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The terms- efficiency and effectiveness are thought to be the same and thus, used in each other but convey a different meaning, specifically when it comes to the business world. Incorporating an effective and efficient strategy is the primary goal of every business. Therefore, to better understand the difference between efficiency and effectiveness, it is imperative to know their definitions.
What is meant by Efficiency ?
The term efficiency is defined as the peak level of the performance that can be achieved by using the least amount of time with the least amount of inputs or resources. In simple terms, it can be said that efficiency requires using time-saving strategies and reducing the number of non-essential inputs or unnecessary resources like machinery, capital, time, efforts, etc., to produce the desired output level.
Efficiency can be measured by determining the ratio of useful output to the total input. Efficiently producing output implies the minimized wastage of time and resources like material, time, energy, capital, etc., while accomplishing the desired output.
What is meant by Effectiveness ?
Effectiveness is defined as the peak level of performance that can be achieved no matter what amount of resources and time. It is not time or input sensitive, which means that the organization, when using the concept of effectiveness, is just focused on producing the given output level without concern for the resources or time.
It is not that easy to measure effectiveness. The primary concern of the entity is to produce effective results no matter what time or resources it takes.
Examples for explaining the Difference Between Efficiency and Effectiveness
Consider the following mentioned examples to understand the difference between efficiency and effectiveness better:
Example for efficiency: A generic sales email is developed by Riya that can be sent to 100 potential clients every day. 4% of her emails lead to the sales of her company’s products.
Example for effectiveness: Abhay researches potential customers and drafts a tailored email for them. 45% of his emails lead to sales of the products manufactured by his company.
Here Riya is working efficiently while Abhay is working effectively. Riya has found a way to maximize her working hours by contacting the maximum number of customers. She has resources similar to Abhay’s but achieved more connections due to her efficiency. In simple words, it can be said that Riya has maximized her output using less resources and time. Whereas Abhay has utilized an effective strategy for closing sales more frequently. He has spent more time and resources drafting personalized mails for each client, and his efforts paid off with a higher success rate. He prioritized developing meaningful connections over the number of connections. Although it took him more time and resources, he achieved the company’s ultimate goal.
So, using these examples, it can be concluded that efficiency is focused on achieving the maximum output with reduced time and resources. On the other hand, effectiveness is the concept focused on achieving maximum output no matter how much time or resources are used.
Difference Between Efficiency and Effectiveness
Conclusion
Efficiency and effectiveness are the two most important terms frequently used in management. However, not knowing the difference between these two and using them interchangeably can result in miscommunication to a great extent in the organization. It is of utmost importance to learn the difference between effectivity and efficiency to prosper in the business world.
