Efficiency vs. Effectiveness
BY: Mark Kelly
EFFICIENCY means: saving TIME, MONEY or EFFORT
EFFECTIVENESS means how well the job gets done. i.e. the quality of the output.
EFFICIENCY and EFFECTIVENESS do not mean the same thing! In fact, they are often natural enemies. Often you can have one, or the other, but not both (unless you are lucky or you want to spend a lot of money.)
Being efficient means you spend less time on something, you spend less money on something or you spend less effort (or number of workers) on something. You will not often get all three types of efficiency. Which one you aim for depends on what you are trying to achieve.
Being effective means you do your job well. In other words, the output (finished product) is of high quality.
It is a rare and delightful occasion where a solution to a problem is both efficient and effective; you usually have to decide which you prefer, because you usually cannot have both.
In some organizations, efficiency is important and quality is secondary. The Novelty Christmas Hat Co. Pty Ltd may be such a case. The public would not be rioting in the streets if there was 6% less glitter on next year's Christmas hats, but the company would want to produce the hats efficiently (with little wasted time, money or effort.)
In other organizations, effectiveness is important and efficiency is secondary. If you were in charge of building a system to defend your country against incoming intercontinental thermonuclear missiles, would you be willing to fail to detect a few missiles and lose a few cities to save a few million dollars? Not likely. You would be willing to spend all that was required to attain maximum effectiveness.
One can only be grateful that the manager of Novelty Christmas Hat Co. Pty Ltd is not in charge of national security.
On the other hand, if the head of national nuclear defense were making party hats and didn't change his views, he would probably produce silly party hats that could withstand gales, lightning, gas attacks and flamethrowers at a cost of $24,938 each.
You can see that each organization needs to balance efficiency against effectiveness and where there is a conflict between efficiency and quality, the organization must decide what is more important to them. The decision will often be determined by their organizational goals. Some organizations are more willing to sacrifice quality for efficiency; some do the opposite. Organizations like 'The $2 Shop' obviously value efficiency over effectiveness. Customers save money. Rolls-Royce value effectiveness over efficiency: to them, quality is everything, and they sacrifice efficiency to achieve it.
Again, EFFICIENCY means: saving TIME, MONEY or EFFORT
If the Novelty Christmas Hat Co. Pty Ltd wanted to be more efficient, it could reduce the quality of the merry quips in their Christmas bonbons by employing illiterate Eskimo joke writers with no sense of humor.
In their case, efficiency is a key organizational goal, while effectiveness is not. They would not suffer too much if 20% fewer party-goers found their bonbon jokes tedious, lame and full of references to polar bears.
EFFECTIVENESS means how well the job gets done. i.e. the quality of the output.
In some circumstances, the quality of the finished product counts for everything, and no scrimping and saving could justify a reduction in quality. Such products are usually expensive, but customers are willing to buy them for their quality.
In the real world, there is always a decision to be made about how far you should go to achieve either efficiency or effectiveness. A balance needs to be struck. The examples of the Novelty Hat Co. and the Missile Defense Organization are extremes: most organizations are in-between, and must constantly make judgments about what is more important for a particular system: effectiveness or efficiency - or some degree of both?