Efficiency and Effectiveness very common terms used in the corporate world. It is very important for an organization to pay emphasis on both of these. Most of the time these terms are used together, but they are not interchangeable. While Efficiency is doing things right, effectiveness is doing the right things.
Efficiency is the ability to produce maximum output through given input, with the minimum wastage of resources like- time, energy, raw materials, etc. It concerns the best ways of doing an assigned job.
EFFICIENCY is doing the things right , which means
- Solving problems
- Safeguarding resources
- Discharging duties
Effectiveness concerns the best use of time which may or may not include the particular job in question.
EFFECTIVENESS IS DOING RIGHT THINGS, which means
- Producing creative alternatives
- optimum utilization of resources
- Producing results
Let us take an example of two car manufacturing companies A and B. Company A manufactures 100 cars, while company B manufactures 80 cars. Company A is more efficient than company B. 9 out of 10 cars manufactured by company A clear the quality test, whereas 10 out of 10 cars manufactured by company B clear the quality test, and therefore the company B is more effective than company A.
Sales teams have daily, weekly, monthly, quarterly, and yearly targets. If a salesperson is expected to make 10 calls a day and if he does that, he /she is effective in sales. Now, if we analyze, the number of calls that actually get converted into sales, the ratio will help us find the efficiency of the salesperson.
|Accomplishing a task or producing a desired result||Performing task in a best possible manner|
|Focus remains on achieving the objective||Focus remainson the maximum result with least time and effort|
|Doing the right things||Doing things in right manner|
|Higher quality result can be expected||Quick and intelligent work can be expected|
|Concern is about results, not use of resources||Concerned about the use of time, energy and resources, not necessarily the results|
|Not process and time oriented||Process and time oriented|
|Looks at whether the something is done or not||Looks at how the activity is done|
|No/less economic sense||High economic sense|
|Long term perspective. It is used to achieve sustainable growth and long term profits||Short term perspective. It is used to achieve short term goals|
|Effectiveness of strategies are measure||Measured in operations of the organization|
|Extroverted approach as it is measured between one or more organisations||Introvert approach as it measures the performance issues (cost, time and resources) within the organization|
|Effectiveness does not look at input to output ratio||Efficiency looks at input to output ratio|
|Effectiveness in a work/organisation should come first||Efficiency should be followed by effectiveness|
Which one to choose –
Effectiveness or Efficiency?
If you have an aggressive growth strategy and have resources, effectiveness is what you should choose. However, If you are managing a small company with limited resources, efficiency is the way. Finding the trade-off between the two is what most companies do.
How Can we improve Efficiency and Effectiveness?
1. Designing the right sales process
Any company which wants to improve the effectiveness and efficiency first needs to have processes in place and once these processes are in place the objectives can be set around these processes. Companies with a proper and defined workflow are known for achieving more.
Step 2: Continuous trainings
Continuous training can increase performance by 50% (especially in sales). Less than 50% of companies have a clear and defined training process. Your employee may know what is to do, but maybe ignorant about how to do it?
We need to reinforce the learnings by following a rhythm. The training sessions should be there for the employees on regular basis.
Also, training materials like synopsis, kits, kill sheets, etc should be available to the employees for future reference.
Step 3: Optimising activities
It is important to use KPI (Key Performance Indicators) and metrics to see what works and what does not work. Also to keep a tab on areas of improvement in terms of speed, quality, etc is important. Using dashboards to visualize trends, figures, etc can further boost performance.