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What is Efficiency
Efficiency generally refers to the efficiency of the used resources and benefit by them obtained. In other words, it is a ratio of inputs and outputs of an activity or a system.

Efficiency, also known as efectiveness or productivity, generally refers to the efficiency of the used resources and the utility obtained by them. In other words, it is a ratio of inputs and outputs of an activity or a system. In terms of organizational management, it is a ratio of quantity or quality of final products and the amount of the resources invested into the production process. Thus it is the use of such resources, which is to maximize the volume and quality of the products.

Note: it often leads to confusion with a similar term Effectiveness

Use of the Efficiency in practice: if someone talks about increasing efficiency, then he usually means minimizing costs and/or maximizing the benefit, respectively balancing of costs (prices) reasonableness and total benefit. The effort to increase the efficiency is one of the fundamental tasks of any manager. In practice, the phrase economic efficiency, work efficiency, public administation efficiency is mainly used. Achieving high efficiency is the key to the succes of the enterpise in a competitive environment.

A popular quote in the management world is by Peter F. Drucker: “Efficiency is doing things right; effectiveness is doing the right things.”

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Last update: 27.07.2016

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