Effectiveness vs Efficiency: Which One Is More Important for Successful Leaders?
Efficiency vs effectiveness. These two big E’s are popularly used by managers, leaders, and CEOs to charter the course of their organization. The success of a company greatly depends on effective leadership. Every business strives to attain its goals and objectives while maintaining a consistent profit. To achieve that, leaders have to realize that efficiency and effectiveness are the primary drivers that contribute to organizational growth.
These days, innovations in technology such as automation taking the central stage in most organizations. So, understanding the distinction between these two fundamental terms has never been so important.
Every leader or manager who wants to achieve great success must view things through the lenses of efficiency and effectiveness. While they may sound familiar, (and are quite misused and misinterpreted), these two viewpoints are distinguishable. Rely exclusively on being efficient, for example, and you’ll be focused on maintaining the status quo. On the other hand, concentrating on being effective can lead to making constant changes, missing headlines, and consequently, veering off the course.
Often, companies tend to focus on doing more in less time with limited resources. They seek to increase the efficiency of their operations and sales processes. All the while, they prefer to maximize on using every resource like time, technology and budget. They forget to step back to look at their overall effectiveness from a bigger picture.
Every business or organization is in pursuit of the same goals (growth and profitability). Wasting time on inconsequential things leaves little to no time for employees to do the right things.
Effectiveness Vs. Efficiency
These two terms are usually used interchangeably, yet they have different meanings. Efficiency means doing things the right and best way, with fewer resources, as well as less time and energy. It focuses on what needs to be done, the process itself, and what can be done to improve the procedure. While efficiency contributes to the growth of a company, it can distract you from real goals.
Conversely, effectiveness is doing things the right way. However, it's more encompassing. It seeks to establish why things are being done and whether they will add value to the organization. Unlike efficiency, effectiveness is not easily measurable, but it aligns with the goals and objectives of the organization. It isn’t concerned with the time it takes to do something, but rather on doing the right thing to reach desired outcomes.
Consider this example. An employee is tasked with lead generation and is required to reach out to as many leads as possible by sending mass emails to increase sales. The employee manages to reach out to 4,000 potential customers in one afternoon. That translates to around 16 customers per minute. Efficient, right?
However, how often do you expect customers to open and read a generic email, let alone click through and make a purchase? An effective sales strategy would be to do thorough research on a potential lead and send them a customized email. You can explain how the product or service will benefit them. The customer is more likely to open and read the email, and even better, buy whatever you're trying to sell to them. Even if it takes an entire afternoon to create the email, chances of making a sale are higher than sending a bunch of generic emails to everyone in your email list. That’s effectiveness.
Even so, crafting just one email per afternoon is not spending time and resources efficiently. When you combine both efficiency and effectiveness, you maximize productivity. That’s why creating a balance between the two is quite crucial.
Qualities of an Effective Leader
Often, you hear the question, “What makes a good leader?” Well, it’s not an easy achievement. Good leaders are effective. They are the key to improved productivity and the overall success of the organization. Good leaders motivate employees and boost their morale to become better at what they do. They also identify loopholes in projects, decisions, and management, and looks for ways to seal them before they become big cracks.
That said, an effective leader should live by certain principals. Here are some of them:
An Effective Leader Focuses on Doing the Right Thing
As a leader you want your goals to be SMART (specific, measurable, achievable, relevant, and time-based. To do so, you must make sure that you're on the right path, that is, your actions are relevant to your objectives and goals.
Great leaders know that doing one right thing is way effective than doing many right things wrong. They know how to identify things that don’t align with the company goals, mission, and vision, and to steer clear of that path. What’s more, they keep a long-term strategy in mind and know that adapting to the changing environment is the only way to survive.
An effective leader knows that one has to make mistakes to learn, and focuses on the final outcome rather than getting maximum output with limited resources.
To do so, one has to be self-aware and accept their blind spots. They have to listen to feedback from colleagues and subordinates. This way, they can be better placed to make the right decisions that align with company goals.
An Effective Leader Does the Right Things Well
As a leader, you first need to identify the right tasks that will propel your organization to success. Once you have them listed, you have to find ways to do them efficiently. It’s a fact that effectiveness trumps efficiency. However, being efficiently effective is now a necessity if you want to maintain an edge in a competitive world.
Focus on getting a few important things done right rather than getting random things done well if you want to drive sales and increase profits.
An Effective Leader Has Time to Reflect
When you are too busy getting things done, you don’t have time to reflect on the effects of your actions or the outcome. However, if you want to become an effective leader, you must take the time to think and review what is working and what isn’t. This gives them insight into things that add value to the business and those that don't.
Instead of being concerned with maintaining the status quo, they believe in achieving the goal by considering variables that may change in the future.
An Effective Leader Must Possess Time Management Skills
As a leader, you are tasked with the most important job. It’s your duty to establish long-term strategies and objectives that must lead your organization to an end goal. For that to happen, you need to set aside chunks of undistracted time that allows you to focus on what really matters.
Time lost is never recovered. Every leader must learn effective time management skills to be able to identify where they waste most of their time. Consequently, they can cut back on areas that place unnecessary demands on their busy schedules.
An Effective Leader Communicates Effectively
Effective communication is an integral part of any organization, and leaders who practice it well tend to be more successful. Communication is all about listening to different views from your entire team and truly considering the input from each team member. By listening, you quickly learn about issues affecting employees that might trickle down to affecting their performance at work.
When you keep your lines of communication open, you will encourage transparency, encourage teams to share their thoughts without fear. In turn, you can build trust and foster better collaboration. What’s more, you will be able to make effective plans that focus on the growth of both the employees and the organization.
An effective leader considers all the inputs from the team, provides context on the rationale behind any decision, and encourages every worker to ask ‘why’ before committing to a task so that they can steer clear of work that does not align with their goals.
An Effective Leader Hires the Right People and Helps Them Grow
The hiring process is a tough one - one that needs careful planning and execution. An effective leader knows how to establish accurate recruitment strategies that will attract top talent that’s best suited for the job.
However, they don’t stop there. Effective leaders know that investing in the right people is highly beneficial not only to achieving personal career goals, but also those of the organization. They look into the aspirations of their people and are willing to share what they know. They identify the weak links and work towards strengthening them and putting their strengths to use.
An Effective Leader Gives Credit Where It Is Due
Some leaders are known to steal ideas from employees and making them their own or take credit for an employee’s achievement. However, a great leader knows to share the glory and is quick to credit the team member for the accomplishment. An effective leader knows that success is achieved through teamwork and respects the ideas and contributions of workers and colleagues.
An Effective Leader Is Decisive
The decision-making process has a direct impact on the success of an organization. Yet, a lot of time can be wasted in coming up with the right decisions, that opportunities are missed. An effective leader not only makes effective decisions but is also mindful of the timeframes involved.
Before reaching a decision, the leader truly listens to inputs from all the concerned parties and takes everything into account before making the decision. On top of that, an effective leader is accountable for any mistakes and takes responsibility for the outcome of his/her decision.
Finding the Balance Between Efficiency and Effectiveness
Although they are different, these two characteristics complement each other. Therefore, businesses should focus on driving efficiencies that fuel effectiveness. For a company looking to grow aggressively and with sufficient resources at their disposal, optimizing effectiveness is the best course of action.
Now, can a smaller company with very limited resources follow the same path? What approach can they take to maximize their capabilities without stretching themselves too thin? Finding that perfect balance between efficiency and effectiveness should be the ultimate goal for all organizations.
A leader has to look at how effective the company, employee, and the strategic approach is through performance appraisals. They must regularly review performance at all levels and take into account the outcome. This way, a leader can devise better ways to improve the performance of each of the concerned parties.
To enable effective leadership, an organization should provide the right tools to help leaders achieve and meet their goals. One such tool is Traqq, a project management software that monitors the workflow of projects and the activity levels of employees. By utilizing the program well, a leader will get all the data necessary to make crucial decisions. For instance, they can identify areas are not performing as expected and address them promptly.
Traqq’s timesheet is automated and records all the hours worked by each employee. Leaders and managers can use the data collected to manage how their staff utilize time and resources and find ways to improve performance. With the detailed reports, there are fewer errors and improved efficiency. Plus, the app collects all data in one easy to navigate interface, giving leaders and managers easy reference to information about a company’s operations.