Operational Effectiveness - Another Way of Looking at Performance
Many organizations measure the performance of the organization on efficiency. The field of cost accounting is built around these concepts and principles. The problem is that efficiency is no longer an effective measure of what is happening in the operation of the organization. It is possible to achieve high levels of efficiency and still operate at a loss. Today’s organization requires a different measure – Effectiveness In other words, how effective are the resources being applied to the operation? Efficiency – The ratio of the output to the input of any system – Skillfulness in avoiding wasted time and effort; “she did the work with great efficiency” [ant: inefficiency] Effectiveness: – The ability to identify and do the things that contribute to the organization. – The emphasis of effectiveness is on ‘doing right things’ and not just solely ‘doing things right’ (which is what efficiency is about) Benefits of E...