Performance or Productivity: Where do you focus?

Every organization has been established with certain objectives to achieve. These objectives can be achieved by utilizing resources like men, machines, materials, and money. All these resources are important but out of these, the manpower is the most important. It plays an important role in performing tasks for accomplishing the goals. We often tend to be confused when it comes to differentiating between employee performance and productivity.

Employee performance can be defined as “the employee’s maximum capacity to accomplish his/her mission based on her skills and expertise”. Productivity refers to whether an employee reaches her peak performance level or not. One can measure productivity in various ways depending on the nature of work an employee performs1.

Employee Performance is Incremental

Every organization performs its task with the help of its available resources. Except for manpower (employees), other resources are non-living but manpower is alive and generating resources. Manpower (employees) utilizes other resources and gives output. If you would change just one thing about your company that would increase productivity, it should be your employees. According to the Association for Talent Development (ATD), companies that offer comprehensive training programs have 218% higher income per employee than companies without formalized training. These companies also enjoy a 24% higher profit margin than those who do not manage their employees2.

The performance level of an employee can vary depending on the job the person is doing and no two employees should have the same performance level. This is because performance level varies from person to person. Employee’s performance is skill dependent and there are different skills required for different works

You can measure an employee’s performance on their level of execution, quality of work, level of creativity, amount of consistent improvement, customer and peer feedback, revenue generated, responsiveness to feedback, being on time and on budget, and lots more2.

The effectiveness with which organizations manage, develop and stimulate their employees is an important cornerstone for how their employees perform. Because of this, people management has a significant impact on performance.

Every employee makes an individual contribution to the performance of the organizational unit and thus to the overall organization. If the performance of an organizational unit or individual employee depreciates, this will automatically lead to redundancy particularly in a competitive environment.

Employee Productivity is Exponential

Productivity is a measurement of the output produced using a number of inputs. The production process is a representation of the relationship between outputs and the inputs used to produce them.

–Diane Huber

Employee productivity (sometimes referred to as workforce productivity) is an assessment of the output of an employee or group of employees to determine whether the individuals are performing up to their maximum capability.

Employee productivity is driven by the environment and culture of the organization. The behavior, attitude, and performance of the employees are directly influenced by the culture of an organization.  It is very important for the employees to know the organization’s culture as it helps them in understanding the objective and philosophy of the organization3.

Organizations face management challenges frequently. The matter of motivating employees has posed a challenge to organizations around the world especially in companies where their level of productivity directly affects the profitability, growth, development, stability, and future achievements of the organization.

Organizations should take appropriate measures in working out the factors that motivate their employees and seek ways of ascertaining that they are adequately motivated in order to improve their performance and productivity levels. Employee’s work should be recognized and appreciated. A friendly environment where employees are motivated by their co-workers is a powerful tool that should be embedded in the company’s culture. “A single dose of motivation can go a long way to energize your employees”.

How to Improve Employee Productivity

The following are the management practices that help to improve employee productivity5:-

1.    Design economic incentives so employees at all levels of an organization can benefit from them. Organizations should not focus only on senior-level economic incentives. There is a natural tendency for employees to work more when they receive incentives because it serves as a source of motivation for them

2.    Provide positive, consistent, and regular feedback. The culture of providing regular and helpful feedback to employees in a manner that encourages them is a foundation of effective management

3.    Respect employees as individuals, in addition to the job they do. Respect is a powerful tool. You can use it to motivate employees. It makes them go the extra mile to help a company succeed

4.   Train employees for their respective jobs as an alternative to redundancy. Organizations should motivate their employees to take an active part in training programs organized by them. National Center on the Educational Quality of the Workforce conducted a study of more than 3,100 U.S workplaces and found that if there is an increase in workforce education by 10%, it will lead to an increase in employee productivity by 8.6%4

5.    Provide support for employees when they genuinely need it. It could take the form of emotional support, innovation support, and flexible support for a reasonable level of work-life balance. Management Support in times of needs is always appreciated and they have a long-lasting effect in building the employee’s loyalty

6.    Praise and recognition should not be withheld when warranted. A recent employee study showed that “recognition is often a more powerful motivator than money”

Employee performance and Employee productivity are two separate concepts and they should not be confused with one another. Being able to understand the differences between the concepts of performance and productivity is crucial since modern performance management links directly to the performance and success of an organization. But more importantly, performance is still individually linked. You can solve it by hiring higher skills employees or up-skilling your existing workforce. Productivity on the other hand has a widespread effect. The cause is more structural embedded at the company’s culture level. Hence, the fix also takes time. However, can it be prevented by focusing on culture in a strategic manner? You bet it can be. Reach out to us at [email protected] to know more.


  7. Chapter 3: Literature Review: “Performance/Employees Productivity Management”. PDF e-book.
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