Efficiency vs Effectiveness in Business

Two important concepts related to the growth of any business is efficiency and effectiveness. One cannot be seen as more important than the other, and both have a role to play when it comes to streamlining daily and overall company activities.

This will be a topic we’ll be exploring over the next few weeks, with each blog detailing how you can improve your processes going forward.

Before we go any further, however, let’s define them –

Efficiency means doing the right things to produce rapid and consistent results.

Effectiveness means doing the right things to produce the results you want.

Efficiency Vs Effectiveness

Efficiency is directly related to profitability. Effectiveness is important for growth.

As a business owner, you’re consistently looking for avenues to maximise profitability. We should be documenting our processes and systems. We should then engage those around us in brainstorming ways to do things more efficiently. By improving and increasing efficiency we save both time and money, thus pushing profits forward.

No matter which way you lean though if you’re doing the wrong things you won’t get the results you want. So before deciding on any kind of approach, ask yourself “at present, am I really getting the results I want?”

Improving Business Efficiency

The ultimate way to improve efficiency is to begin measuring and evaluating all of your processes and systems. Again, your staff and employees can be a great help, as making them feel involved gives them a higher level of ownership of the outcomes. Engage your team to start documenting, evaluating and measuring every critical process in your company. As you become more efficient you’ll discover a new capacity for production and profitability.

There are a few simple ways of improving efficiency in a number of areas, including:

  • client service
  • delivery and distribution
  • waste cost reduction

Your clients will always be the most important resource in your business. By listening and actioning on what customers say about your company and products you can greatly improve the service you provide.

Customer awareness is imperative in producing interest in your products. You can maximise customer awareness through:

  • marketing, especially through social media
  • making the most of your website (redesigning if needs be)
  • encouraging word of mouth from repeat customers

Map out a workflow to describe processes your employees should follow when selling your products. By looking at all the tasks they need to carry out, you can often spot opportunities to save time and avoid duplication of work. This may include redesigning the way your staff work with digital and physical content to ensure they use their time efficiently.

Improving Business Effectiveness

The best way to improve effectiveness is for you as a business leader to take time on a consistent basis to evaluate, plan and focus. This is why it’s always encouraged for business owners to take strategic retreats every so often. By doing this you take a step back and are able to see the bigger picture. You can get clear on what results you really want, and then asses how you’re doing at getting those specific results.

In addition, make the most of your human resources department as they play the largest role in improving overall effectiveness. Get human resource professionals involved in the design and implementation of changes within the company to improve the organization. They offer unique perspectives that leaders may overlook and play an active role in identifying the right professionals for new positions within the company.

Organisational effectiveness is a business strategy designed to improve the efficiency of the company without reducing the quality of the products or services. In addition, by working with professionals from different fields or at different educational levels, a leader obtains new ideas to help reduce costs, improve the product and provide quality customer service.

In conclusion, businesses growth is largely a function of efficiency and effectiveness!

Be sure to check in next week where we’ll be digging even further into business efficiency. Providing our top ten tips to follow and implement for a business looking to take steps forward!