Defining Organizational Effectiveness and Efficiency

Organizational Effectiveness and Efficiency

Defining Organizational Effectiveness and Efficiency
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The effectiveness and efficiency of a organization helps in determining the productivity of an organization and how it achieves its goals. The following article discusses the effectiveness and efficiency of an organization in detail.

Business organizations are the economic entities wherein are the resources being referred as organizational resources in the form of, Men, money, machines, materials, and information and the task of management is nothing but planning, organizing, directing and controlling (PODC) of the activities while utilizing the aforesaid resources so as to accomplish the predetermined objectives effectively and efficiently. The methodology, (having undertaken the organizational resources as inputs) which is put into practice in order to get the things done or the functions with their sequence carried out by management is what is said to be management process. It is through the effective management process that the outputs or the end results are attained in the form of efficiency, profit growth, increase in sales and organizational development in a way which is wanted or intended.

More often than not, the terms, effective, effectiveness, efficient and efficiency are commonly used in the management literature as they have to do a lot with the accomplishment of goals and objectives of a business organization, the organizational development and competencies. This leads us to discuss about the aforementioned terms. 

Effective’ is adjective and ‘effectiveness’ is the noun. The meaning of former term is producing the result which is wanted or intended or producing a successful result. The meaning of latter may be clearly understood with this sentence: There must be cost-effectiveness in our plans against the money spent; connoting giving the best possible profits or benefits in comparison with the money which has been spent, while it emphasizes on the end results.

As regards the terms efficient and efficiency, ‘efficient’ is yet again an adjectival form of which the noun form is ‘efficiency’.

The first of two signifies performing tasks in an organized and capable way; capable of achieving the desired results with the minimum use of resources time and efforts. While on the other hand, efficiency is the competence, implying the ability to do something well or achieve a desired result without wasted energy or efforts.

As has been mentioned above, a business organization is an economic entity and its survival and success are contingent on either in producing goods or providing services. In this way, for the accomplishment of organizational goals and objectives the effectiveness and efficiency must be observed. At his stage, efficiency indicates fewer inputs (resources) or producing more outputs as compared to a similar process that achieves the objectives, while effectiveness is of great importance indicating if it is worth doing in the first place or if it has the same effect as has been expected. If a business does not achieve what is needed then the efforts are ineffectual. What in general the term effectiveness indicates is the capacity to produce effect while efficiency means using resources in a way to maximize the output - production of goods or services. Peter Drucker defines clearly, “Efficiency is doing things right; effectiveness is doing the right things.”

The quotation of Peter Drucker has two parts using the word ‘right’ twice.  In case of the first part, it refers to doing things in a right manner while the second part connotes doing the things that are right. However, I suggest you a quick way to easily differentiate the terms, effectiveness and efficiency. If you use the word right before things you mean effectiveness and when used the same word after things it is efficiency. Here, in this context, the same word functions differently, that is, adverbially and adjectivally. 

To end with, no business grows vigorously nor can it achieve its objectives successfully unless it is backed by effective and efficient management. By efficient we mean it performs its operations while avoiding mistakes and in a smooth manner. It is effective, in the sense, it focuses on the results while measuring constantly whether the actual results meet the expected results. It thus must be said that a business organization must be both effective and efficient to grow and prosper while improving total organizational development and competencies constantly.



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