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Key Differences

Know the Differences & Comparisons

Difference Between Efficiency and Effectiveness

efficiency vs effectivenessEfficiency means whatever you produce or perform; it should be done in a perfect way. Although, Effectiveness has a broader approach, which means the extent to which the actual results have been achieved to fulfill the desired outcome i.e. doing accurate things. These are the metric used to gauge the performance of an employee in an organization.

Efficiency and Effectiveness are the two words which are most commonly juxtaposed by the people; they are used in place of each other, however they are different. While efficiency is the state of attaining the maximum productivity, with least effort spent, effectiveness is the extent to which something is successful in providing the desired result.

Take a read of the article to understand the difference between efficiency and effectiveness in management.

Content: Efficiency Vs Effectiveness

  1. Comparison Chart
  2. Definition
  3. Key Differences
  4. Video
  5. Conclusion

Comparison Chart

Basis for ComparisonEfficiencyEffectiveness
MeaningThe virtue of being efficient is known as efficiency.The magnitude of nearness of the actual result with the intended result, is known as effectiveness.
What is it?Work is to be done in a correct manner.Doing accurate work.
Emphasis onInputs and OutputsMeans and Ends
Time HorizonShort RunLong Run
ApproachIntrovertedExtroverted
AscertainmentStrategy ImplementationStrategy Formulation
OrientationOperationsStrategies

Definition of Efficiency

Efficiency refers to the ability to produce maximum output from the given input with the least waste of time, effort, money, energy and raw materials. It can be measured quantitatively by designing and attaining the input-output ratios of the company’s resources like funds, energy, material, labor, etc.

Efficiency is also considered a parameter to calculate the performance and productivity by making comparisons between the budgeted output and the actual outputs produced with the fixed number of inputs. It is the ability to do things in a well-mannered way, to achieve the standard output.

Efficiency is an essential element for resource utilisation, as they are very less in number, and they have alternative uses, so they must be utilised in the best possible way.

Definition of Effectiveness

Effectiveness refers to the extent to which something has been done, to achieve the targeted outcome. It means the degree of closeness of the achieved objective with the predetermined goal to examine the potency of the whole entity.

Effectiveness has an outward look i.e. it discloses the relationship of the business organisation with the macro environment of business. It focuses on reaching the competitive position in the market.

Effectiveness is result oriented that shows how excellently an activity has been performed that led to the achievement of the intended outcome which is either accurate or next to perfect.

Key Differences Between Efficiency and Effectiveness

The points, given below describe the substantial differences between efficiency and effectiveness:

  1. The ability to produce maximum output with limited resources is known as Efficiency. The level of the nearness of the actual result with planned result is Effectiveness.
  2. Efficiency is ‘to do the things perfect’ while Effectiveness is ‘to do perfect things’.
  3. Efficiency has a short run perspective. Conversely, the long run is the point of view of Effectiveness.
  4. Efficiency is yield-oriented. Unlike Effectiveness, which is result oriented.
  5. Efficiency is to be maintained at the time of strategy implementation, whereas strategy formulation requires Effectiveness.
  6. Efficiency is measured in operations of the organisation, but Effectiveness of strategies is measured which are made by the organisation.
  7. Efficiency is the outcome of actual output upon given the number of inputs. On the other hand, Effectiveness has a relationship with means and ends.

Video: efficiency Vs Effectiveness

Conclusion

Efficiency and Effectiveness both have a prominent place in the business environment which must be maintained by the organisation because its success lies on them. Efficiency has an introspective approach, i.e. it measures the performance of operations, processes, workers, cost, time, etc. inside the organisation. It has a clear focus on reducing the expenditure or wastage or eliminating unnecessary costs to achieve the output with a stated number of inputs.

In the case of Effectiveness, it has an extroverted approach, that highlights the relationship of the business organisation with the rest of the world to attain a competitive position in the market, i.e. it helps the organisation to judge the potency of the whole organisation by making strategies and choosing the best means for the attainment result.

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Comments

  1. Julius Kejo says

    May 12, 2018 at 5:24 pm

    Excellent and clearly narrated explanation on efficiency and effectiveness. It has served my purpose because I will have a reflection session with my co-workers. Bravo

    Reply
    • Felix says

      March 14, 2021 at 1:32 am

      Yes it was really helpful and I appreciate that. I am very grateful. Keep the good work.

      Reply
  2. Tariq says

    May 26, 2019 at 7:21 am

    Well explained article. Helps me a lot to distinguish between the terms (efficiency vs effectiveness)

    Reply
  3. Bereketdagnachew2011@gmail.com says

    September 7, 2019 at 8:37 pm

    Thanks much

    Reply
  4. YURY says

    November 6, 2019 at 3:08 pm

    VERY IMPORTANT INFORMATION! THANKS A LOT!

    Reply
    • Sammy T. Otukile says

      February 6, 2023 at 4:37 pm

      Thanks for the clarity in defining them, excellent!

      Reply
  5. Tidjani Mohammed says

    January 1, 2020 at 7:08 pm

    your explanation is so exhaustive and clear. many thanks indeed

    Reply
  6. Dumsani says

    September 29, 2020 at 5:54 pm

    I am a law student at the University of the Free State (RSA). I took business as an elective module and i found it hard to differentiate between the two two terms. However, after reading this article, i found myself ready to explain it well to my peers. Thank your

    Reply
  7. Tamirat yohannes says

    May 30, 2021 at 6:14 pm

    good job

    Reply
  8. Mara says

    October 4, 2021 at 6:08 am

    Very helpful. Thank you so much!

    Reply
  9. Udah Comfort says

    October 20, 2021 at 3:32 am

    Excellent job

    Reply
  10. HAMZA AHMED HASSAN says

    November 21, 2021 at 8:43 pm

    I am an MBA Student of university Punjabi Patiala University in India. I have studied my whole education in the French language. It is my first time doing my master’s in the English language.
    I got a lot of difficulties understanding the meaning of that two words. But now it is ok thanks.

    Reply
  11. bachan says

    December 1, 2021 at 2:48 pm

    best ones and helpful to understand well between efficiency and effectiveness

    Reply
  12. AWELU HUSSEN says

    August 2, 2023 at 6:26 pm

    your explanation is so clear and understanding easily. thank you.

    Reply
  13. Muyiwa Oladosun says

    January 24, 2024 at 4:54 pm

    Great job!

    Reply

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