Efficiency vs. Effectiveness
In business, two values that find themselves most commonly together in the same sentence are efficiency and effectiveness. Do the following statements sound familiar?
- “We need to be much more efficient and effective.”
- “If this company doesn’t improve its efficiency and effectiveness then its future doesn’t look good.”
These two values almost sound like twins, or at least kissing cousins. Are they even related?
Let’s compare the definition of these two important values:
Efficiency means skillfulness in avoiding wasted time and effort; careful use of resources.
Effectiveness means producing an intended result; able to accomplish a purpose.
They clearly have different meanings. And while they both relate to human talent, they should never be confused with each other.
One can become very efficient – wasting no time or effort – and never produce an intended result. Or one can be very effective – accomplishing a stated purpose – and yet be extremely careless with limited resources.
Different Strokes for Different Folks
Some people naturally excel at effectiveness. They have a keen sense on how to produce results. Their word is their bond. They make stuff happen. They always make quota. They deliver the goods. They are high achievers.
Others excel at efficiency. Their internal compass tells them if something is taking too much time or if too much money is being spent to achieve the desired results. Their creativity is honed on finding new ways to do things faster and cheaper (but not always better).
It’s very rare to find the same qualities in the same person. They require two different types of mental wiring. It’s part of what makes each of us unique.
Which value has greater value?
If you could only pick one value, effectiveness matters more.
Why? Because if someone can reliably produce results – effectiveness – then they’ll always have another day to improve on efficiency. Not surprisingly, people who understand this tend to be leaders.
Leaders understand the importance of effectiveness.
On the other hand, efficiency is more like a balancing act between time and money. If you swing too much one way, you can spend enormous amounts of time ensuring not a penny is wasted. If you swing too much the other way, you can spend too much money to save on time. People who appreciate this gift tend to be managers.
Managers understand the significance of efficiency.
So maybe it’s time to stop putting these two values together in the same sentence. Let leaders lead on effectiveness and mangers manage on efficiency. Only then will a business be leveraging the right people strengths in the right areas.
Which value is more important in your business?
Interesting to see and read this perspective, which I have read and heard many times over in business, church, life, etc.
I’ve always distilled the point in the following way:
1. Do right things, then
2. Do things right.
Best example I ever heard was from the 90’s when a Malcom Baldrige Quality Award winner went bankrupt the following year. They focused on efficiency in terms of the measured metrics, but that did not translate into effective business practices and eventually their foundation eroded along with their success. If you aren’t doing what is right, what’s the point of being able to do it well? Choose wisely.
That’s a terrific example, Randy. Someone once told me of an accounting firm that was extremely zealous for accounting for every penny – and ended up going bankrupt. There is clearly a need for being both efficient and effective. But without being effective first, efficiency doesn’t really matter.
Thanks for sharing!