Should You Be Efficient or Effective? (Yes, There’s a Huge Difference)
Technology is a wonderful thing. It has shortened the time it takes to get things done in every aspect of our lives.
We love being able to carry our phones with us and communicate from anywhere. We like being able to find information in a few clicks. In our workplace, technology has streamlined all of the mundane tasks that once had to be done by hand.
HR software keeps track of hours worked, calculates deductions, and prints out employee checks. We can even depend upon word processing programs to correct our spelling and grammar errors in business writing.
All of these tools contribute to workplace efficiency – how we get things done. Efficiency means that we can get more done faster, and it’s called ”working smarter”.
The other big “E” of business is effectiveness. And while it is related to efficiency in some ways, it is a totally separate (and much more important) factor in business success. Effectiveness relates to what gets done. Or more aptly put – results.
We can be as efficient as the technology and procedures allow us, but if “working smarter” does not help to achieve quality results for the business, then what’s the point?
To better understand the difference between these two aspects of operating a business or an organisation, it’s good to discuss some facets of a business with the two “E’s” in mind.
Goals and objectives
All businesses have goals, and they typically relate to revenue and profits.
Thus, there might be a goal to increase sales by 10% over the next 12 months. Or a goal to reduce customer attrition by 5%. Meeting those goals will determine the effectiveness of the business.
Objectives, on the other hand, are the tasks and activities that help us to achieve that effect. Thus, a new logistics system might be put in place to streamline the inventory and drive the production; new CRM software could be adopted to structure and automate responses to customers before, during and after sales.
These examples are all about efficiency – doing things in a better, smarter, and faster way so that organisational goals can be met. The objectives are therefore the activities we need to accomplish to meet the goals. They make work more efficient. But in order to give effective results, the objectives must also lead to an end goal.
Example: In areas where consumers have a choice of TV and Wi-Fi providers, there tends to be a high turnover rate. This is because the customer service is that bad – yes, just plain bad.
Companies have adopted automated phone answering systems to respond to customer questions and issues to accomplish higher efficiency. The goal is to “weed out” calls for which there are simple responses, cutting the number of calls that actually reach a real employee. The other goal, of course, is to save money by lowering numbers of employees.
Unfortunately, the efficiency results in irritated customers tired of punching numbers, sitting on hold, and ending up in the wrong “place” within the system. If this happens often enough, angry and frustrated consumers will drop the service provider. Efficiency has streamlined the processes for the company, but the result for the customer has been ineffective. Saving money is useless when customers are leaving and paying less for the service.
Effectiveness in leadership
Leadership is another area of business operations in which both efficiency and effectiveness come into play.
Certainly, technology has provided numerous methods by which leadership tasks can be made more efficient. Email alone has made a huge difference in the time it takes to communicate with one’s team members, delegate tasks, etc. Project management tools now allow team members to collaborate on projects and tasks, no matter where they may be physically. All of these tools and efficiency should free leaders up to focus on greater effectiveness.
There is no lack of research, information, and writing about effective leadership. However, in the end, an effective leader is one who achieves results and helps a business to meet its goals.
A lot of “efficiencies” can be put into place, but they may not contribute to effectiveness. In fact, they may even become detractors. If those efficiencies reduce team morale, personal communication, sense of camaraderie, etc., the results may be negatively impacted.
Efficiency in sales/marketing
Here is another area in which technology has stepped up to make operations more efficient.
• Sales can be tracked, and salespeople alerted when a customer should be re-contacted.
• Tools and apps can tell online retailers when and where a customer was “lost” in the sales funnel and designate the best places to re-target that customer. See the complete list of cool CRM features
• Content for blogs and social media can be somewhat automated as can e-mail campaigns. Posts can be prepared in advance, for example, and an automated publishing schedule will take care of getting them “out there.”
• Based on individual visitor/user behaviors, different types of content can be personalized and delivered individually
• Data can determine where and when customers are online so that they can be targeted in the right places at the right time
• Psychological and demographic profiles can tell marketing and salespeople the type of content to produce and on which platforms to publish it.
All of this efficiency saves marketing and salespeople from following dead ends in the pursuit of customers.
But the “proof is in the pudding”, as they say. Has all of this efficiency provided the desired results? Are sales and revenue up?
The results serve as the measure of a marketing campaign’s effectiveness. And if sales aren’t up, it’s time to take a look at all of the automation and efficiency, checking whether it’s undermining effectiveness.
Perhaps the critical relationships and trust that must be established with customers have fallen by the wayside in the drive to become more efficient.
Finding the perfect balance
If business owners were to ask themselves whether efficiency or effectiveness is more important, the answer should be effectiveness. This is how goals (and ultimately profits) are measured.
Unfortunately, most management analytics are skewed toward efficiency – we measure how much is saved by putting “smart efficiencies” in place that can streamline procedures and processes.
When efficiency is of itself seen as a goal rather than as a means to a goal, the company’s results and profit will suffer in the long term.
Technology is a wonderful thing. It can automate tasks that are mundane and boring; it allows more efficient communication. However, when it’s not measured against your company’s goals, no one is asking and answering the important question “Is all of this efficiency contributing to our effectiveness?”
When setting up a business dashboard to monitor your business results, remember that what matters are the end goals. Other smaller objectives are only a means to achieve the long-term success.