Answer to Question #108115 in Management for Muhammad Irshad

Question #108115
In today’s environment, which is more important to organizations—efficiency or effectiveness? Explain your choice.
Expert's answer

Dynamics, constant technology, recurring emerging issues, and increasingly stiff competition in today’s business environment incorporate both efficiency and effectiveness. The success of any business in the existing modern environment will solely depend on both these two recipes of good organizational management. Efficiency and effectiveness can be referred to as the two sides of the coin for they lead to each other in one way or another.

Effectiveness of an organization can be described as the status that an organization develops by having achievable, workable and smooth operations that produce the desirable predetermined goals. Effectiveness can be linked to how employees carry out their roles by managing other factors of production to enable a company to realize the profit. The best performance of employees to maximize the company’s assets that are fixed assets and mostly recurrent assets are characteristics of effectiveness.

           Efficiency, on the other hand, can be referred to as the proper balance between the company’s assets, liabilities, and income. In other words, the equilibrium of the bookkeeping equation must be maintained to qualify an organization as efficient. Efficient management ensures that a company’s assets are fully utilized to take care of overhead cost, equity of resources, debts within manageable limits and the main goal should be profit maximization.

           Generally, from the facts on efficiency and effectiveness, it can be concluded that an effective organizational human resource has a major role in realigning the company’s assets that will show efficiency when these produce the profit. Otherwise, an inefficiency that can be pronounced with the company’s consistent losses disapproves of the effectiveness of a company. 

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