Providing Small Business Advice: Online Counseling about Effectiveness and Efficiency

C. recently contacted me after he received his annual personnel review. He was slightly confused so he aproached my Online Counseling services. The review stated that he was a “Very efficient manager…” but that he was also “Not as effective as they expected.”

As a Small Business Advice consultant I directed him first to look in his company’s policy manual for their specific definition of the terms if available. I then went on to explain what ‘efficient’ and ‘effective’ mean as they are usually listed in management textbooks.

Not only businesspersons or managers but anyone engaged in the processes of planning, organizing, managing and monitoring have a practical familiarity with theses terms. They usually are relating to various activates and situations that occur regularly in business and professional environments as well as personal situations. A little further clarification on this would be that “anyone” engaged in a managerial process may include the following: A housewife that runs the family affairs, a student that is going to be tested and graded, a retired civil servant who manages the household budget while saving what he or she can for a rainy day. These are just a few examples of positions where the terms "efficient" and "effective" might apply.

Generalities aside; let us talk in scientific and precise language now: 

Efficiency – is ‘to do the things right’; to be accurate, calculated and structured according to the up-to-date procedure, in order to achieve the highest yield in the least amount of invested resource or effort. Once you run your shop, house or life in efficient mode, you capture the amount of waste and get to your desired output while spending the least amount of input.

Here are some examples from my experience as a Small Business Advice consultant: a manager should calculate which activities would be efficiently done in-house and what would be better out-sourced in order to reduce costs. A busy mother must determine, working around a schedule, what route(s) to drop off three or four kids active in several sport or social clubs in various parts of the city. A student will retain more when knowing the best hours to study, based on his or her learning style and personal daily arousal cycle. The retired investor should monitor not only the yield, but also the managing costs of the fund he chose to invest in.

Effectiveness – is ‘to do the right things’ in order to not only meet current expectations, but the overall desired product. That means: to make the right decisions of what to do or what not to do. To let yourself or others know what direction to choose, and therefore what avenue to ignore.

After going over this information during our Online Counseling session, C. were able to relate it more specifically to specific situations. He had to ask himself if he had a good blend of management and leadership. MANAGEMENT: doing things right, according to the current procedure in order to achieve the highest yield in the least amount of invested resource or effort; this is efficiency. LEADERSHIP: doing the right things, while considering long term outcomes; this is effectiveness.