What is Efficiency?
Peter F. Ducker defines efficiency as doing things right. It means completing the task correctly with minimum cost. It improves the achievement of objectives through the use of minimum inputs. It aims at enhancing an organisation’s profit by reducing the cost involved in completing a particular task. Management is said to be efficient when for the same level of output, fewer resources are used and less costs are incurred.
For example, Manager ‘B’ also promised the same company ABC Ltd. to produce 3,000 units in half the production cost of Manager ‘A’, but in one year. Now manager ‘B’ can produce 3,000 units but needs a longer period. Here, the manager was efficient, but not effective, as for the same output, more time was needed.
Features of Efficinecy:
• Resource Utilization: Efficient systems or individuals use resources, such as time, money, personnel, and materials, in the most productive way possible, minimizing waste and maximizing output.
• Time Management: Efficiency involves completing tasks in the shortest time possible without sacrificing quality, through effective prioritization and time management.
• Process Optimization: Efficient operations continuously seek to streamline processes, eliminating unnecessary steps and reducing complexity to enhance productivity.
What is Effectiveness?
Peter F. Ducker defines effectiveness as doing the right things. It is concerned with achieving the organizational goals on time. The ultimate goal is to achieve the end result. It aims at achieving the results on time, no matter what the cost is. Its goal is to produce target production on time.
For example, manager ‘A’ promised a company ABC Ltd. to produce 3,000 units in six months. To achieve this target within time, the manager increased the working hours, labour and the number of shifts, etc. Now manager ‘A’ was able to produce 3,000 units, but at a higher production cost because of high wastage and mishandling of resources. Here, the manager was effective, but not so efficient.
Features of Effectiveness:
• Goal Achievement: Effectiveness is defined by the ability to achieve specific, predefined goals and objectives, which involves setting clear, measurable goals and consistently meeting or exceeding them.
• Resource Utilization: Effective individuals and organizations use their resources, including time, money, personnel, and materials, efficiently and judiciously, minimizing waste and maximizing output relative to input.
• Consistency: A hallmark of effectiveness is the consistent performance and reliability in delivering high standards and results over time.
Therefore, management needs to obtain end results on time with as minimum cost as possible while maintaining a balance between effectiveness and efficiency. Generally, high efficiency is allied with high effectiveness, which is the aim of all managers. But the needless emphasis on high efficiency without being effective is also not desirable. Poor management is due to both inefficiency and ineffectiveness. So, management must be both, effective and efficient to make the organisation successful.
Basis | Effectiveness | Efficiency |
|---|---|---|
| Meaning | Effectiveness means doing the right task, completing activities on time, and achieving desired goals. | Efficiency means completing the task correctly with minimum cost and maximum profit. |
| Scope | Broad and goal-oriented. It looks at the bigger picture and the long-term impact of actions. Success is judged by results. | Narrow and process-oriented. It focuses on optimizing the use of resources for short-term or specific tasks. |
| Resources usage | May use more resources (money, time, energy) if necessary to achieve the right outcome. | Aims to minimize resource usage, possibly at the expense of some effectiveness. It seeks to use the least resources for maximum output. |
| Focus | Focuses on achieving the desired outcome or goal. It answers the question, "Are we doing the right things?" | Focuses on using the least amount of resources (time, money, energy) to achieve a goal. It answers the question, "Are we doing things in the best way?" |
| Time frame | Often associated with long-term success and sustainability. It might require a longer time to see results. | Typically concerned with short-term gains and quick returns, with an emphasis on immediate resource optimization. |
| Flexibility | More flexible in its approach to achieving goals, as it allows for changes or additional resources to ensure the desired outcome. | Tends to be more rigid in resource allocation, sticking closely to processes designed to optimize inputs. perspective. |
| Measurement | Measured by how well objectives or goals are met, regardless of the resources used. Metrics are outcome-based. | Measured by the ratio of input (resources) to output (results). Metrics are input-output based, such as cost per unit or time per task. |
| Example | A marketing campaign might be highly effective if it attracts many new customers, even if it costs more than initially planned. | A manufacturing process is efficient if it produces the same number of products using fewer materials, even if the product quality or customer satisfaction is slightly compromised. |
