What is the difference between effectiveness and efficiency?

Difference between effectiveness and efficiency

According to the Royal Spanish Academy, effectiveness refers to the “ability to achieve the effect ”what is desired or expected", while efficiency is defined by this organisation as the “ability to dispose of 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 goals,The difference between efficacy and efficiency is based on how this objective has been carried out.

In this sense, we are talking about a person effective when it manages to meet an objective within the specified time; 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 effective if its three employees manage to reach the minimum number of products established each day; however, it will be efficient if it achieves this daily limit with only two workers.

Furthermore, it should be noted that these are relative concepts, that is to say, that the greater or lesser degree of effectiveness and efficiency will depend on what others have done. In this way, there arise Two principles regarding their application, highlighted by Kilian Zambrano Duque in Public production planning and control:

• Principle of effectiveness: «The achievement of results should require the minimum number of events possible. Encounters and friction should be minimised and only occur as integral and organically result-oriented chained events.
• Principle of efficiency: «The strategic actor will make measured use of their resources in each event of the interactive game, which will occur based on the application of resources by the other.

How to calculate effectiveness and efficiency

Because of the difference between effectiveness and efficiency, The methodology for determining one or the other is not the same. In this regard, the mathematical formulas for calculating these indicators are represented as follows:

• Effectiveness= (Result achieved*100)/ Expected result . The figure will be a percentage and, by applying a percentile table, we will be able to numerically quantify effectiveness. For example, from 1 to 10% will award a score of 1 or very ineffective, while from 90 to 100% will contribute a 10 or highly effective.
• Efficiency= ((Result achieved/actual cost)*Time invested)/((Planned result/planned cost)*Planned time). The calculation of efficiency will yield a number that, also subject 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 should the organisation prioritise?Meet deadlines or use fewer resources?

In this regard, the key lies in finding the balance between both parameters, which translates into a third concept, effectiveness, understood as a balanced solution between achieving set objectives with adequate spending.

To ascertain our effectiveness, we can employ your mathematical calculation:

Effectiveness = ((Efficiency value + Efficacy value) / 2) / Maximum scoren