We explain what efficacy, efficiency, and effectiveness are and the differences they present. Also, what are its characteristics and examples?
Efficacy, Efficiency, and Effectiveness
Effectiveness, efficiency, and effectiveness are terms often used in the field of business administration, the meaning of which is not always clear and are sometimes used as if they were synonymous. In general terms:
- Efficiency. It is the ability of something or someone to achieve a proposed end through the best possible means.
- Effectiveness. It is the ability to achieve the proposed objective without taking into account the means or resources used for it.
- Effectiveness. It is the quantification of the specific capacity to approach the initially proposed task.
In simpler terms, we can say that efficiency implies achieving the goal using the best tools for it ; efficiency is the ability to achieve it even if the means are not suitable for it; and the effectiveness how much is achieved of the objective proposed at the end.
These notions are obviously related to each other, and are a frequent part of operational business analysis.
Characteristics of efficacy, efficiency, and effectiveness :
According to the dictionary of the Royal Spanish Academy, these three terms are defined as follows:
- Effectiveness. Ability to act or to achieve a specific result.
- Virtue and faculty to obtain a determined effect.
- Action with which this effect is achieved.
- Aptitude, competence, effectiveness in the position that is occupied or work that is performed.
- Effectiveness. Ability (quantitative) to produce the desired effect.
“The three E” of the administration
The productivity margin depends on the efficiency of the company.
These three concepts, in terms of administration , are considered the three fundamental tasks to be achieved by adequate management and which, if taken together, would guarantee the quality of the objectives achieved.
Thus, the productivity margin of an organization , be it a factory, a company of another nature or even a financial year, will directly depend on the degree of effectiveness, efficiency and efficiency that its parts achieve together and separately.
Efficiency in administration
Efficiency in administrative terms implies achieving favorable productivity, that is, achieving maximum results with a certain (sometimes minimal) amount of resources or inputs. It is often understood as a low measurement of the productive capacity of a company, taking into account elements such as time , efforts, capital and quality.
For its part, effectiveness has to do with the degree of satisfaction that the final product of the company shows in relation to the expectations of the final consumer or the recipient, that is, how well it satisfies their real or potential needs.
The effectiveness is estimated by contrasting the objectives and the results obtained.
When we talk about effectiveness in business administration, we refer to the degree of fulfillment of the proposed objectives , which is usually estimated by contrasting the ideal or projected plans (objectives or goals) and the results obtained, taking into account the general performance of the company. production line.
The relationship between these three terms is usually considered based on the following formula:
Efficacy + Efficiency = Effectiveness
From which it follows that the last includes the first two, and that the calculation of these two allows a general look at the functioning of the administrative set . From this perspective, it would be impossible to be fully efficient without first achieving good performance in terms of effectiveness and efficiency, so we are talking about strongly related concepts.
Quality includes the notions of value, design, promotion, and profit.
Quality is another fundamental concept in the analysis of the “Three E’s”, and which encompasses the innate characteristics of the product or service offered in order to satisfy its tasks, as well as the opinion that the client formulates about it: its conformity , your satisfaction, your preference criteria.
It is a concept that involves the notions of value, design, promotion and profit , and that is usually evaluated based on a set of standards and guidelines established to guarantee a minimum degree of final customer satisfaction.
The managerial approach
From a managerial perspective, the “Three Es” occupy a different place in the production chain and in the internal logic of the company. Thus, efficiency, for example, is played in relation to the procedural logic of the company , that is, in the transformation of inputs into products.
On the other hand, effectiveness responds to a directional logic, that is, how close the product obtained is to the expected results. Finally, the effectiveness is played in the comparison of the desired and undesired effects of the final product, as a result of the global evaluation of the processes that intervened.
Efficiency gets results in the fewest possible events.
From the above, the three principles that govern each concept emerge, and which (according to Killian, Z., 2004) are:
- Efficiency principle. “The strategic actor will make a dosed use of his resources in each event of the interactive game, which will occur depending on the application of resources by the other.”
- Principle of effectiveness. “Obtaining the results should require the fewest possible events. The encounter and friction should be minimized, and only occur as chained events integrally and organically oriented towards results.
- Principle of effectiveness. «The balance between the positive and negative effects of the results must be favorable for one actor and unfavorable for the other. In other words, given that each actor obtains results with positive but also negative effects, each actor will orient his strategy so that the negative effects of the other are greater than his own ”.
A simple example of efficiency, efficiency, and effectiveness can be illustrated in the measurement of the process of a design department of a company.
- Its effectiveness can only be measured by counting the number of design work completed in a stipulated time frame (one semester, so to speak), regardless of the cost in time or resources that this implies.
- Its efficiency could be measured according to the use of the resources assigned to it every six months ( paper, ink, instruments, computers, time, etc.) in view of the results obtained.
- Finally, its effectiveness would be evaluated annually, by comparing the two previous aspects and evaluating its role in the company’s products as a whole, to see whether or not it is satisfactory for the needy.
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