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Difference between Efficiency and Effectiveness

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We can define management as the process of getting things done through and with people to achieve a common goal efficiently and effectively. When we go through the definition, we find the two buzzwords efficiency and effectiveness 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. 

Difference between Efficiency and Effectiveness

What is 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.

What is 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 the cost is. 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.

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 Efficiency and Effectiveness

Basis 

Efficiency

Effectiveness

DefinitionEfficiency, on the other hand, means completing the task correctly with minimum cost and maximum profit.Effectiveness means doing the right task, completing activities on time, and achieving desired goals. 
Aim                                Its main aim is doing the task in the right way.Its main aim is doing the right task.
Crucial ElementCost and revenue utilization element is crucial in efficiency.Time element is crucial in effectiveness.
FocusIt focuses on completing the task correctly with minimum cost and the least wastage of resources or effort.It focuses on achieving the result on time.
Based OnEfficiency is based on strategy.Effectiveness is based on operation.
Time PerspectiveEfficiency generally has a short run perspective.Effectiveness generally has a long-term perspective.
Measured OnEfficiency is measured in operations of the organisation.Effectiveness of strategies is measured, which are made by the organisation.

Last Updated : 11 Jan, 2024
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