In the goals model, efficiency refers to whether or not an organization has reached its goals.

What is the difference between effectiveness and efficiency? They are two buzzwords that are popularly used by CEOs, CRO’s and Sales VPs in charting the course of their organization. Yet, they are also commonly misused and misinterpreted, not just in the lexicon of business-speak but also in daily use. For all intents and purposes, let’s begin by defining efficiency and effectiveness in general terms, borrowing from Dictionary.com:

Effective(adj.) – Adequate to accomplish a purpose; producing the intended or expected result.

Efficient (adj.) – Performing or functioning in the best possible manner with the least waste of time and effort.

The difference between effectiveness and efficiency can be summed up shortly, sweetly and succinctly – Being effective is about doing the right things, while being efficient is about doing things right.

Another way to illustrate efficiency vs. effectiveness is with the 2×2 grid below. By referring to this chart, CEOs and sales leaders can find an optimal balance between effectiveness and efficiency:

Companies usually seek to increase and improve the efficiency of their operations and sales processes. After all, when working with limited resources, they would prefer to maximize the use of each of these resources, from budget and technology to time and sales reps. However, by pursuing efficiency at all costs (irony intended), some of these companies are missing a valuable chance to take a step back and look at their overall effectiveness from a big picture perspective.

The Holy Grail for every company is to always pursue the top right box – pursuing the right goals and being efficient, by making use of technological advances, not wasting time, and having better alignment and collaboration of between employees. Many companies have their hearts in the right place – they know what goals they want to achieve, but are inefficient in achieving those goals. Other companies are tightly run ships, with all employees working together, humming along and all singularly focused on the task at hand…but what if the task at hand is the wrong goal?

An Example of Sales Efficiency Versus Effectiveness

For a practical example, consider the differences between activity effectiveness and activity efficiency among your sales reps. Every sales team has daily, weekly, monthly and quarterly goals that, when achieved, are representative of the effectiveness of their roles. If your reps are tasked with making 70 calls each day, and they easily hit their numbers, they are effective at their jobs. Some might even go above and beyond and make 80 or 90 calls each day. But what if those dials are producing few connects and even fewer deals?

Learn How to Measure the Effectiveness and Efficiency of Your Sales Team

And therein lies the rub – is it more important for your organization to pursue effectiveness or efficiency? If you’re trying to grow aggressively and have resources to burn, optimizing effectiveness might be the way to go. However, if a smaller company has very limited resources to work with, they might be more interested in pursuing efficient operations in order to maximize their capabilities and not stretch themselves too thin. Finding the sweet spot between effectiveness and efficiency is truly that ultimate goal for all companies.

If you are looking to increase the efficiency and effectiveness of your sales team, get in tough with one of our experts. We can show you how InsightSquared can quickly and easily improve your sales process and management.

As businesses seek to grow by maximizing returns while reducing costs, the words “efficiency” and “effectiveness” are often used interchangeably. But they’re not the same thing. As technical innovations such as automation make it easier than ever to rapidly scale, understanding the distinction between the two — and how each can help your organization achieve more — has never been so important.

Doing things right vs. doing the right things

“Efficiency is doing things right; effectiveness is doing the right things,” Peter Drucker, often touted as the “Father of Modern Management,” famously said. While improving efficiency means doing things faster, using fewer resources, in fewer steps, effectiveness means aligning improvements to the way you work to high-level corporate goals. Instead of efficiency for efficiency’s sake, increasing effectiveness requires taking a more focused and strategic approach.

Measure what moves the needle 

Part of a more strategic approach is clearly defining how we measure effectiveness. The ability to quantify anything and everything – from the number of steps we take in a day to the exact value of every comment and like a post gets on the company social media feeds – has made organizations hyperfocused on data and metrics. But just because we can measure everything doesn’t mean we should. To yield true value, businesses must measure the right things. 

Yet businesses are struggling to figure out how to measure what matters. While the majority of businesses consider themselves data-driven, a global survey conducted by MIT Sloan Management Review found that just one quarter of senior executives agree that the functional KPIs they track roll up to their organization’s strategic objectives. 

It’s not that companies aren’t focused on the numbers; but many either aren’t paying attention to the right metrics or aren’t using their findings in meaningful ways. Nearly 30 percent of the 3,200 participants in MIT Sloan’s survey reported that their organization’s KPIs influence their approach either somewhat, minimally – or not at all.

Conversely, those businesses that have managed to align their numbers to their ultimate goals have found the secret sauce: “What sets leading companies apart is not so much the number of metrics they track but how they use them to better engage customers — and thereby grow their businesses,” the authors conclude.

Drive efficiencies, improve effectiveness

Though they are different, effectiveness and efficiency aren’t mutually exclusive. By focusing on creating the right efficiencies, businesses can fuel effectiveness at the same time. Finding this sweet spot requires three crucial things:

1. Strategy. If effectiveness is achieved by making improvements to the right things to achieve organizational goals, then the first step is defining those objectives. In strategic planning, businesses identify their specific objectives and create a roadmap for achieving them. Such planning should form a backbone for all corporate initiatives, and should consider the business’s vision, needs, resources, and other factors. Strategies can be large-scale, encompassing the full organization, or developed for teams and departments; although it is important that smaller-scale strategies align with overall corporate goals. 

2. Metrics. Once the organization has  defined its goals and created a strategy, it’s crucial to determine how to measure the effectiveness of your plan. Identify which data points will show you how the results of your initiatives track up to your goals. To determine which metrics to monitor, ask yourself what story each indicator will tell you. The exact KPIs will vary depending on what you want to achieve, but it’s important to find the ones that show whether the work that’s being done is helping your team — and your organization — reach its objectives. 

3. Commitment. Once you’ve decided what you want to do and how you will know you’re on track, the next challenge is follow-through. This means ensuring that everyone understands organizational goals and their role in achieving them. Make a commitment to empower your organization with the tools employees need to measure their progress, such as access to real-time data, and easy-to-understand insights, and data visualization.  Then use that information to perform ongoing evaluation and refinements. Together these will ensure that you’re not only growing your business’s efficiency – you’re becoming more effective at the same time. 

Ready to learn more about how the flexible Smartsheet platform can help you increase efficiency so you can achieve more? 

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