The 2020 Mid-Year Economic Update_long

Operations Q&A: Efficiency vs. Effectiveness

Should you sacrifice speed for accuracy?
LeeSchwartz

Question: Must you choose between being efficient or being effective?

Answer: Let's begin outside of the warehouse or factory. Think of a track and field sprinter. They have one goal in mind: Get to the finish line as quickly as possible. Now think of a heart surgeon. They must walk a fine line between speed and outcome. The heart can only be on the heart machine for so long, yet one slip and the patient’s life is in jeopardy.

The heart surgeon is balancing efficiency with effectiveness. In operations the two are also inseparable, joined at the hip. Consult your dictionary and you’ll see the following definitions:

  • Efficiency – accomplishment of or ability to accomplish a job with a minimum expenditure of time and effort
  • Effectiveness – adequate to accomplish a purpose; producing the intended or expected result

Or as world renowned management consultant Peter Drucker put it, effective is doing the right thing, while efficient is doing things right.

Bottom Line: No matter what the task, isn’t the goal to perform the activity as quickly and accurately as possible? Whether it is the manufacture of the widget or the shipping of an order, the faster the task is completed, the less it costs. Lower costs translate to greater profitability. And more profits could mean growth, financial stability or more satisfaction from your workforce as a result of bonuses or increased salaries.

But there is a balance to all this. Does doing the work at top speed mean that the task was done correctly, that you achieved the desired results? No. Order pickers who pick the fastest but make the most mistakes negatively impact the bottom line – and put their jobs in jeopardy. So does the factory worker who produces a record amount of widgets per hour, but must scrap 20 percent of the finished goods.

Your responsibility is to balance efficiency with effectiveness, regardless of your role. One without the other will prevent you from achieving operational success.

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