Management Basics: What is the Difference Between Efficiency and Effectiveness?

Annalena Simonis, Thursday 02 July 2020 | Reading time: 6 min.

Working less and still being more successful? Yes, that’s possible! The key is not effectiveness, but efficiency. But what is the meaning behind these terms? Find out here what the differences are and how InLoox can help you to work more effectively and efficiently.

"Efficient work" and "effective results" are common terms in project management - but what is the meening behind them? When it comes to time management or productivity, project managers often talk about processes that need to run more efficiently in the future or, in the worst case, you hear them saying: "You work effectively but not efficiently". But what does this mean and is there even a difference between effectiveness and efficiency? This article helps you to develop a clearer understanding of efficient work and effective results and provides you with simple tips on how to work simply better with InLoox.


Effectiveness vs. efficiency

Initial research in the dictionary does not help to clarify the distinction, as both terms are explained by the synonym "effectiveness". However, more detailed research reveals a wide range of attempts for definition and delimitation. Here we have listed the most common distinctions and explanations of the terms efficiency and effectiveness:

Effectiveness vs. Efficiency
Question: What needs to be done? vs. Question: How must something be done?
Effectiveness means doing the right things. vs. Efficiency means doing things right.
Effective work is target-oriented, i.e. the use of methods that work towards a set goal. vs. Efficient work is resource-saving, i.e. the use of methods that achieve the set goal with the least possible effort (time and/or resources).


Experience shows why the differentiation of terms is so important. In practice, confusion or synonymous perception of the terms can occur. Old-fashioned managers often still measure the performance of employees based on their working time. They believe that the productivity of the employee who stays in the office the longest is the highest. But studies by Stanford University now confirm the opposite: employee productivity decreases as soon as the weekly working time of 50 hours is exceeded. Therefore, the efficiency of the work performed is decisive, not necessarily the effort.


Simply explained with formulas and an example

To clarify and visualize the differences between effectiveness and efficiency, the formulas for calculating these two variables can help. The result to be achieved is related to the most important variable in each case. While effectiveness focuses on the best possible achievement of objectives, efficiency focuses primarily on the effort required.

  • result / objectiv = effectivity
  • result / effort = efficiency

To understand the difference between effectiveness and efficiency even more clearly, take an example. Let's say the marketing department of your company is planning a survey to determine customer satisfaction.

Possibility 1: An employee goes from door to door and visits all customers one after the other. This way you get direct feedback.

Possibility 2: An online form is created to reach as many customers as possible at the same time.

Both possibilities are basically effective, as they represent actions to achieve the given goal. What makes the difference is the way and in this case the amount of time and effort saved, which can be calculated concretely by using the formula given above. Therefore, the online survey is not only effective but also efficient due to the lower effort required.

However, what should be taken into account especially in this example is that the most efficient way is not automatically the most reasonable one. For example, if your company attaches great importance to establishing a close customer relationship, a personal selective survey of individual customers may be the better solution. In the end, this means that every decision must be carefully weighed up to determine how to achieve which goal.


InLoox tips: How to increase your efficiency with project management software

The InLoox project management software is designed to make your everyday project work easier and more effective, so that you can make your personal contribution to the project success with less effort. Here we show you three practical examples and tips on how you can work efficiently with InLoox:

Tip 1: Achieve efficiency through the InLoox integration for Outlook

With the InLoox Outlook integration you can easily convert emails into tasks with just one click. This saves you the unnecessary time and effort of creating and assigning individual tasks and achieves an improved, effective workflow.

InLoox feature: Outlook integration - Seamless workflow: Turn Outlook mails, with or without attachments, into InLoox tasks with one click


Tip 2: Improved effort estimation with the InLoox time tracking tool

The InLoox time tracking solution not only allows you to record billable hours but also to identify time wasters. By using the tool regularly, you can get an overview of which tasks you spend too much time on, or which tasks you should eliminate or delegate.

InLoox feature: Time tracking - See how much time was spent on project tasks, i.e. how much project budget has been used.


Tip 3: Keep an overview of resources workload

From a business perspective, the use of resources is equivalent to expenditure. It is therefore particularly important to manage them carefully. InLoox enables you to keep an overview of the resource workload in your team, department and company. This enables you to manage your employees more efficiently and avoid overloading individuals or "wasting" too many resources on a simple task.

InLoox feature: Resource management - Assign resources more efficiently thanks to the workload view as you can reassign tasks so your team won't be overworked.

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