Measuring efficiency and effectiveness in business

Image courtesy of Stuart Miles at FreeDigitalPhotos.net

Hello readers, we commonly hear sentences like we have to be effective and efficient in business. Today I will be writing about ways to measure effectiveness and efficiency. Most of us know what efficiency and effectiveness mean but anyway I will still define them.

A business is said to be effective when the established goals and objectives of the company are achieved. Thus, effectiveness is said to be achieved when an individual meets its organizational target. While efficiency deals with your ability to use the resources available to the maximum.

Effectiveness measures the achievement of objectives, thus we can measure effectiveness using a quantitative key performance indicator that are tailored to measure your objectives. For example if a business decides to provide excellent customer service, the amount of customer compliants can give you an ideal of how satisfied your customers are. Another example will be an objective to increase production. Comparing the number of units produced last year to the number of unit produced next year will let you know if production has increased.

Efficiency on the other hand measures maximum utilization of resources. Quantitative attributes such as the cost used for production or production time will help measure efficiency. Basically you figure out a quantitative attribute to measure your efficiency.

Keep checking out my blog regularly. Cheers!

Comments

Eid Mubarak

Hope you have a good one

How can your strategy be successful

Hello readers, today I will be telling you about ways to make your strategy a successful one. The scope is your strategy must be fit, in other words your strategy must be consistent with the environment your business operates in. When I say environment, I am talking about both external and internal environments. Thus, you must understand the political, economic, socio-cultural, technological and legal environments your business operates in. The environmental protection that affects your organisation must also influence you when formulating your strategy. Therefore, PESTEL analysis can be used to understand the external environment of your business. The internal environment also needs to be understood, as your strategy must also be in alignment with the internal environment. Understanding your internal environment will help you know the resources your business has, the capabilities of your business as well as the structure and system. The SWOT analysis can be used to help y...

Managing Employees

Hello readers, today I will be writing about managing employees. It is common knowledge that employees of an organisation are not owned by the organisation they work for. Thus, employees should always be treated as humans and not assets. An employee will be motivated to deliver high quality results if the employee enjoys his/her working environment. In other words, employees deliver good results when they work with employees that act nicely, when the working environment is conducive and when managers implement decisions that does not lead to dissatisfaction. There is always a relationship that exists between an organisation and its employees that requires each party to satisfy each other's needs. It is usually perceived as a psychological contract. Thus, both the employees and the organisation will be doing the giving and the receiving. The initial impression that a employee perceives about the relationship between the organisation and employees goes a long way ...

Islam and Business Finance

Search This Blog