Effective, Efficient & Productive

Introduction 

Business and academia characteristically use a variety of terms and definitions to describe notions of effectiveness, efficiency, and productivity, as used in the workplace. However, the conditions are not always defined, interpreted, or accepted consistently within and across industries and organizations.

The definitional confusion is typically concerned if the terms are related, synonyms, or merely two sides of the same coin. While many business people may point to terminology dissimilarities, all will generally agree to the correlation of the underlying concepts and use with the business cycle and process measurement and reporting.

Creating successful business strategies with specific effectiveness, efficiency, and productivity goals and metrics within a strategic alignment framework model are very different. Executives, in the current environment, need to understand and appreciate the value of embedded a productivity factor within each corporate business and technology strategy. 

In simple terms:

• Effectiveness: Doing the right things.
• Efficiency: Doing things right.
• Productivity: Output / Input.

Further clarification is covered below.

Effectiveness

Effectiveness is the capability of producing the desired result or the ability to produce the desired output. When something is effective, it has an intended or expected high-quality outcome and higher overall business performance.

Efficiency 

Efficiency is an internal measure of performance that calculates how well the organization converts inputs into outputs. The more the ratio of outputs to inputs approaches 100%, the better the efficiency of the process will be.

Efficiency is the ability to do something or cost-effectively produce something without wasting resources, materials, time, or energy.

Productivity

Productivity is a measure of the efficiency of a person, machine, factory, system, etc., in converting inputs into useful outputs. At its simplest, labor productivity is the amount of output per worker. 

It is a calculation of the output of goods and services to the inputs of the resources used in the production of the products and services.

Productivity also refers to a combination of efficiency and effectiveness that measures how well a business transforms resources into products. Thus, an organization that focuses on either efficiency or effectiveness is either partially productive or not productive at all. To achieve total productive success, executives need to be a focus on balancing the effectiveness and efficiency goals.

Focus on efficiency alone, has the potential to endanger business competitiveness. For instance, emphasizing the only efficiency may overlook or discount the contribution of the business activity to customer value creation. Similarly, exclusive attention on efficiency disregards the cost-effectiveness of the event. Productivity improvement has the potential to expand competitiveness by lowering costs, improved use of human and other resources, and a positive impact on the financial plans.

Productivity Measurement 

Productivity measurement is dividing the units of output (product), by the groups of input (capital, labor, and materials).

 Employee productivity measurement approach consists of metrics and a reporting to identify:

• How employee output is contributing to organizational goals and targets.
• The number of employees or group produced units for a particular period.
• Feedback and comments of co-workers.