Efficiency and effectiveness - the difference explained simply

In practice, the two terms are often confused, used imprecisely or synonymously. However, the differences are huge, as the definitions show.

Definition of effectiveness

The Duden dictionary defines effectiveness as "the ability to achieve desired results". Effectiveness refers to whether the result achieved corresponds to the previously desired and defined goal. If you act effectively, you are doing something that brings you closer to your stated goal. When the project manager evaluates the effectiveness of your work, it is about WHAT you have done and whether the result meets expectations.

The Duden dictionary defines efficiency as "the ability to achieve desired results with the least possible effort". Efficiency therefore refers to how well resources (such as time, money, materials) are used to achieve a specific goal. It is about completing tasks quickly and without waste. It is about cost-effectiveness and achieving the best possible cost-benefit ratio. Act efficiently, act in the right way. When the project manager evaluates the efficiency of your work, it is about HOW you acted to achieve the goal.

It is not always easy to say which actions are effective or efficient and to what extent. The difference becomes clear in the following four practical examples.

Example 1: All roads lead to Rome?

If your declared goal is to travel to the eternal city to drink an espresso in the Piazza del Popolo, you could immediately set off south on foot. You will get closer to your destination step by step on foot. However, it is more efficient if you go to the nearest train station or airport instead and buy a ticket to Rome there.

But is it really that simple? No. Because what is really efficient in terms of project management depends on which target dimension the efficiency should relate to:

• If time is a scarce resource, we do everything right with the plane.
• However, if our goal of "drinking an espresso in Rome" is to be achieved in the most CO²-neutral way possible, the bicycle is probably the best way to reach the goal efficiently. We need to adapt our process accordingly.
• If we have to act in a cost-saving manner and time is not a scarce resource, walking or cycling are probably the most efficient alternatives to reach our destination.
• If both time and costs are limited, the right measure is not to adapt our method and our processes, but rather to adapt our goal definition and make cutbacks: If the goal is now just "drink espresso" we can down the espresso in the office coffee kitchen and thus act not only effectively, but also highly efficiently.

Companies A and B both set themselves the goal of increasing their turnover by 10% within six months.

Company A launches a marketing campaign and hires external digital marketing, advertising and PR agencies. Ads are immediately placed on all channels. Paid ads, print ads, radio and TV spots are produced and published. Headhunters are used to recruit new sales staff, who plunge into a cold-calling marathon. After six months, it turns out that sales have actually increased by 10%. This means that company A has achieved its goal and the desired result. The action was effective.

Company B first plans the "sales increase" project specifically in project management software. It uses data to analyze which channels have been used to acquire the most customers. It then takes targeted advertising measures only there. The sales employees contact satisfied customers and start a recommendation campaign so that they in turn recruit new customers. All work, efforts, successes and suggestions for improvement are documented in order to further optimize the process during the course of the project and after its completion. This was efficient management and action, as the resources of time, budget, personnel and technology were used in a targeted and careful manner. At the same time, the action was also effective, as company B also achieved the target of a 10% increase in turnover.

To apply for leave, your company's employees contact the HR department. There they receive a printed analogue application form, which they take to their workplace or home to enter the desired leave periods. Employees then hand in their leave requests to the HR department. The HR department receives the request, checks whether there is still enough leave budget available and forwards the request to the relevant team or project manager.

If they give their approval, they return the signed application to the HR department. The HR department informs the employee whether the leave request has been approved and enters the leave in the calendar, where colleagues can see it and take it into account when planning their own leave. The request is then scanned, digitally indexed and archived in the document management system, and the analog paper document is filed away. In the event that the leave request is withdrawn or rescheduled at a later date, the document is retrieved to initiate the change process.

In fact, it is not often that you can work efficiently without being effective at the same time. In practice, however, this is possible. For example, someone can work very quickly by using resources such as time or materials efficiently, but if the work does not deliver the desired result in the end, it was still not effective.

The following scenario illustrates this:

1. A work instruction is formulated on a ticket that is required to complete a project task.
2. The assigned agent starts working on it.
3. In the course of processing, the task changes or the task has become obsolete in order to achieve the objective.
4. The project manager or person responsible for the work package fails to inform the agent of this.
5. The processor therefore works efficiently towards a result that is no longer necessary to achieve the goal.

In software development, it is very easy to work efficiently without being effective. In terms of efficiency, for example, an engineer creates software code that never needs to be executed in the end.

To prevent this dilemma, a well thought-out change management process with subsequent validation of the requirements provides a remedy. The goal must always be clear to everyone involved. Well-organized project communication is therefore essential.

In project management and project work, both efficiency and effectiveness are required in order to achieve the project objective in line with the overarching corporate objectives. Anyone who subordinates everything in project work to the idea of efficiency, including effectiveness, runs the risk of planning highly efficiently in the wrong direction, handles the wrong projects highly efficiently, efficiently fills positions in the project team with the wrong personnel and efficiently and consistently pursues the wrong goals.

• Especially at the beginning of a project, i.e. in the initialization and definition phase, your approach should be characterized above all by effectiveness. This is about the sober analysis of the initial situation, the documentation of the client's requirements and the definition of specific, measurable, realistically achievable and scheduled goals (SMART method).
• Only after you have operationalized the goals and defined individual project phases and milestones in the work breakdown structure, sorted them in the schedule and scheduled them in a flowchart, can you choose the appropriate methods to achieve these goals in the most resource-efficient way possible.
• You should strive to further increase efficiency throughout the entire project, but it is also important to regularly scrutinize the effectiveness of the project's progress as part of the status reports.

The short answer is that both are important.

However, this question always depends on what goals are being pursued. In some cases, it is more important to work efficiently in order to save resources such as time and money and to speed up processes. In other cases, it is more important to work effectively to ensure that the goal achieved actually delivers the desired result.

Ultimately, however, the primary focus should be on effectiveness, as the clear definition of goals and their fulfillment are the absolute foundation of productive work. Without an effective way of working, however, you will not get very far, as you will waste too many resources and achieve little output with a lot of input and effort. That would be uneconomical.

Efficiency and productivity are two terms that are often associated with each other, but they describe different things.

Efficiency refers to how well resources such as time, materials or labor are used to achieve a goal. It is about how an action, task or process is carried out to achieve the desired result with minimal use of resources.

The term productivity, on the other hand, refers to how much output is achieved in relation to the input (resources). It is about how much value (e.g. in the form of goods or services) is generated with the available resources.

For example, a company that introduces a new production machine that produces the same amount of goods in half the time would be considered more efficient. If the same company produced the same amount of goods in the same amount of time, but with fewer resources, it would be considered more productive.

Comprehensive project management software such as Projektron BCS is a valuable support for any project team in every respect.

Projektron BCS helps your project team to carry out projects more effectively and efficiently by improving communication and collaboration within the team, simplifying task management and supporting project planning. In BCS, you plan processes and successively optimize them based on experience and data. In this way, BCS helps you to complete your projects more successfully and increase the productivity of the project team.

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