Case Study

4. Difference between efficiency and effectiveness? Which is more important for performance? Can managers improve both simultaneously?

Answers for question # 4

Effectiveness and efficiency is viewed as subcomponents of performance. In an organization’s performance can be measured in many different ways. The most common ways are in terms of efficiency or effectiveness. 

*Organizational efficiency refers to the amount of resources used to achieve an organizational goal.

Efficiency can be measured in terms of the inputs required to generate the outputs. It is about the way in which work is completed. It is part of a manager’s job to help improve efficiency. For example, if the same work can be completed using less inputs or resources then efficiency has improved.

Measuring efficiency means that the process followed to complete the work must be defined and then each part of the process studied to see what resources are required. This becomes the starting point or benchmark for measurement.

Future work is then measured against the benchmark to see if it has taken more or less resource. Process changes are also measured to see if they are more or less efficient. It is also useful to measure one team’s efficiency against another and then adopt the most efficient methods as best practice– always assuming that effectiveness is maintained.

*organizational effectiveness is the degree to which organization achieves a stated objective. It is measured by setting out clear objectives before work starts and then evaluating whether the objectives have been met or not

Effectiveness can be explained in terms of what is achieved. It is about whether targets are met or not. Performing effectively means that the right work is being completed. Managers are responsible for making sure that this happens. If a team is working really hard but not delivering what is needed, then they are not effective. Effectiveness is measured by setting out clear objectives before work starts and...