What is the difference between effectiveness and efficiency?

It is common in business circles to see them used as synonyms, but there is a noticeable difference between the two. difference between effectiveness and efficiency that we must know and calculate for better planning, optimal allocation of resources and a successful staff performance appraisal.

Difference between effectiveness and efficiency

According to the Royal Academy of the Spanish Language, efficacy refers to the “ability to achieve the effect that is desired or expected”, whereas efficiency is defined by this body as “the ability to dispose someone or something to achieve an effect". determined”.

However, in the business sector, be effective and efficient at work has slightly different connotations. Although both terms refer to the achievement of the goals, thehe difference between effectiveness and efficiency is based on how this objective has been achieved.

In this sense, we are talking about a person effectivewhen it succeeds in meeting a target within the given time frame; Instead, it will be efficient if it achieves the goal using as few resources as possible.

For example, a company that manufactures tables will be efficient if its three employees manage to achieve the minimum daily output of the set number of products, whereas it will be efficient if it achieves this daily limit with only two employees.

In addition, it should be noted that these are relative concepts, In other words, the greater or lesser degree of effectiveness and efficiency will depend on what others have done. In this way, the two principles on implementation, noted by Kilian Zambrano Duque in Planning and control of public production:

• Principle of effectiveness: «The achievement of results should require as few events as possible. Encounter and friction should be minimised and only occur as integrally and organically linked, result-oriented events.
• Principle of efficiency: «The strategic actor will make a measured use of its resources in each event of the interactive game, which will occur depending on the other's application of resources.

How to calculate effectiveness and efficiency

Because of the difference between effectiveness and efficiency, the methodology to determine one or the other is not the same. In this sense, the mathematical formulae for calculating these indicators are represented as follows:

• Effectiveness= (Result achieved*100)/ Expected result . The figure will be a percentage and, using a percentile table, we can quantify the effectiveness numerically. For example, 1 to 10% will give a score of 1 or very ineffective, while 90 to 100% will give a score of 10 or highly effective.
• Efficiency= ((Result achieved/actual cost)*Time invested)/((Planned result/planned cost)*Planned time). The calculation of efficiency will give a number that, also subjected to a value scale, will allow us to determine the degree of efficiency: if the result is less than 1, we will speak of inefficiency and vice versa.

Striking a balance

In view of this difference between effectiveness and efficiency, it is worth asking what the organisation should prioritiseMeeting deadlines or using fewer resources?

In this respect, the key is to finding the balance between the two parameters, which translates into a third concept, effectiveness, understood as a balanced solution between achieving the objectives set with adequate expenditure.

To find out if we have been effective, we can use their mathematical calculation:

Effectiveness= ((Efficiency value+Effectiveness value)/2))/ Highest scoren