Michael Mankins, a partner with Bain & Co., argues that there’s a critical distinction between “efficiency” and “productivity”. A company concerned with efficiency wants to accomplish its goals with minimal resources by eliminating waste. Often, that means workforce reductions. Improved productivity, meanwhile, means maximising the utility of existing resources by removing barriers, as Mankins writes for Harvard Business Review. And this distinction matters, he says, because falling S&P 500 earnings have left less profit to be wrung from “efficiency”. He instead suggests improving productivity by inspiring employees, identifying those who are “difference-makers”, and eliminating the bureaucratic structures and processes that consume people’s time.
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