Effectiveness and efficiency

Effectiveness and Efficiency Differences – MBA Articles

In the management subject, two of the very common terms are used. They are, Effectiveness and Efficient. These two terms are very interrelated to each other that a manager or VPs have to take care of.

Let’s try to understand the effectiveness and efficiency with the real-life examples.

Effectiveness & Efficiency Definition

What is Effectiveness

Effectiveness is the end result or impact of something. Effectiveness is a concern with the outcome of certain activities or products. It is about doing the right task, completing activities and achieving goals.

For example, a car can run 150 KM/hr without any problem.

Here, in this example. The focus is only on the result that a car can run 150 KM per hour without any problem. It does not address how much fuel is being used.

What is Efficiency

While effectiveness is a concern with the outcome, efficiency is a concern with how the resources are being used. Efficiency means using fewer resources or as much as possible. Efficiency talks about time and effort.

For example, a car consumes very little fuel.

Let’s try to look at the following diagram to better understand the relationship between effectiveness and efficiency.

effectiveness and efficiency difference
Effectiveness and Efficiency Relation

Effectiveness and Efficiency Key Differences


Although these two words sound a bit similar in nature, they have their own importance in any organization. A company must consider the effectiveness of the employee and as well as the efficiency of the employees.

Effectiveness has an extroverted approach, meaning it highlights the relationship of the business organization with the rest of the world in order to attain a competitive position. The effectiveness of any organization helps in judging the potency of the whole organization among other competitors.

Efficiency, on the other hand, has an introspective approach meaning it measures the performance of operations, processes, workers, cost, time of an organization. It measures costs, time used to achieve the output with the stated number of inputs.