Efficiency and Effectiveness – two terms that are frequently misunderstood, but both are essential for business success.

By Harold Taylor

At a recent members’ meeting of the Sussex and District Chamber of Commerce we discussed the relevance of getting organized and managing our time. During the discussion we referred briefly to efficiency and effectiveness – two terms that are frequently misunderstood. The usual definitions of efficiency as “doing things in the best possible way”, and effectiveness as “doing the best possible things,” needs to be expanded.

Getting more things done in less time says nothing about the importance or necessity of those things. Efficiency is concerned with getting more things done in less time, thus increasing productivity. Effectiveness, on the other hand, assures you that you are getting the most important, most profitable things done.

For example, developing life goals, plans, policies and mission statements are all aimed at increasing effectiveness. But reducing interruptions or improving e-mail and streamlining meetings are aimed at being more efficient. Similarly, personal values, career choices and life balance all aid effectiveness. Office organization, file management and the use of technology are aimed at increasing efficiency.

Effectiveness may involve having a vision or mission, goals compatible with that vision, and a plan of action to achieve those goals or objectives. But efficiency is necessary to carry out the step-by-step action plan in the most economical, expedient way with a resultant quality consistent with the goal. A goal and a plan are useless if the job never gets done. Efficiency cuts through procrastination, perfectionism and inertia, and converts a plan into action. Efficiency minimizes delays, interruptions, distractions and ensures that results are obtained.

Efficiency and effectiveness work in tandem; one is useless without the other. Without effectiveness, we lack direction, drift away from the priorities, and become busy without accomplishing the 20% of the tasks which represent 80% of the value. On the other hand, without efficiency we experience the frustration of knowing exactly where we want to go, but seeing little progress in that direction. It’s a “two steps forward and one step backwards” process.

Effectiveness has an eye to the future while efficiency deals with the here and now. An effective manager sets goals, plans, organizes, directs, controls and innovates. The one who is efficient conducts the “doing” portion of his or her job with a minimum of interruptions, idle time, procrastination, indecision, perfectionism or wasted effort.

Efficiency looks at the process through a microscope, analyzing every detail of the jobs to eliminate, simplify, combine, or otherwise improve them so the total process can be accomplished in a minimum of time at minimum cost with minimum effort.
Effectiveness looks at a process through a wide-angle lens, observing how it affects the productivity of the other processes, how it contributes to the goals of the organization and how it impacts the bottom line.

Efficiency studies may lead to an improvement in a process or job. Effectiveness studies may serve to eliminate it. Although both are important, effectiveness studies should come first, since there’s little point in improving something that may later be eliminated. Never underestimate the importance of efficiency; but never strive for efficiency at the expense of effectiveness.

The higher the level in the organization, the more time a manager must spend managing, and less time actually doing. Therefore, effectiveness becomes more essential at higher levels in the organization, while efficiency is critical at the staff level. But even a CEO has a certain amount of doing and limited time for its accomplishment. Efficiency never loses its importance.

Although time management experts urge us not to be efficient at the expense of effectiveness, this should not be construed to mean efficiency is unimportant. Lacking effectiveness is like sailing a ship without a rudder. But it is no less serious to be sailing a rudder without a ship.

Harold L Taylor, owner of Taylorintime.com, is a member of the Sussex & District Chamber of Commerce and a columnist with the Kings County Record, tj.news/kingscountyrecord.

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