Whether you are a part of an organization or have a small business of your own, you are sure to come across the words ‘effective’ and ‘efficient’. Although the two words refer to progress toward a goal, there is a clear distinction. While effectiveness refers to doing the right things the way you are supposed to, efficiency refers to doing the right things the best way. Not all organizations that are effective are efficient, and vice-versa. This article talks about the differences between the two and how your company can benefit from being effective as well as efficient.
Effectiveness usually refers to how useful something is and how much can be attributed to its contribution. It is not a time-oriented, process-oriented, or effort-oriented measurement of input. As long as the goal of the company is achieved, you can say that it is an effective one. Each organization is responsible for creating a formula to measure how effective they are and can use it to measure anything they think contributes to productivity. Their formula can be used to calculate the relationship between profits and employee performance and much more. Measuring effectiveness is especially helpful to small businesses looking to curb loss; you can see where you can better processes and what resources can be put to better use.
Efficiency Of Resources
How efficient a company is can be denoted by how well it uses its resources. Efficiency involves more effort when working toward a goal. It is more of a time and process-oriented strategy that focuses on how you can achieve results using minimum input. So basically, it is figuring out how to maximize performance while putting in the least amount of effort and money.
Comparing The Two
The most fundamental difference that can be used to tell these two words apart is that effectiveness is a measuring tool that can be used to calculate almost anything. Efficiency exclusively considers financial elements. Effectiveness needs mathematical values to achieve results; efficiency looks at the relationships between expenses, equity, capital, and balance sheets of the organization.
If you are a slightly larger company that has the resources at hand, then optimizing effectiveness within your ranks would be the way to go. But, if you are a small organization with minimal resources, then you should look at increasing efficiency. Once you master the art of being effective, you can determine how to cut down on costs and how to optimally manage your resources.
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