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Difference between Effectiveness and Efficiency

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  • Last Updated : 27 Jun, 2022
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We can define management as the process of getting things done through and with people to achieve a common goal effectively and efficiently. 

When we go through the definition, we find the two buzzwords effectiveness and efficiency, which are alike terms and popularly used by managers. They are essential elements of management. Though both are different, they are commonly misused and misinterpreted. 

Effectiveness

Peter F. Ducker defines effectiveness as doing the right things. It is concerned with achieving the organizational goals on time. The ultimate goal is to achieve the end result. It aims at achieving the results on time, no matter what is the cost. Its goal is to produce target production on time.  

For example, manager ‘A’ promised a company ABC ltd. to produce 3,000 units in six months. To achieve this target within time, the manager increased the working hours, labour and the number of shifts, etc. Now manager ‘A’ was able to produce 3,000 units, but at a higher production cost because of high wastage and mishandling of resources. Here, the manager was effective, but not so efficient.

Efficiency

Peter F. Ducker defines efficiency as doing things right. It means completing the task correctly with minimum cost. It improves the achievement of objectives through the use of minimum inputs. It aims at enhancing an organisation’s profit by reducing the cost involved in completing a particular task. Management is said to be efficient when for the same level of output, fewer resources are used and less costs are incurred. 

For example, manager ‘B’ also promised the same company ABC ltd. to produce 3,000 units in half the production cost of manager ‘A’, but in one year. Now manager ‘B’ can produce 3,000 units, but needs a longer period. Here, the manager was efficient, but not effective, as for the same output, more time was needed.

Therefore, management needs to obtain end results on time with as minimum cost as possible while maintaining a balance between effectiveness and efficiency. Generally, high efficiency is allied with high effectiveness, which is the aim of all managers. But the needless emphasis on high efficiency without being effective is also not desirable. Poor management is due to both inefficiency and ineffectiveness. So, management must be both, effective and efficient to make the organisation successful. 

Difference between Effectiveness and Efficiency:

Basis EffectivenessEfficiency
MeaningEffectiveness means doing the right task, completing activities and achieving goals. Efficiency on the other hand means completing the task correctly with minimum cost.
Aim                                Its main aim is doing the right task.Its main aim is doing the task in the right way.
Crucial ElementTime element is crucial in effectiveness.Cost and revenue utilization element is crucial in efficiency.
FocusIt focuses on achieving the result on time.It focuses on completing the task correctly with minimum cost.
Based OnEffectiveness is based on operation.Efficiency is based on strategy.
Time PerspectiveEffectiveness generally has a long term perspective.Efficiency generally has a short run perspective.
Measured OnEffectiveness of strategies is measured, which are made by the organisation.Efficiency is measured in operations of the organisation.
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