Definition of Efficiency, Effectiveness and Productivity

According to Currie, productivity is defined as "the quantitative relationship among the resources we use and what we produce"

Beeching and Smith added: "Volume of production is obtained in a given time period related the total of indirect and direct efforts expended on its production."

Productivity

This term is different from the production. While productivity refers to the ratio of the output to the input, production otherwise refers to increasing production during a given time period. This definition of productivity in relation to the ratio was not detailed on by the writers.

Productivity ratios is concerned to the units of a single output (i.e. labor costs, total cost or number of work days) to a single output (the financial measures as added value, profit or physical measures like standard work minutes or tonnes produced)

All these given definitions and ratios do not include efficiency, the important concept of productivity evaluation.

Efficiency

This term as a notion assumes the ability for identifying changes of the productivity ratio. A manager wants to assess possible scope on the productivity improvement and compare with his/her competitors. Efficiency gathers this factor into account as well as compares it to several known potential.

A good example of efficiency measures is the typical measures of labor productivity of standard hours in comparison to productive hours. And they can good labor productivity index of how well the workforce is being utilized or working. They show if organizations are "doing well", while giving no gauge of if organizations are doing "well"

Effectiveness

This term can be defined as "maximizing the efficiency as a value." Actually, it cannot be understood as "biggest benefits for cost, but biggest measurable benefits for measurable cost".

Productivity and efficiency normally consider how people work. Things such as adaptability, initiative, cooperation and flexibility would not be included in the input measures.

Baldamus (1961) pointed out "Efficiency, as the word, has no scientific basis, we tend to assume that to make efficiency maximal is desirable without question if not the main purpose of the industrial enterprise."

The writers related the efficiency with the preoccupation to the emerge of a measure cult precluding a lot of the less quantifiable and essential ingredients of a successful business.

Consider this value of the extremely efficient production of non-marketable goods or maybe a person who pursues his own goal and refuses to co-operate with his or her colleagues falling behind. This is an example of the individual maximized efficiency but not an example of organization.

Measuring productivity brings us a qualitative dimension in which effectiveness is a factor. But the problem is some of components of the productivity are easier-measuring than others.

The materials consumed or the work hours are easier to quantify than product quality, the levels of customer satisfaction or the extending of the caliber of staff.

Productivity, at this point, should have a strategical dimension. However, when considering effectiveness, new market developments and technologies have to be additionally taken into account.