The Difference Between Employee Performance and Productivity
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Employee Performance and Productivity

The Difference Between Employee Performance and Productivity

We often tend to be confused when it comes to making the distinction between employee performance and productivity. Generally, we don’t manage to grasp the subtle differences between the management of these two concepts. While productivity management comes down to HR management systems, performance management actually is a tool that can be used to rollout the overall corporate strategy.

The last decade has seen many organisations link performance back to strategic business goals. They offer a way to share the responsibility equally between the employee and the employer, which supports the alignment of individual goals with more global corporate objectives. Managing employee performance in this way favours employee engagement and encourages employees to give the most of their abilities. In summary, this more recent performance management model integrates individual performance into an organisation’s business plan.

Unfortunately, it is still customary these days to see people associate performance management with a “Big Brother” like pressure instituted by HR upon employees. Hence why many believe that performance management is incompatible with personal development and the establishment of a positive workplace culture.

Defining performance and productivity

Performance can be defined as “the ability of an employee to accomplish his or mission based on the expectations of an organisation”. For example, let’s consider the performance of an artist on stage. Both the theatre company and the public will have their own expectations. As a fact, we expect an excellent performance to generate more sales. Similarly, we talk about better performance when a vehicle can run longer distances while using less fuel.

However, if we want to measure the performance of an individual (i.e. his or her output), we should employ the term of “efficiency”. Depending on the nature of work an employee performs, his or her productivity can be determined in various ways. For example, in a call centre, the number of calls managed during a week can be used as an indicator of productivity for a customer service agent. That said, that person’s performance will be judged based on the quality of those calls in comparison to the customer service standards and procedures established by the organisation.

For a complete view, it is necessary to link productivity with efficiency, which essentially consists in doing the “right” thing. So to illustrate, a sales person could have for objective to meet with five prospects each week AND obtain at least a second meeting with one of them.

Why is the distinction important?

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 organisation. It also creates accountability, which means that it brings visibility on the things that work and the ones that don’t within a business.

To implement this model successfully, we need to associate performance management with the five phases of the performance cycle: planning, monitoring, implementing, rating and rewarding. These phases are part of a continuous improvement cycle based on the Plan-Do-Check-Act framework, also called Deming cycle.

In order for this model to work well, it is important to manage and review employee performance periodically. Once major goals are established, each employee can meet with their manager to establish individualised KPIs that are in line with the corporate objectives. Depending on the challenges of the organisation, employees will manage, evaluate and update their own performance on a regular basis.

What you need to remember

More and more organisations have started to communicate their executive management’s objectives so that employees, being directly impacted by those objectives, can adjust their own objectives consequently.

Integrated performance management tools such as EmployeeConnect, contain performance dashboards that allow to create this performance follow up. These performance management tools are becoming more and more popular because they allow all employees to be aware of the different elements that are included in the performance management process. Each employee can be responsible for his or her own performance plan and objectives, in direct link with the enterprise overall goals.

This approach integrates completely with the idea of giving more autonomy to your employees while also maintaining their wellbeing in a positive work environment. Even if this new form of performance management requires more work to be setup initially, it will make the administration of rewards and benefits much easier. Thus affecting positively HR’s performance!

To thrive in a highly competitive environment, organisations need to be able to perform. That’s why it is essential to make use of the concept of performance and use adapted tools to manage it.

Oriane Perrin

Customer Success & Growth Manager