support growth. Hence, when organization is focused on efficiency, it tries to consolidate and standardize its work to gain cost efficiency through scale. Also, investing into sources for competitive advantage and managing for a positive result.

Yet, you can’t have one without the other and they both are very important parts of any successful company. Just remember the difference to avoid the confusion. You can read more how to boost your company’s productivity Be Productive by Choosing Productivity Scenarios: the Efficiency of Collaborative Approach.