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Efficiency or Effectiveness, Which Way Should I Go?

published on June 10, 2010

A recent conversation with a my former college professors gave me the push for this article. In my line of work, you often hear business owners and executives talk about the need for their businesses to run more efficiently. They need to really focus on smart use of resources and to ‘do more with less’. This made me wonder, should businesses want to be efficient or effective?
Webster’s defines efficiency as an effective operation measured by costs and effectiveness as an efficient use of resources in terms of benefits. It’s easy to see why companies use the two terms indiscriminately. So really what’s what?
If your sole goal is to reduce the cost of resources (staff, money or time) then your goal is to be efficient. In other words you are looking to find the most cost effective way to run your business. If your goal is to produce a service or product that meets a very specific customer or industry expectation, then you want to be effective. Can the two terms meet each other halfway? I don’t know, but I think it’s a good goal. Before you try to implement any changes in your company, it may be worth asking
• What do you want to do?
• What do you need to do to be effective?

• What are you willing to give up in order to produce your products/ services quickly?

• Will your customers accept slower work for a higher quality standard or is speed a driving factor in their decision making process?

• Do you have enough resources readily available to accomplish your goals?

• How does your company measure quality and is it realistic?

• Do your quality measures reflect your customer’s expected quality threshold?

Sometimes companies are led down the path of efficiency by either internal or external forces. Sometime’s it’s both. In our current climate efficiency is something that companies innately run to in an effort to keep their head above water, but I think that it is worth asking if efficiency is where your company should be looking.

published on June 10, 2010


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