Efficiency and effectiveness are the very common terminologies in the business and economics world that are often used interchangeably with one another. Yet, they both sound similar and begin with the same letter, but they are clear differences between them. This article will help you to know the complete difference between efficiency and effectiveness. The blog has the following main topics.
Definition Of Efficiency
Efficiency is the ability to avoid wasting resources like energy, effort, money, and time while performing a job or producing the desired result. It is the ability to do things in the right manner and produce maximum output from a given input with minimum resources so that work is done faster. It helps to calculate performance and productivity by making some comparisons between budgeted and actual outputs.
For example, A car is an effective form of transportation as it moves people across long distances to a specific place but it is not efficient because it uses maximum resources such as fuel and others.
Definition Of Effectiveness
Effectiveness on the other hand is the capability of producing the desired result or the ability to produce desired outcomes. It determines how well you get to your objectives. Effectiveness is inquisitive in nature. This means that it communicates and imparts the relationship of a firm with the macro environment of the business.
Difference Between Efficiency And Effectiveness(Table)
|Basis For Difference||Efficiency||Effectiveness|
|Definition||It generally refers the completing a task with minimum cost, optimum utilization of resources, and in a cost-effective manner.||It refers to the completion of a task on the time, no matter whatever the cost.|
|Focuses On||It focuses on inputs and outputs.||It generally focuses on means and ends|
|Consideration||Time is the main consideration of Efficiency.||Cost is the main consideration of effectiveness.|
|Approach||Its approach is considered to be yield-oriented||Its approach is time-oriented.|
|Effort Orientation||It is effort-oriented||It is not effort-oriented|
Key Differences Between Efficiency And Effectiveness
Some of the main differences between efficiency and effectiveness are as follows.
- Efficiency is the ability to avoid wasting resources like energy, efforts, money, and time while performing a job or producing the desired result. On the other hand, Effectiveness, on the other hand, is the capability of producing the desired result or the ability to produce desired outcomes.
- The approach to efficiency is yield-oriented whereas the approach to effectiveness is considered to be result-oriented.
- Efficiency focuses on “doing things perfectly”. On the other hand, effectiveness clearly emphasizes “doing perfect things”.
- Efficiency has a short-term perspective while effectiveness keeps long-run considerations.
- Efficiency is the outcome of actual output derived from the given number of inputs but effectiveness is related to the means and ends.
So, with the above concepts and differences, we can conclude that both efficiency and effectiveness have eminent space in the business and economic environment which must be monitored and maintained by the businesses because their success lies on them. Efficiency is the outcome of actual output derived from the given number of inputs but effectiveness is related to the means and ends. The approach to efficiency is yield-oriented whereas the approach to effectiveness is considered to be result-oriented on the time.
Effectiveness has an extroverted approach that high spot the relationship of the business organization with the world. On the other hand, if we talk about efficiency then it clearly focuses on reducing the wastage of resources in order to achieve the output with a stated number of inputs.