Although they are often used synonymously, the terms efficiency, effectiveness and efficacy refer to different aspects and their correct differentiation and calculation helps the company to assess the performance of staff and processes and implement actions for continuous improvement.
To talk about a worker being efficient when they are actually effective, or to say a campaign has been effective when what we want to express is that it is successful are Common business mistakes.
Therefore, to understand the degree of the company's efficiency, effectiveness, and impact, it is important, first, know the conceptual differences What is the relationship between these three terms, the cornerstone of business productivity.
So, Efficiency means achieving the maximum planned results from minimum resources. For example, a worker who manages to generate 10 articles with half the raw material of another will be more efficient.
For its part, The concept of efficiency refers to the degree of achievement of specific objectives., meaning if the second employee can create 10 goods per hour, while the first can only create 7, they can be considered more effective, even if they are less efficient.
Finally, effectiveness is related to the balance of these concepts of efficiency and effectiveness, defining itself as the capacity to carry out the maximum planned work with the minimum possible resources.
Having clarified the concepts of efficiency, effectiveness, and efficacy, how are these indicators calculated? Generally, the following are used for this purpose mathematical formulas:
The indicators of efficiency, efficacy, and effectiveness are closely related to business performance and productivity, so their measurement allows obtain an X-ray essential for planning the organisation's strategy.
In particular, its correct calculation contributes in several aspects:
