If you’re working in a leadership position, there’s a high probability that improving employee productivity is one of your biggest objectives.
Don’t worry, you’re in good company. According to a study in the UK, the average employee spends less than three hours a day doing actual work. Similarly, companies in the United States are losing an estimated $550 billion every year to low productivity, leaving managers scrambling to find ways to ensure work is being completed on time. Yikes.
The common solution to low productivity is efficiency. If employees can work more efficiently, they can maximize the time they have. This makes sense considering how research indicates that our brains maintain concentration in cycles, which is why many psychologists and productivity specialists suggest taking scheduled breaks for a much needed mental recharge.
There’s even a productivity system based on this ideology known as the Pomodoro Technique.
But what if we’re focusing too much on efficiency when we should be looking at effectiveness as well?
In this post, we’re going to look at the differences between efficiency and effectiveness as well as how you can leverage both to help your teams maximize productivity.
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Head to head: Efficiency versus effectiveness
Efficiency and effectiveness are both related to productivity, but in different ways.
Efficiency refers to how we execute our tasks. When we work efficiently, we use less time, resources, and/or human effort to do our job.
Effectiveness looks at the quality of the results we achieve. If an employee is effective, they’ll consistently reach goals and objectives like delivering high quality-work or making sales.
Think of it like this:
- Efficiency measures the means
- Effectiveness measures the end result
It’s possible to work inefficiently and still be effective. An employee may deliver a report that’s filled with valuable data that can help your department make more informed decisions (effective), but if they missed their deadline because they wasted time during the research process, that’s inefficient.
On the other hand, one can also be efficient and ineffective. An example of this would be an employee who came up with a system for responding to emails more quickly (efficient), but failed to include important information in those emails (ineffective).
You can probably see why efficiency and effectiveness are both important traits. After all, what’s the purpose of optimizing resources if you’re delivering subpar work? And how effective are you really being if your work is consistently behind schedule? Real productivity isn’t achieved without first striking the right balance between efficiency and effectiveness.
Efficiency or effectiveness?
Achieving the right level of efficiency and effectiveness starts with the leadership. Everyone from company executives to junior leadership plays a role in setting the company culture, and when your primary goals are to cut costs and minimize turnaround time, you prioritize efficiency over effectiveness.
Conversely, when you’re encouraging teams to follow rigid work guidelines that reduce errors, but end up wasting a lot of time along the way, you’re not creating a culture of efficiency.
Neither of these scenarios are good for your business.
- High Efficiency-Low Effectiveness means your teams are rushing through work, probably with little regard for the quality of their finished products.
- High Effectiveness-Low Efficiency means that workers may be delivering high-quality results, but they’re not making the most out of their working hours. Remember that most people don’t work the full eight hours of their workday, so inefficiency can rob you of much of the actual productive time.
If either of these scenarios reminds you of the team you’re managing, you’ll need to make some changes. The good news is promoting better efficiency and effectiveness isn’t rocket science––it’s not even that difficult. You just need to create and maintain a workplace environment that values both.
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Tips for improving efficiency and effectiveness
As a team leader, it’s your job to ensure your employees are achieving company goals and objectives. If they’re not reaching those goals, you should put a system in place that helps them work more efficiently and effectively.
Raluca Apostol, the co-founder of tech company Nestor, says that efficiency and effectiveness take some serious work–and that employees often need help getting on the right track. “If your team members lose your focus quickly, help them build healthy habits in maintaining it, like using time management tools, having an accountability partner, or by using productivity systems like Eat that Frog,” she said.
But it’s not enough to encourage your team to be more efficient and effective–you need to take some extra steps to set them up for success, too. Most workers aren’t intentionally being inefficient and ineffective. They just need a little extra help with improving the way they execute and complete assignments.
Here are some ways you can give them a nudge in the right direction:
Incentivize efficiency
Rewards are an excellent way to motivate employees to work more efficiently. Reward efficient (and effective!) work via bonuses, extra vacation days, or anything else you can think of that would make for a compelling incentive. You can even reward your entire team with a half-day if everyone meets their efficiency goals.
Keep the training process ongoing
Don’t limit training to the onboarding stage. Hold scheduled training events to discuss ways to work more efficiently and effectively. This is a great way to help employees get refreshers on important information they might have forgotten, and you can use this time to introduce new concepts they can use to help make work easier.
Introduce a team Kanban board
Kanban boards bring more accountability and transparency to the workplace by showing who’s working on which tasks and how long it’s taken to complete those tasks. This can give your employees a sense of ownership over their assignments, which can motivate them to maximize the efficiency and effectiveness of their work.
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Create a positive work environment
Happy employees are far more efficient and effective than unhappy ones. You can boost the mood around the office by:
- Ensuring everyone feels like their being valued
- Promoting positive communication and idea sharing
- Allowing mental recharge breaks throughout the day
- Creating support structures to lighten the load when people start feeling overwhelmed
Oh, and stop micromanaging.
Let your employees know what’s expected of them
This is important. If you want your employees to work more efficiently, let them know. Tell them how much work they should complete within an average shift and give them tips for delivering that work efficiently. If there’s a problem with their effectiveness, point out the issues and explain to them how to improve the quality of their work.
Getting the most out of your team
Once you’ve implemented a system for improving effectiveness and efficiency, set up weekly, bi-weekly, or monthly meetings to measure your team’s progress.
- Look at how long it takes employees to complete work in your average day, month, or quarter
- Assess the quality of each team member’s work and whether their work is bringing value to your company
- Check whether your employees are consistent with their quality and delivery
The key to managing a team that’s both efficient and effective is to set the example. You want them to improve their productivity, then show them that you’re committed to helping them make the improvement. That way, you’re creating a culture that actually encourages your employees to grow and build their skills.
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Whether you are an HR professional or a line manager or a part of the executive leadership, organizational effectiveness would definitely mean something to you. If you take a close look, you will understand that while many consider it as a mere buzzword without any concrete meaning, some forward-looking organizations are treating it to gauge their success. Put simply, organizational effectiveness refers to how well and efficiently an organization is able to achieve its vision and goals. As a fast growing organization, you must focus on organizational effectiveness as it is essential to impact the bottom line, attract the top talent, as well as, survive and thrive amongst your competitors.
What is organizational effectiveness?
Before diverting any resources to this buzzword, you might want to answer the question on what is organizational effectiveness. In the simplest terms, organizational effectiveness refers to an organization’s ability to meet its objectives. As a growth driven organization, you are bound to have a certain set of goals that you seek to achieve by a combination of operations, processes and people. Organizational effectiveness is all about being able to realize the intended outcomes in the most effective and efficient manner.
It is a comprehensive concept which takes into consideration the performance of each aspect that contributes to the running of an organization. Employee performance, managerial effectiveness, process efficiency, collaboration between different areas and organizational behavior, collectively contribute to organizational effectiveness. Organizations ranking high on all or most of these parameters and others tend to rank in the higher rungs of effectiveness, while those that face gaps in these, struggle with optimal levels of performance.
Importance of organizational effectiveness
You can understand the importance of organizational effectiveness by studying its direct correlation with company success. As the effectiveness quotient of your organization goes up, your ability to serve all the stakeholders better as well as make greater profits increases. Here are a few factors that illustrate why you should focus on organizational effectiveness:
Cost and resource efficiency
Effectiveness is closely associated with efficiency across the organization. Organizational effectiveness will enable you to achieve maximum output with minimum input as the performance level is optimal. At the same time, effectiveness ensures that resources, beyond financial ones, like human resources, technology assets, etc., are used and allocated efficiently. Invariably, organizational effectiveness will help you promote efficient allocation, considerably reducing costs and disbursing limited resources to promote best results.
Greater employee engagement
An effective organization is defined by great performance across all verticals, in a holistic manner. This suggests that employees who work in such organizations are able to deliver top performance, without compromising on their wellness, leveraging the efficient processes and practices. Invariably, this augments their work experience and promotes engagement which results in greater loyalty, retention and commitment, further, accentuating their performance.
Better customer outcomes
Organizational effectiveness definitely takes into account augmenting the efficacy of customer service channels. An effective organization supports its customers in the most promising manner to create a pleasant experience. Right from its offerings to its service, organizational effectiveness plays a major role in helping you enhance customer outcomes.
Impact on bottom line
Finally, overall effectiveness has a direct impact on your organization’s bottom line. When all parts of your company work like a well-oiled machine, the profits are bound to soar high. The bottom line is positively impacted by decreased costs, greater employee productivity, happier customers and overall increased efficiency and efficacy.
Top 4 organizational effectiveness approaches
From a macro level, you might equate organizational effectiveness with cost reduction. However, this all encompassing concept requires following a strategic and comprehensive approach based on specific objectives and principles. Based on experience of most fast growing organizations, you can follow these 4 organizational effectiveness approaches to commence and accelerate your journey to success:
Goal attainment approach
The first approach to organizational effectiveness majorly focuses on the goals and objectives achieved. Put simply, according to the goal attainment approach, you should start by setting a set of goals and objectives that you seek to achieve through various efforts, i.e. achievement of goals is the reason for existence of the organization. Therefore, for this approach, you can gauge organizational effectiveness by measuring how well your organization is able to achieve its goals, mainly in the form of profits and efficiency. While this approach is important to ensure how effectively an organization reaches its goals, the dynamic nature of the goals and varying scope of long-term vs short-term goals, makes it slightly challenging to use this to assess organizational effectiveness.
Systems resource approach
The systems resource approach came as an answer to the challenges of the goal attainment approach. While the latter focuses only on the end, the systems resource approach takes into account the means to the end. To adopt this approach, you need to understand that success of any organization depends not only on the goal it achieves, but how it achieves the same. Therefore, there is focus on how effectively you are able to acquire the resources needed to achieve the desired goals or outcomes. Here, effectiveness is not only a result of goal attainment, but rather depends on resource acquisition. However, the challenge majorly lies in the dilemma that higher resource acquisition does not always translate to greater performance or success.
Strategic constituency approach
According to the strategic constituency, organizations survive and thrive in an environment where their success is dependent on a number of stakeholders. These include the employees, managers, shareholders, customers, partners, suppliers, etc. Organizational effectiveness is, thus, contingent to the company’s ability to satisfy these constituencies in its environment. Effectiveness depends on how well your organization is able to identify its various strategic constituencies and their expectations and, thus, navigate ways to achieve the same. At the same time, since each constituency has its own goals, power and influence, organizational effectiveness depends on the efficacy of trade-offs between one constituency over the other, in case of a conflict.
Competing values approach
The final approach takes into account the competing values and goals that your organization strives to achieve. At any given point of time, you may be conflicted on competing values which lead to different outcomes, all of which are necessary for organizational success. For instance, you might want to induce structure and discipline, but at the same time, might wish to promote autonomy, innovation and flexibility. Likewise, competing values come in the form of increasing profits and customer satisfaction vs augmenting employee wellness. Therefore, organizational effectiveness, according to this approach, assesses a company’s ability to strike the right balance between such competing values to create a win-win situation for all.
How to measure organizational effectiveness?
Like any other parameter defining company success, measuring organizational effectiveness is extremely important. Without proper metrics to measure effectiveness, you will continue to struggle with performance improvement because of a lack of monitoring and tracking. Following are the top 3 approaches that you can leverage to measure organizational effectiveness:
External resource approach
Using the external resource approach, you can measure organizational effectiveness on the basis of how well you are able to acquire, manage and control valuable resources from the external environment to power their operations. Focus on factors like price of inputs, relations with external stakeholders, quality of inputs and human resources to gauge effectiveness.
Internal resource approach
You can leverage the internal resource approach to measure organizational effectiveness on the basis of your company’s ability to constantly innovate with agility and responsiveness. Here, you need to focus on the decision making time, level of innovation and creativity, resilience, time to market, level of conflict or collaboration. If you perform well on such parameters you are likely to have higher levels of effectiveness.
Technical approach
Finally, the third approach you can use requires you to measure your organization’s ability to convert or transform the acquired resources into high quality final output by leveraging innovation, agility and responsiveness. The objective is to deliver improved and higher quality of products and services that yield greater customer satisfaction and stickiness. This approach majorly measures the increase in product quality, reduction in defects or rejects, better customer service, etc.
Top 6 components of organizational effectiveness
According to organizational development experts, there are six components of organizational effectiveness. You must focus on these components in a holistics manner as they are highly interdependent and an integrated and comprehensive approach to them has the potential to guarantee organizational effectiveness.
Leadership
Leadership plays an integral role in promoting the effectiveness of an organization. Invariably, leaders have diverse roles to play right from creating a vision to ensuring the vision translates into reality with seamless processes and practices. You need to encourage and inspire your leadership to address three key questions to promote effectiveness. Firstly, the vision and values, i.e. the purpose of the organization and the unique value it brings to its customers. Secondly, the strategy and the approach, i.e. the most effective manner in which the organization will achieve its objectives and derive value. Thirdly, structure and alignment, i.e. balancing and aligning different components like strategy, technology, innovation, etc. to achieve desired results.
Communication
Communication is imperative to organizational effectiveness. You need to inculcate the thought across the organization that communication is not only about putting words to one’s thoughts. Strategic communication is all about ensuring that what is said clarifies the real intention behind it, and is not just stringing together some corporate buzzwords. You must spend your energy and efforts on creating a communication strategy for organizational effectiveness that focuses on clear messaging with no scope for ambiguity or excuses. Furthermore, you need to ensure that everyone is aligned on the shared vision as well as clear on what is expected out of them. Communication is not only about getting the message across, but also involves active listening and being receptive to feedback by diverse stakeholders.
Accountability
Accountability is a key parameter that ensures that a company is able to deliver on its promises and promote organizational effectiveness. You need to focus on building a culture of accountability, both individual and collective. This suggests that while each individual is responsible and accountable for a piece of task, collectively, the entire organization is accountable for the big picture. Accountability involves expectation alignment to ensure clarity in who is expected to do what. Additionally, as the custodian of culture, you need to leverage incentives, rewards, and appreciation to promote accountability and high levels of performance.
Delivery
Delivery primarily focuses on the experience that your organization is able to create for the end user or customers. Your effectiveness here largely depends on the satisfaction of your customers. It is not only about ensuring delivery, but also about promoting a seamless process of achieving the same. A simple and agile delivery process without too many steps is every customer’s dream. On the other hand, a delivery process fraught with complexities is likely to create a poor experience. Hence, for organizational effectiveness, you need to be agile and responsive to changing market conditions by improving your operations and processes to make delivery efficient and smooth.
Performance
Organizational effectiveness is largely dependent on the human capital of a company. Therefore, you need to put in best efforts to recruit, develop and retain the top talent. Start your process by onboarding the right talent with a robust hiring process which not only assesses the talent on their technical and hard skills but ensures a match on all levels for the role. In addition, to ascertain an optimal level of performance, you need to provide your employees with regular and adequate development opportunities. These include upskilling and training as well as mentoring and guidance to promote holistic growth. Finally, you need to facilitate retention and loyalty of employees. This requires fostering a culture of appreciation and acknowledgement, which highlights the impact of employee contribution to the overall company success.
Measurement
Finally, the last component for organizational effectiveness requires you to focus on key metrics, performance indicators and trackers to measure and monitor business progress. Unless you closely measure each aspect of organizational performance with the right metrics, improving quality becomes difficult. You need to encourage your functional leaders to establish a set of standard metrics to measure performance at regular intervals and monitor the results. The measurement will enable you to gauge whether or not you are able to move the needle on important business parameters which collectively contribute to organizational effectiveness.
Improving organizational effectiveness through transformational leadership
Transformational leadership has the power and potential to augment organizational effectiveness exponentially. By promoting effectiveness on the below five parameters, you can enhance overall organizational effectiveness:
Culture
Start by creating and nurturing a culture that promotes effectiveness across the organization. A culture of effectiveness refers to one where attributes like efficiency and efficacy are valued. For instance, adherence to timelines, prompt response, agility, etc., are most likely to develop a culture that reaps effectiveness.
Experience
Employee experience directly translates to organizational effectiveness. This suggests that the more pleasant and positive experience employees have, the greater performance they will deliver, contributing to increased effectiveness. Higher engagement from experience promotes motivation, retention, loyalty and commitment towards work, which collectively add to organizational effectiveness. Invariably, you need to focus on promoting a positive experience by providing authentic leadership, regular reinforcement and opportunities to grow and thrive.
Commitment
Your leaders must practice and display a commitment to organizational effectiveness. This involves not only having effectiveness practices and policies on paper, but also preaching them. When leaders constantly illustrate their commitment to effectiveness, it is likely to propagate in their teams, leading to a collective effort. At the same time, effectiveness must be practiced at all levels and across the organization. Be it hiring, or conducting meetings, or planning events, you always need to view it from an effectiveness lens.
Strategy
As a part of strategy and processes, you need to ingrain efficiency and effectiveness as a part of the core values that define the organization. This suggests that efficiency and effectiveness must become synonymous with the organization for both internal and external stakeholders. Effectiveness in strategy is also about ensuring that the path to achieving the company’s goals and objectives is clear, seamless and simple. Strategy for overall goal achievement must be crystal clear to ensure easy comprehension and implementation.
Tools and technology
Finally, your leaders must innovate and experiment with the latest tools and technologies. The idea is to stay abreast with the latest industry trends to maintain a competitive advantage. Leveraging the latest tools and technologies is the best bet to augment efficiency as well as stay relevant.
Organizational effectiveness: The starting point
Promoting organizational effectiveness is a collective responsibility which falls on the shoulders of all the stakeholders of a company. An integrated approach that seeks to understand and serve the interest of each of these stakeholders is key to achieving organizational effectiveness. However, working on all aspects at once can be chaotic and self-defeating. Therefore, you must consider starting your journey to improve organizational effectiveness by focusing on the internal stakeholders, i.e. the employees and the leadership. In such a situation, partnering with platforms like SuperBeings that gauge and augment employee experience as well as offer avenues for leadership development is something to bet on. Invariably, organizational effectiveness is integral to company success and those who start early on in the race are most likely to reach the top.
Suggested reading:
Promoting Manager Effectiveness at Work
Ultimate Guide to Building Organizational Culture
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