Question

Define concepts of efficiency, effectiveness and productivity respectively, and explain their interrelationships

Answer 1

Efficiency

Efficiency indicates peak performance that uses minimum inputs to achieve maximum output. For example, if a manager wants to convey a message to his employees, sending them an email collectively is a more efficient method as compared to writing a letter to each one of them. To be efficient, one must do things the right way by eliminating or minimizing the number of unneeded resources ,including time and money that is used to generate a given output. When the efficiency of a company improves, its costs are reduced, time is saved, and its competitiveness is enhanced.

Effectiveness

In order to be productive, it is imperative that we do the right thing to achieve the desired outcome. The only way to measure one’s effectiveness is to observe if the implemented action has achieved the intended result. This analogy can be applied to a swimmer in the Olympics. If a swimmer desires to win, the first thing he must do is perform the act of swimming towards the finish line. The only way to understand if his actions are effective, is to see if it takes him closer to his goal.

Productivity

Productivity is the measure of outputs divided by inputs. All the activities that get done in a day may be considered as the output, and the resources put into them are the inputs. For example, consider a factory that employs 100 people and produces 1000 chairs per day Therefore, the productivity of each employee is 1000 divided by 100 which equals to 10 chairs per day.

The three concepts are interrelated, as productivity combines both effectiveness and efficiency. In order to be productive, an organization must maximise its output for the total input. Therefore, it needs to be effective (do the right thing) as well as efficient (do things the right way) to be productive. It must be noted that, efficiently doing the wrong tasks is a waste of time. Similarly, effectively doing a certain task in the wrong way will not yield optimum results. Combining efficiency and effectiveness is necessary to eliminate the shortcomings that arise from using them alone.