The words “efficiency” and “effectiveness” are regularly employed regarding individual performance in organizations; but there is not a definite way to measure these variables. Below are suggested measures to consider; and also how they can best be used.
In his article “Useful Performance Measures & Metrics – How to Measure Efficiency & Effectiveness” Michael VanBruaene states that measuring efficiency and effectiveness should be linked to an organization’s quantifiable objectives and performance standards.
Here are a few ways VanBruaene helps us define efficiency & effectiveness.
Efficiency – viewed in terms of how an organization uses its resources, such as available funding and staff, to achieve organization objectives.
Efficiency measures include:
- Per unit costs
- Cycle time
- Response time
- Per unit full-time equivalents (FTE’s)
- Staffing ratios
- Per unit equipment utilization
Effectiveness – the extent to which the service provided meets the expectations of the company and/or a customer.
Effectiveness measures include:
- Using Efficiency And Effectiveness Measures
Here are some ways to use these measures and the types of questions they raise, such as:
- What is the trend?
- Are the ratio’s good or bad, compared to our efforts and circumstances?
- Are our ratios becoming better or worse?
- Is this what we expected?
- If there is no substantial change year to year, is this good or bad?
- How do we compare to other organizations in general, to similar organizations?
- How can we make better use of our resources? What can we do to better leverage our technology, financial and staff resources?
The specific ways to measure the company’s objectives can help the organization & the individuals understand best possible ways to utilize their time & efforts.
Refer to VanBruaene’s article for further detail regarding the measures outlined above.