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Do you know the difference between productivity and efficiency?

Productivity and efficiency are similar on terms, but they don't mean same thing. Due to the lack of knowledge, many people end up associating them to each other without considering what distinguish them.

Productivity and efficiency are similar on terms, but they don’t mean same thing. Due to the lack of knowledge, many people end up associating them to each other without considering what distinguish them.

Speaking about the administration of a small business specifically, productivity and efficiency are determining factors for the definition of a business with market value and a good chance of working out. Learning about efficiency and managing productivity, bearing in mind the difference between them, can lead you to the path of success.

In this article you will understand what productivity means apart from efficiency, and what the differences between these so important factors are for a company to pursue a solid path in a so competitive market.


When it comes to dealing with the efficiency, we are talking about what is competent and performs the functions in the correct way. If you want to succeed in your segment, being effective is essential. Efficiency is not a skill that develops itself. If you are efficient, you are also organized, compromised, concentrated and creative.

The analysis of the company’s efficiency evaluates the levels of accomplishment in the productive part of the organization, that is, efficiency of the production means how much it is produced in relation to how much it should have been producing.

Small businesses, or those that are starting, rely on efficiency patterns to identify what can be cut from the budget to reduce costs and invest only in what really brings the expected results. In addition to that, efficient systems help increase profits and production indexes.


Productivity is the ratio between the resources used and the final production. It’s the result of the ability to produce, create a product. Productivity is the efficiency of any business. For example, in the industry sector productivity is directly linked to production efficiency.

Productivity calculates how resources will be used in relation to the company’s goal, allowing you as entrepreneur to have a broader vision of where resources are being used.

Do you know the difference between productivity and efficiency?

Up until now it was very clear to you that these two factors are essential and are part of your company’s development. A good example to facilitate understanding of the difference between productivity and efficiency is thinking of quantity and quality. We should think of the quality of products or services despite the growing demand in producing a greater quantity.

In the case of large companies, because they have sufficient resources to do whatever the investment is, managers don’t even realize if there is lack of efficiency. In the case of small companies, the situation changes. The inefficiency affects all businesses, however in small business if these inefficient processes are not identified so they can be transformed, the company cannot survive or won’t even grow.

Inefficiency has cost and it is very expensive, no matter what your business is. To cope with this problem that is so common, you will need to determine productivity measures to indicate the level of efficiency in each of the internal processes. Many of these problems are easy to be solved.

The big question is, as you don’t follow internal processes evaluating them to see if they really work, your company loses resources. The administrative problems, even with the impact that cause in the company, are easier to be solved than the problems regarding your team.

Working on your team’s personal productivity for them to be effective and deliver results is a daily work that never ends. If you hold a leadership position, establish a dialogue with your staff to get to know them better, knowing what their ambitions and needs are.

This dialogue can help you identify where the points that you need to work to motivate your team are, causing them to be productive and contribute to efficient processes.

6 tips to increase your productivity

Learn some tips for you to improve your company’s productivity, adapt its processes and see how many resources and the time you will gain from these new habits.

First of all, remember that your company is made out of people who organize themselves in processes to make it work, i.e. a company is made out of people and the more productive they are, the more effective will their processes be.

1. Identify the flaws

Identify the flaws that compromise productivity and evaluate the processes of each department. Make a thorough analysis to know where you are injecting money and how it has been spent. Gather as much information as you can before you take any decision.

Monitoring internal processes allows you to have insights to redesign them and propose improvements to increase productivity. Doing it assertively is a great challenge, that’s why we talk about the importance of having relevant information as a basis for any decision. So, you can automate processes and cut unnecessary expenses.

2. Planning is never too much

If you’re starting to undertake, don’t ever forget the strategic planning stage. Planning is never too much and it’ll make the difference for everything that is done in an organization.

No matter if it’s big or small, your company must not take a step without planning the actions. Planning is defining the institutional behavior according to the goals that need to be achieved. There is no success without planning.

On a daily basis, you will observe that the situations don’t behave exactly as stipulated by the planning. So, don’t let adversity affect the productivity of your company. Make the necessary adjustments.

3. Establish strategies

Your planning must contain all the strategies, including a preview of all the risks that can happen and how you should act to solve the problem as soon as possible. Learn the importance of strategy and planning for organizations in times of crisis.

A company is never stable, once the market is not stable. Thus, control all the features and how you make the investments at most. Ups and downs, knowing how to seize opportunities, confront crises and perform cost-cutting as well as changes in processes require strategies that need to be evaluated periodically.

A tip for you (small and medium-sized company) is: maintaining the efficient processes and with high productivity is investing in technology to reduce time spent on mundane tasks. It is very likely that your team is reduced and there is no time left to perform parallel tasks. Use the technology and let your employees work focused on results.

See other tips to create strategies for your company.

4. Motivation is fundamental

Creating a nice, comfortable and harmonious work environment is the starting point to have an integrated, organized and cooperative team. Motivating is not only about praising. It also involves offering good physical conditions for the employee.

Having a comfortable chair that won’t hurt their back, office supplies available, a specific place for a coffee in the middle of the day etc. Some companies, mostly the startups, offer a space of relaxation (and integration), as, for example, television, books, snacks, games and championships played among employees.

Motivation can be worked in a variety of ways and starting with organizational environment makes professionals feel more comfortable to perform their tasks hence they will produce more. Evaluate your resources and see what your company has as a benefit (differential) for the team members.

5. Train your team

A productive professional is the one who can handle the job and is always improving its quality. The efficient professional is the one who always finds the best ways to solve the demands.

For that, this professional needs training to keep up with market trends, reducing the likelihood of errors and making them more confident to dare in innovative processes.

6. Learn to communicate

Knowing how to communicate is not the same as having the ability to talk to the team. Communicating is the ability to know when and how you should speak with each employee.

In addition to leader communication with the team, you need to make sure that the communication between the staff works so then there is no lack of information and the productive process won’t be harmed.

Invest time in planning strategically, eliminating the barriers of communication rather than spending money repairing damage caused by lack of information. A way to solve this problem is to run regular meetings.

Nobody likes meetings that last all day, then the proposal must be short and objective meetings just to align the internal flows. You take the guidelines to be discussed and lead the meeting in an organized way, with a scheduled duration.