Management and Organizations | Efficiency and Effectiveness

Discuss the difference between efficiency and effectiveness and include a specific example to support each concept.

Answer:  

• a. Efficiency refers to getting the most output from the least amount of inputs. Because managers deal with scarce inputsincluding resources such as people, money, and equipmentthey are concerned with the efficient use of resources. For instance, at the HON Company plant in Cedartown, Georgia, where employees make and assemble steel and wooden office furniture, efficient manufacturing techniques were implemented by doing things such as cutting inventory levels, decreasing the amount of time to manufacture products, and lowering product reject rates. From this perspective, efficiency is often referred to as "doing things right"that is, not wasting resources.
• b. Effectiveness is often described as "doing the right things"–that is, those work activities that will help the organization reach its goals. For instance, at the HON factory, goals included meeting customers' increasingly stringent needs, executing world-class manufacturing strategies, and making employee jobs easier and safer. Through various work methods and programs, these goals were pursued and achieved. Whereas efficiency is concerned with the means of getting things done, effectiveness is concerned with the ends, or attainment of organizational goals.

Management, 10e (Robbins/Coulter)