The Complicated Relationship Between Efficient and Effective

After reading a post by Bernie Siben, I got to thinking.

Efficiency sometimes gets a bad rap. Efficient means achieving maximum productivity with minimum wasted effort or expense. You can do something wrong very efficiently. Or you can do something right, but do it very inefficiently.

I think the concept is somewhat misunderstood. Consider this math problem:

Let us suppose you are working on a proposal. Two proposal coordinators, who each make $10/hr, could get the proposal together in 20 hours. However, the proposal manager, who is paid $100/hr, could put together the proposal in five hours. Which option is more efficient?

If you said it is more efficient for the proposal manager to do it, you are dead wrong. That’s right, you’re wrong.

It costs $500 for the proposal manager to do it and only $400 for the proposal coordinators to put the proposal together.

Efficiency doesn’t care if the end product is better. It doesn’t care whether it is harder on those poor proposal coordinators. Efficiency only cares about resources.

Effectiveness, on the other hand, cares whether what you are doing will produce the best results. To some degree, all of us are effective. All of our firms are, to some degree, effective.

Efficiency and effectiveness can work together or work against each other.

For example, if your accounting systems aren’t set up effectively, you wont be able to identify your best clients efficiently. Oh, you can still do it. It just might take a while.

On the other hand, because it would be so inefficient to dig into the data and analyze your client base, some might argue that it is not an effective use of time. Inefficiency can cause reluctance.

The degree to which you are effective is based on the proper and efficient execution of the right actions.

Efficiency and effectiveness are both important.

The complaints I hear most often are of A/E/C firms that are doing the wrong things, poorly and inefficiently. Yet, they may be reluctant to change because they have experienced some effectiveness over the years (otherwise, they wouldn’t be in business).

It is true that you should focus more on being effective than efficient. But it is important to understand the relationship between the two.