Introduction

Efficiency and Effectiveness

Types of questions asked to elicit effectiveness and boost productivity

Difference between Efficiency and Effectiveness

How do you measure productivity: examples to illustrate efficiency and effectiveness?

How do manage for results?

Conclusion

Introduction

In today’s business environment individuals are encouraged to be more intentional in the way they solve problems. You may choose to see the problem or the solution. The path you choose may be due to a default on the way you think or a learned behaviour. You may choose to improve our productivity or performance by becoming more proactive as per the outcome you want. Hence, you can be efficient, effective or both.

What is efficiency and effectiveness? Why do I need to be both efficient and effective in the conduct of my affairs? What outcome will I focus on when I think in these ways – being efficient or effective?

This article will seek to explain the meaning of efficiency and effectiveness. It will compare and contrast these concepts by looking at the outcome each tries to achieve. On the whole it will throw more light on the meaning of these words which will help us to apply this wisdom in the way we do things so as to improve our bottom line.

Efficiency and Effectiveness

What do these words mean to you?

The website: reference dictionary.com describes efficiency and effectiveness thus:

Effienciency described

1. the state or quality of being efficient; competency in performance.

2. accomplishment of or ability to accomplish a job with a minimum expenditure of time and effort: The assembly line increased industry's efficiency.

3. the ratio of the work done or energy developed by a machine, engine, etc., to the energy supplied to it, usually expressed as a percentage.

Effectiveness described

1. adequate to accomplish a purpose; producing the intended or expected result: effective teaching methods; effective steps toward peace.

2. actually in operation or in force; functioning: The law becomes effective at midnight.

3. producing a deep or vivid impression; striking: an effective photograph.

4. Prepared and available for service, esp. military service.

From the above definitions, it is clear that both words are words of performance or productivity. For our discussions, the first definitions are apt. Efficiency is the state or quality of being efficient – competency in performance. Effectiveness is an attribute; being adequate to accomplish a purpose – producing intended or expected result.

From the management standpoint, effectiveness seeks to do better what is already being done. It focuses on costs. On the other hand the effectiveness focuses on what to do. It focuses on opportunities to produce revenue, to create markets and to change the economic characteristics of existing products or markets.

Types of questions asked to elicit effectiveness and boost productivity

If you want to be more efficient in a performance driven market you need to frame your questions thus:

Don’t focus on the process where you ask; how do you do this or that?

Seek to focus on the identity of the product; and ask which of the products really produce extraordinary economic results or are capable of producing them?

Which of the markets and/or uses are capable of producing extraordinary results?

To which results should therefore the resources and effort of the business be allocated so as to produce extraordinary results rather than the ‘ordinary’ ones which is all efficiency possibly can produce?

Difference between Efficiency and EffectivenessIn book on Managerial Effective, Bill Reddin describes the difference between mangers who concentrate on efficiency and effectiveness:

Efficient and Effective mangers compared

Efficient Manger                                                                          Effective Manager

Do things right                                                                                Do the right things

Solve problems                                                                             Produce creative alternatives

Safeguard resources                                                                    Optimize resource utilization

Lower cost                                                                                     Increase profit

From the forgoing differentiation, it seems that being efficient seems to ask; “what else?” kind of question in a given situation or circumstance. Ultimately, the idea is to find how best to ad value in that particular circumstance.

Illustrate efficiency and effectiveness

The diagram below will be use to graphically illustrate the difference between efficiency and effectiveness in an industrial environment.

a. Efficiency                                                                              b. Effectiveness

Figure: 1 Efficient and effective departments compared

Adapted from ‘Who care wins- How to unlock hidden potential of people at work’ Peter Savage (1990); p. 2c

Efficiency and Effectiveness have impact in internal and external environment in any organisation and therefore can influence the bottom line. The diagrams above are five departments in an efficient company and five departments in an effective company. The steps from efficiency to effectiveness are made by finding the common purpose to which people can align so that everyone pulls in one direction. You can see from the diagram that whereas the organisation in terms of the efficient department is scattered, the efficient department is much focused and all actions of the different departments are aligned to the company’s goal.

How do manage for results?

In his book, Thinking for a change – 11 ways highly successful people approach life and work: John C. Maxwell said that, “Bottom-line thinking has to be built into the system of working and relating and achieving.” From the on set you have to decide the type of result you want to achieve and therefore set strategies and systems in place to achieve it. In his book he described five steps you need to reap the results of bottom-line thinking:

1 Identify the real bottom line

Get to the results you are really looking for, the true essence of the goal.

2 Make bottom-line the point

Your purpose must serve profit not the other way round.

3 Create a strategic plan to achieve the bottom-line

Identify the core elements or functions that must operate properly to achieve the bottom-line. This is the leader’s responsibility.

4 Align team members with the bottom-line

Team member must know the overarching goal of the organisation as well as their individual role in achieving it. See the Fig.1 above o effectiveness.

5. Stick with one system and monitor results continually

Develop a system to monitor progress continuously. Keep track of changes and adjust as deemed necessary.

Conclusion

This article has tried to differentiate between efficiency and effectiveness. Basically they are used to express productivity- relationship between input and output. The ratio effectiveness divided by efficiency is the productivity index. The output the effectiveness can be improved by through good management of resources consumed.

We can intentionally decide to be more effective in the way we do things so as to improve our productivity.