Saturday, 14 July 2012

Efficiency, Effectiveness and Productivity

You will recognise the 3 word in the title to this post as being .... well, what, exactly? related terms? or synonyms?

If you do a search for these terms online, you can find lots of definitions and lots of ratios ... many go which are just plain wrong!

In descriptive terms, efficiency is doing things right ... and effectiveness is doing the right things.

In simple ratios ... Efficiency = Actual Output / Standard Output (i.e. it measures how good performance is compared to some measure of what the machine or the person or the team should do ... in the case of a machine this might be the manufacturer's specified optimal performance).

Effectiveness = Standard Output / Resources Required (i.e. it measures how well we turn resources into - quality sets of - our planned output)

Then productivity becomes Efficiency x Effectiveness

= (Actual Output / Standard Output) x (Standard Output / Resources Used)

= Actual Output / Resources Used

Simple, really!

(This has been a public service refresher announcement!)

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