When you read through business blogs and books, you’ll see the words “effectiveness” and “efficiency” everywhere. These terms are seemingly interchangeable, and you’ll undoubtedly see people using them that way, but this is incorrect. Efficiency and effectiveness are related, but they’re not the same, and you should know the difference.
It’s easy to confuse effectiveness and efficiency. On top of the widespread, albeit mistaken, interchangeable use of these words, their definitions look similar. In fact, if you look them up in a dictionary, they may appear as synonyms.
While efficiency and effectiveness may be synonymous in some contexts, they’re not when it comes to business. To get the most you can out of your company, you should know how to achieve both effectiveness and efficiency. To do that, you’ll have to understand what makes them different and which you should prefer.
Effectiveness is the most crucial factor in creating a productive business. A company in any sector can’t succeed if it’s not effective to some degree. Conversely, you can’t consider a company to be effective if it’s not successful.
Work effectiveness is focusing on achieving a given goal. It’s taking the necessary steps towards completing a task. If you are meeting objectives that serve your overall purpose, you are effective, and if you’re not meeting those objectives, you’re ineffective.
You can picture effectiveness like a to-do list. Each item on the list represents a tangible goal that all add up to a productive day. As you go throughout your day, you check things off once you’ve done them. If you’ve checked them all by the end of the day, you’ve been effective.
Your overall goal is to have a productive day. Going through the list and completing all of the individual items are just steps to help you be productive. To that end, everything on the list should directly relate to productivity or following it wouldn’t be effective.
To determine whether or not your operations are effective, you can ask these questions:
- What is my end goal?
- What steps do I need to take to achieve that goal?
- How do all of my tasks serve that goal?
- Am I doing anything that distracts from the primary purpose?
- Are there any other tasks that will help me accomplish my goal?
Work effectiveness is about setting criteria and then meeting those standards. The extent to which you meet these criteria is the extent to which you are effective.
Efficiency is not the same thing as effectiveness, but it does feed into it. You can see it as a second step after aiming for effectiveness. Whereas effectiveness is concerned with whether or not you accomplish a goal, efficiency is concerned with how you accomplish it.
If effectiveness is doing the right things, then efficiency is doing things the right way. Consider the to-do list illustration from before. You’d be effective if you finished everything on the list, but you’d be efficient if you did so in the shortest possible time at the lowest cost.
To become more effective, you would do things like set goals or focus your strategy. To become efficient, you would take action like deciding what kind of workstation fits your needs best. Efficiency is about streamlining the path towards effectiveness.
Efficiency-related questions you can ask include:
- Where is most of my budget going?
- What tasks are most important?
- Is there anything I could spend less money on?
- Are there any tools or strategies that would do things faster?
- Could I complete multiple tasks at once?
An effective business is one that does what it sets out to do, but an efficient one does so with higher profit.
Balancing Effectiveness and Efficiency
The intersection of effectiveness and efficiency is productivity. You can’t be productive if you accomplish your overall goals but waste a lot of time and money along the way. Similarly, you shouldn’t sacrifice quality for doing things quickly and cheaply.
Productivity isn’t a match of effectiveness versus efficiency, but it’s finding out how to combine the two. The ideal company is both. That said, you can’t always aim for both at the same time, especially in the early phases of a business venture.
Remember that effectiveness is the end goal of any company. You should aim to be effective first and then work on your efficiency. Being fast and using fewer resources are close to meaningless if you’re not meeting the bottom line.
Efficiency improves the value of effectiveness, but if a business isn’t effective in the first place, it’s not worth much. This isn’t to say the efficiency isn’t essential to a productive company, but that it shouldn’t be the priority. Instead, you should see efficiency as a way to further your profits once you have an effective business model.
First, ask, “how can I do this?” and then ask, “how can I do this better?” Efficiency and effectiveness are both central to making your business as productive as it can be, but they’re not equal.