Common response to this observation is:
"Aren't they the same?"
No! No! No!
Efficiency != effectiveness
Efficiency is not equal to effectiveness. In many situations choices based on efficiency can lead to very ineffective solutions.
So what is the difference? Let me give you an example.
Given a group of people stranded in the middle of a jungle. A manager steering on efficiency concentrates on how fast these people can chop their way through the jungle to get out of there. Steering on effectiveness changes the focus to making sure they group moves in the right direction.
This is further illustrated in the definitions on the balancedscorecard.org (which contains many government definitions of this terminology):
Efficiency is the number of chopped trees per hour and effectiveness is the degree at which you attain your goal: how fast you leave the jungle.Effectiveness: (a) Degree to which an activity or initiative is successful in achieving a specified goal; (b) degree to which activities of a unit achieve the unit's mission or goal.
Efficiency: (a) Degree of capability or productivity of a process, such as the number of cases closed per year; (b) tasks accomplished per unit cost.
So, why bother?
As mentioned at the start of this article we sometimes make decisions based on the wrong reason: efficiency.
In many places we have been taught that efficiency is a good thing and we have even implemented this on a large scale (factories, work places). Doing nothing at work is (by most people) frowned upon. An employee who is asked to do nothing at work will start wondering about his job security. Why? Well, we believe everybody needs to do his job, so you have to do stuff.
To be honest I prefer an effective bouncer over an efficient bouncer anytime. Imagine a bouncer who's trying to be as efficient as he can be. He would be throwing people out of the club constantly, which would at some point ruin the business. An effective bouncer is somebody who has nothing to do, meaning the club is safe and there is no trouble.
I don't find myself in the middle of the jungle very often or being thrown out by a bouncer. How does this apply to you average work environment?
Here are just two examples of the many I've encountered in real life:
*) Trying to schedule a training course for 100 people. Based on efficiency the company tried to get the trainer to do bigger classes so he needed less time to teach. Turned out it was more effective to train 13 course for approximately 8 students that it was to try and teach only 5 classes of 20 people. The difference was facility. The big rooms were rare and hard to book and therefor the time it took to train all staff was longer.
*) A company was being controlled on the basis of efficiency, so everybody had to be utilized as much as possible. This in itself is not really a bad thing as long as you understand and accept the consequences. When the company was asked for a major deal they were unable to respond to this because of the utilization and the resulting loss of responsiveness, everybody was just fully booked to the max. Increasing efficiency may lower effectiveness due to loss of responsiveness.
As a final note: I'm not saying that efficiency is bad. Efficiency as a single goal is a bad thing. If used properly it is possible to increase effectiveness by increasing efficiency. Just remember you might get more effective by lowering efficiency in some places. ;)