The Difference Between Performance and Productivity

When it comes to the definition and the differences between employee productivity and performance, there remains a great deal of confusion. Though the two terms are often used interchangeably — even by human resources professionals and senior managers — there are subtle differences between these two concepts.

Let’s explore the definition of employee performance and productivity and why this distinction matters — and how companies can put measures in place to support and boost productivity in the employee and the organization overall.

Performance at Work

What people often forget about employee performance is it is a mixture of tangible and intangible factors. We sometimes use it to describe the ability of an employee to complete his or her work to a certain standard, based on their goals or objectives. However, performance entails so much more. The performance of an employee also includes their communication, punctuality, willingness to collaborate, and their general attitude at work. When considering employee performance, as well as efficiency, you need to consider how they treat their coworkers. Are they helpful and encouraging — or are they hostile and irritable?

The tangible and intangible factors of employee performance matter because both can have a significant impact on the overall performance and culture of your organization. As senior managers and HR executives, you set expectations and standards regarding employee performance. These expectations shape the employee experience, can affect performance, and certainly have an impact on employee productivity. 

Exploring Productivity

Traditionally, productivity was a measure of output over time. The term originated in the nineteenth century and centered on agricultural output. Productivity was used to describe what types of soil, plots of land, or varieties of plants produced the greatest yield. This information was tracked over time to determine what to plant where, and at what time of the year.

In business, we usually use “productivity” to account for the amount of work completed, the quality of that work, and its worth in terms of organizational objectives. Importantly, productivity is related to the number of hours worked or the money invested. In this way, productivity is almost always quantitative. Ideally, companies are looking for the highest possible outcome (productivity) for the minimum amount of input.

Many factors influence productivity. There are also a huge amount of misconceptions concerning it. These misconceptions can be damaging to employee wellbeing, resulting in lower levels of productivity and efficiency for your organization.

Here are just a few misleading (but common) beliefs about productivity:

1. More hours worked equals increased levels of productivity — This misconception is not only incorrect, but it’s a recipe for employee burnout. Research has shown productivity dramatically falls after an employee works 55 hours a week. In fact, an employee who works 70 hours produces no more with the 15 extra hours. It is for reasons such as this many companies are experimenting with reducing the traditional 40 hour work week. Your employees aren’t robots. They can’t work all hours in a day and expect to be consistently effective.
2. Downtime means time is being wasted — For an employee to give work their all and to be productive, they need time to recuperate. They need downtime. They need to get away from their desks, stretch their legs, or engage in watercooler chats to interact and connect with their colleagues. Even a five-minute social media break can be enough to refresh an employee mentally.
3. Multitasking means more is getting done — Science has shown we’re not as good at multitasking as we think we are. Data shows that humans can’t do many things simultaneously. Instead, they switch their attention from task to task. They can do this quickly, but it always takes a few seconds to readjust, to acclimatize. This adds up, leading to wasted time.

Why is it Important to Differentiate Performance and Productivity?

So, knowing all this and understanding the subtleties between the different terms, we need to ask — why does it matter? Why do we need to distinguish performance from productivity? Why is it a performance management concern?

It is because while performance and productivity are different concepts, they are very much linked. By monitoring employee performance, (at WorkTango we prefer to think of it in terms of employee success), it is possible to influence and improve employee productivity. Managers — through regular performance or employee success conversations — can get to grips with employees, their morale and engagement levels and their attitude towards certain workplace processes. Managers can also pick up on issues such as workplace bullying — a behavior that is certainly going to impact productivity. Managing performance and having the right performance management processes in place can help shed light on important issues, allowing changes that will influence and enhance overall productivity. 

Increased performance doesn’t necessarily equate to improved productivity. Behaviorally, an employee might be meeting all of the company’s expectations. They might also be achieving all of their assigned goals.  But they aren’t producing anything of real significance. This doesn’t necessarily mean the employee is at fault. However, it could mean they have inadequate goals unaligned with overall company objectives.

How Can We Increase Productivity in Business?

How can we help employees be as productive as possible, thereby improving the bottom line and helping us compete in difficult industries?

1. Be aware of productivity rhythms — We now know employees work best at different times of the day. Some employees are more productive in the morning and early afternoon, while others are more productive in the early evening or at night. Allowing employees to work to their own rhythms will yield promising results — if this is something your business can accommodate.
2. Encourage regular breaks — As mentioned above, frequent breaks result in more refreshed employees who are less prone to burnout. Encourage employees to take time away from their work so they can attack it with real enthusiasm when they return. These breaks include short breaks, lunch breaks, and vacations.
3. Use employee strengths to your advantage — We all work best when we are doing what we’re good at and what we enjoy. Determine what strengths your employees have. Then, find out how you can use these strengths strategically to further your organizational objectives, rather than placing all your focus on weaknesses.
4. Provide your team with the right training, tools, and resources — An employee can only be productive if they have proper training and tools to perform the function of their role. 
5. Provide means for in-the-moment feedback and team communication — Technology has advanced rapidly over the past decade, allowing for the delivery of instantaneous feedback between employee and manager. Employee collaboration tools also allow employees to communicate and ask each other for their insights. This communication is conducive to increased productivity and efficiency.
6. Stop micromanaging employees — Everyone works their way. Hovering over an employee’s shoulder and insisting they work in a particular way will likely hold that employee up and halt productivity. Allow the employee to find out how they want to work and what works well for them
7. Hold regular check-ins — Managers should hold regular performance discussions. These discussions are an opportunity for manager and employee to cover progress and what can be done to improve productivity. How can the organization improve efficiency, and what can the employee do to improve?
8. Ask employees for their feedback — Employee feedback is hugely important for an organization to evolve, and become more productive. Ask employees for their thoughts on existing processes: what can be streamlined, and what red tape should go? You can do this either through informal discussions or more formally, through employee surveys.
9. Set appropriate goals and objectives — The productivity of the organization will only increase if it sets appropriate goals and expectations for employees. Take the time to address your objective-setting process. Are your employee’s goals helpful? Are they aligned upward, with organizational objectives? Does the employee understand how their work contributes to the company’s goals? Giving your employee context on their work will provide them with a sense of purpose that will spur them on to be even more productive.
10. Give your employees recognition and rewards — Employee recognition, as Gallup puts it, is a low cost but high impact way to increase productivity and loyalty to your company. Don’t forget to show your employees how appreciative you are of their hard work and their effort. Your reward will be more engaged, more productive employees who will be eager to go that extra mile.

About the Author: Stuart Hearn is an HR speaker and Founder and CEO of Clear Review, a performance management software company that helps organizations move towards a more agile, flexible, and productive way of working.