What is the difference between effectiveness and efficiency? Companies often talk about employee effectiveness and efficiency when brainstorming ways to improve business. While they sound similar, effectiveness means something entirely different than efficiency.
According to Dictionary.com:
Effective (adj.) – Adequate to accomplish a purpose; producing the intended or expected result.
Efficient (adj.) – Performing or functioning in the best possible manner with the least waste of time and effort.
The difference can be summed up in one neat and tidy sentence – being effective is about doing the right things, while being efficient is about doing things right.
One example we all may be able to relate to is the difference between effective and efficient activity amongst sales representatives. Every sales team has daily, weekly, monthly and quarterly goals and if these are achieved, they can be a clear metric of effectiveness. If your representatives are tasked with having to make a certain number of calls per day and they easily hit this number, or go above this number, they are effective at their job. But what of those who don’t meet this number?
This is where a sales manager can use reports, like an activity efficiency ratio, to find out which representatives are not only effective at their job but efficient in performing them.
This brings up an important question – is it more important for a business to pursue efficiency or effectiveness? For a small company with limited resources, it may be better to pursue efficient operations to maximise their abilities. However, if an organisation is trying to grow and has resources available, pursuing effectiveness may be a good strategy.