Differentiating Between Employee Performance and Productivity

In today's workplace, there is often confusion when it comes to distinguishing between employee performance and productivity. The subtleties between these two concepts often escape us, and it is important to disentangle these distinctions. Productivity management is usually the responsibility of human resources (HR), while performance management is an effective tool for implementing the overarching corporate strategy.

Over the last decade, there has been a significant shift in organizations that now closely link performance to their strategic business goals. This innovative approach distributes responsibility evenly between employees and employers and promotes alignment between individual goals and larger company goals. This evolved performance management model drives employee engagement and gets them to do their best work. In summary, this paradigm seamlessly integrates individual performance into an organization's business plan.

Unfortunately, the prevailing narrative often portrays performance management as a looming "big brother" imposed on employees by HR. As a result, many believe it is incompatible with personal development and maintaining a positive workplace culture.

Understanding performance and productivity

Performance can be described as “an employee’s ability to complete his or her job in accordance with the company’s expectations.” To illustrate: Imagine an actor on a stage. Both the theater group and the audience have their own expectations. Above all, it is expected that outstanding performance will translate into higher ticket sales. The situation is similar when increasing the performance of a vehicle when it comes to covering longer distances and consuming less fuel.

However, if we want to quantify a person's performance (i.e. his output), we should use the term "efficiency". Depending on the type of work, an employee's productivity can be assessed in different ways. For example, in a call center, the number of calls made in a week serves as an indicator of productivity for a customer service representative. However, the employee's performance will be evaluated based on the quality of these calls and compliance with the company's customer service standards and procedures.

For a comprehensive view, it is essential to link productivity with efficiency, i.e. H. essentially doing the “right” things. For example, a sales representative might set a goal to meet five prospects every week and have at least a second conversation with one of them.

Why the distinction is important

Understanding the differences between performance and productivity is of utmost importance because modern performance management is inextricably linked to an organization's performance and success. It promotes accountability and provides insight into what works and what doesn't in a company.

To successfully implement this model, performance management is synchronized with the five phases of the performance cycle: planning, monitoring, implementation, evaluation and recognition. These phases correspond to a continuous improvement cycle based on the Plan-Do-Check-Act framework, also known as the Deming Cycle.

For this model to be successful, regular management and review of employee performance is essential. After setting key goals, employees work with their managers to set personalized key performance indicators (KPIs) that align with company goals. Depending on the dynamics of the organization, employees will self-manage, evaluate and regularly update their performance.

How employee performance and productivity affect company culture:

Cultural Expectations: Employee performance reflects and reinforces the cultural expectations within an organization. A culture that values high performance may foster a climate of innovation, excellence, and accountability, while a more relaxed culture may emphasize adaptability and work-life balance.
Values Alignment: Employee performance that aligns with an organization's core values can strengthen organizational culture and create a shared sense of purpose. Values-based cultures tend to be more cohesive and employee-oriented.
Recognition and feedback: Performance reviews and recognition programs can significantly influence culture. Frequent, constructive feedback promotes a culture of continuous improvement and learning. On the other hand, neglecting feedback can lead to frustration and disengagement, which impacts the entire culture.

Key insights

Companies are increasingly communicating their management's goals so that employees directly affected by these goals can adjust their own goals accordingly.

Built-in performance management tools, like IceHrm, provide tools to help you monitor the progress of employee goals. These tools are becoming increasingly important because they can make all employees aware of the different elements of the performance management process. Each employee takes responsibility for their performance plan and goals, which are directly linked to the company's overarching goals.

This approach fits seamlessly into the concept of giving employees more autonomy while promoting their well-being in a positive work environment. It may require more upfront work, but it streamlines compensation and benefits management and improves HR efficiency.

In the highly competitive corporate landscape, performance is the be-all and end-all. The concept of performance and the use of tailor-made tools are therefore indispensable.

Check out IceHrm's performance management module to see how it can help you access your employees' performance.