Though Similar in Looks, They Are Different
• A good number of people, at times, feel confused between the exact difference between the two terms "effectiveness" and "efficiency".
• Everyone wants to achieve success (and thus happiness) by accomplishing one's goals in a short period of time with minimum resources and therefore, he must know exactly what effectiveness means and what efficiency means.
• One must do both- effectiveness as well as efficiency. Yet, effectiveness comes first, always.
Compare the Two
• In organizational terms, minimization of extent of expenditure of resources (including money, time and information) in a process to get an output (result) in called "efficiency". "Effectiveness" is how well the process achieves its desired output and the desired output is what its user or customer requires- are the chosen output and process the right ones?
• So how fast I did a job is "efficiency" using the given process (selection of process or the job itself may be a question mark- either one of them or even both may be non-value adding). But when I carry out a job that is value adding and when I select a better process, that is "effectiveness".
• In every day language, thus, efficiency is doing things right whereas effectiveness is doing right things.
• Effectiveness is answer to "what" and efficiency is answer to "how well".
• "Effectiveness" is all about finding the right destination and right direction and right path to reach the chosen destination. "Efficiency" is reaching the destination on this chosen path with the usage of optimized resources. For example, how soon will I cross mile stones after mile stones and how fast will I reach the destination and so how fast can I walk?
• So do effectiveness first and then efficiency.
• If you do efficiency first, you may start walking fast on any path, in any direction, in the over zealousness of walking faster (efficiency) but with this higher speed of walking, you may end up proceeding in wrong direction, on wrong path and away from the desired destination, faster. What's the use? It's waste of resources though you have been efficient in walking.
First Decide The Goal, Your Product/Output and Process
• Very first thing, decide what is your product/services? Are they the ones that your customers need? There is no point in making the mechanical watches when the customers want quartz technology watches. Applying greater efficiency in making mechanical watches is being utterly ineffective.
• Then choose the right processes: management, business and technical processes.
• Processes consist of both, value adding activities and non-value adding activities.
• There is no point in automating a process having too many non-value adding activities by using any technology. Automation is like having greater efficiency. All you will end up doing is: doing the non-value adding activities of the process faster, which is no improvement. Rather, it will be detrimental to the organization.
• Therefore, think of the processes without any non-value adding activities before automating them by using technologies or by employing efficiency.
• This would necessitate giving a fresh look to how you design your processes (management technical, business and technical processes etc) and substituting the exiting processes (non-effective process) with brand new effective processes.
• Effectiveness can be measured in terms of how well the products or services meet customers' requirements. Are my chosen destinations/goals correct ones?
• Efficiency can be measured in terms of ratio of output to inputs, utilization percentage of various resources, unit cost of product, cycle time or lead time, extent of wastage etc
6th July 2009 From India , New Delhi
effectiveness can be like a MBBS doctor is less effective than a MD doctor.in operations it can be one type of process is less or more effective than other like warehouse storage and movement process.
(Author of "Logistics Management")
8th July 2009 From New Zealand , Auckland
for example in a manufacturing company if a product making process is 10 step and output is 100%.
Effectiveness - as above example if the same product is going 100% after the adding the another process for example rework & reuse then then the numbers of rework is reduce the effectiveness. if a product is ok after adding the 1 process then the effectiveness is 90% instead of 100%.
25th October 2013 From India , Delhi
Example: Using an axe to chop vegetables would be effective but not efficient (as it will take a lot of energy) OR, A large SUV and a Maruti 800, both are effective when travelling from office to market but Maruti 800 would be more fuel efficient.
16th December 2013
Companies usually seek to increase and improve the efficiency of their operations and sales processes. After all, when working with limited resources, they would prefer to maximize the use of each of these resources, from budget and technology to time and sales reps. However, by pursuing efficiency at all costs (irony intended), some of these companies are missing a valuable chance to take a step back and look at their overall effectiveness from a big picture perspective.
For a practical example, consider the differences between activity effectiveness and activity efficiency among your sales reps. Every sales team has daily, weekly, monthly and quarterly goals that, when achieved, are representative of the effectiveness of their roles. If your reps are tasked with making 70 calls each day, and they easily hit their numbers, they are effective at their jobs. Some might even go above and beyond and make 80 or 90 calls each day. But what if those dials are producing few connects and even fewer deals? That’s where activity efficiency ratios come in. For a sales manager, having reports that track how many calls lead to connects, how many connects lead to demos and how many demos lead to deals can be an incredibly powerful indicator of which of your reps are not only effective at their jobs but efficient in performing them.
22nd July 2019 From India,