Efficiency – Definition, what it is and concept

In economic terms, efficiency is the ability of an organization to meet predefined objectives under pre-established conditions. It is, therefore, the assumption of production challenges and their fulfilment under their own parameters.

Within the scope of the study of the company, the term effectiveness is known as the level or ratio of compliance with the economic objectives defined by an organization. They are usually collected in a business plan.

This concept does not take into account the means used to reach the estimated production goal or results. Regardless of the resources used, only their achievement is valued. In that line, it focuses on the concept of results obtained.

In many cases, companies propose effectiveness purposes for the fulfilment of works and projects with a time limit to devote or with quantitative objectives.

A construction company, for example, will act effectively if it plans to build a six-kilometre wall in two weeks and achieves it by meeting the deadlines.

Additionally, efficacy is considered as a efficient regulation principle, as is the efficiency. According to this point, there would be several factors that affect it: a clear definition of the objectives, simple execution, coordination of tasks and avoiding legal loopholes.

Effectiveness and efficiency

It is common for this concept to be related and even confused with that of efficiency. However, the differences between both phenomena reside precisely in the non-use of their capabilities or the control of their resources in the best possible way or the most optimal.

On the other hand, organizations seek to achieve their objectives so that they achieve economic benefits thanks to the optimization of its resources, so they are governed by principles of efficiency. This point also establishes the ability to the competitiveness of a company versus the rest.

This will prepone this principle to that of effectiveness, which tends to focus as more generic by focusing on the achievement of objectives. In other words, a company can become effective without being efficient and vice versa.