Efficiency vs Effectiveness

Hands holding traditional and energy efficent lightbulbsEfficiency vs effectiveness. Both terms are the lexicons of improvement. Combined with productivity the three terms are used perhaps more than any others in setting targets in strategic plans, defining metrics for dashboards and balanced scorecards, and setting boundaries for acceptable operational performance.

Defining Efficiency vs Effectiveness and Productivity

Somewhere in our development we seem to learn when and how to use efficiency vs effectiveness or when productivity is appropriate for use and when it is not. Although most people view efficiency, effectiveness and productivity as synonymous there are times when distinctions are useful. Interestingly, in looking at the uses of each term there seems to be clear associations in IT.

  • Efficiency we associate with costs; power and energy; labor; and operations
  • Effectiveness is associated with strategies; organizations; costs, and testing
  • Productivity is associated with applications; tools; metrics; and labor

When each term is viewed within the context of education other peculiarities emerge suggesting we do not consider the terms as synonymous as we might think. To offer just one illustration consider the contexts of when we use effectiveness versus efficiency when discussing teacher performance.

Despite the tendencies there are countless misuses of the terms primarily it seems from a belief efficiency and effectiveness are equivalent in their meanings. This confusion results in lots of people using them interchangeably at times they should not. Having dealt with this for many years in various quality movements and under numerous ITSM/ITIL continuous improvement initiatives I decided to settle on some overly simple definitions for each term to help people distinguish each term.

  • Efficiency is about doing the same with less;
  • Effectiveness is about doing more with the same;
  • Productivity is doing more with less

Efficiency vs Effectiveness

There are times when you have to move beyond the simple definitions and look at efficiency and effectiveness in more detail. This is usually when you want to begin to measure or quantify performance and show improvement.

Efficiency is a ratio of quality representing an ability to accomplish something with minimal inputs. Although you can focus on the output side of efficiency most often we focus on the inputs.

Effectiveness is mostly about an ability to adequately accomplish an intended purpose. It can be a go-no go measure for situations where the result is binary or it can be a success-fail ratio.

Illustration of efficiency focused on time and effectiveness focused on outcomeEfficiency tends to be more process oriented in its focus where effectiveness targets outcomes. Efficiency emphasizes the economies particularly time and money whereas effectiveness emphasizes how well the intended outcome was accomplished.

Within in IT there are countless areas to apply either concept as well as that of productivity. Given our willingness to use the terms interchangeably it may not matter so much how precise we are only that we achieve our intended goal. Although, when attempting to benchmark against peers or to industry performance standards it does start to get tricky.

The Conflict of Efficiency vs Effectiveness

Efficiency vs EfffectivenessThe duality of performance measures can be a source of conflict. Just to illustrate we might judge a single help desk case as effective or not, while also judging overall help desk support for effectiveness. Similarly, the efficiency of a help desk case and overall efficiency measures require a different set of examinations.

Those involved with help desk performance know efficiency and effectiveness are always at odds with each other in a natural tension. That is why a balanced approach is preferred which relies more on productivity and a balanced scorecard of efficiency and effectiveness metrics.

Understanding the nature of the conflict between efficiency vs effectiveness is an essential part of IT decision making regarding services and technology. CIO’s experiencing the pressures of budget cuts must instinctively shift their thinking so that the forced efficiency doesn’t result in adverse effects on effectiveness.

For more on IT performance you might also read IT Performance Metrics: Balanced Scorecards & Leading vs Lagging Indicators which offers additional views on efficiency and effectiveness.

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4 Responses to Efficiency vs Effectiveness

  1. Richard Sullivan says:

    I think there are two other aspects that need to be covered in this discussion and which you alluded to briefly – affect and impact. When we discuss efficiencies and effectiveness in the context of total productivity, we have to include the overall affect and impact on the area where we are trying to improve on efficiencies and effectiveness.

    The affect and impact on a given area, whether that is lab support, application support, research and development or any other given area where IT is involved, has to be considered both in the short term and in the long range planning. Of these two, impact is the most visible and probably the most likely to change the overall effectiveness of the CIO’s role.

    We recently witnessed the impact of Hurricane Irene on the east coast. The efficiencies and effectiveness of the weather reporters, FEMA and local government staff, and other support services could not have been better conducted; however, the impact of the storm, the torrential rains and the damage caused by the post-storm flooding could not have been stopped no matter how efficient or effective the pre-storm preparations were.

    One could ask, what the comparison of this event has in relationship to IT in higher education and that would be a fair question. The comparison, as I see it, is that no matter how well you prepare, no matter how efficient or effective your vision for your department and programs ‘will’ be, no matter how well you communicate to the administration, staff and students, you still have to deal with the aftermath of any changes to the environment that you make towards the end objective of being more efficient. The aftermath could be positive or negative depending on what was done, but you have to be ready to support the change in policies, procedures or staffing to your constituents while limiting the negative impact or affect on their environment.

    A prime example is the implementation of change management. If performed correctly and with proper governance, change management can have an extremely overall positive affect on IT operations. At the same time, even if performed correctly, change management has a tendency to slow the implementation process. The impact to the end users, if they have been accustomed to having their requests acted upon immediately, will be received as a negative change. The CIO and the IT department has to be prepared to support or even defend these types of changes and the impact of these types of changes.

  2. Really great insights. In thinking about your comments it seems the focus has to turn towards the purpose of the activity or item under consideration. To continue the change management example, a determination on effectiveness or efficiency has to start with a clear understanding on the purpose of change management. Change Management for risk management whether operational or project related would be expected to have a conflict with user satisfaction and vice versa. Therein lies the rub.

    CIO’s must understand how to develop a clear service strategy that balances the goals of IT controls with service quality or agility.

  3. J. E. Smith says:

    From over twenty years of fixing IT organizations for clients, your argument is a bit of the old chicken verses Egg debate. Drucker said it best, “nothing is so useless as doing efficiently that which need not be done at all” (I put the quotes for credit, not sure I have it exactly verbatim “.

    When re-engineering a company’s utilization of the IT resource, two reoccurring themes have been at the forefront at every engagement. The CEO was almost always content to let his officers figure out what to do with IT and the CIO was so busy dealing with current and planed initiatives, no one was looking in the rear view mirror. I can’t tell you how many times I discovered significant use of IT resources, being done very efficiently, but for which we could not find a benefactor.

    Before we get too concerned about the nuances of effective or efficient we should apply Drucker’s challenge, should we even be doing the thing at all, effectively or efficiently.

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