Effectiveness & Efficiency

Organisational performance can be seen as consisting of two dimensions: –Effectiveness –Efficiency

Effectiveness Effectiveness is the level of results from the actions of employees and managers. Employees and managers who demonstrate effectiveness in the workplace help produce high- quality results. Take, for instance, an employee who works the sales floor. If he’s effective, he’ll make sales consistently. If he’s ineffective, he’ll struggle to persuade customers to make a purchase. Effectiveness also refers to a company’s ability to formulate and then achieve its objectives

Efficiency Refers to the use of resources (money, time, etc) in achieving objectives An organisation is efficient to the extent that it achieves its objectives at the lowest possible cost, using the minimum quantities of resources

Both concepts can be used as bases on which to evaluate the performance of management Look at figure 1.7 on page 22 –‘Evaluating organisational performance’

Performance Areas Performance area – refers to the activities performed by a business that can be measured –Performance areas typically associated with effectiveness are towards the top of the list –Those typically associated with efficiency are towards the bottom All performance areas can be approached from the point of view of effectiveness and efficiency

Your turn! In your books define the terms: – Effectiveness – Efficiency – Performance area

Performance Indicators

The concepts of effectiveness and efficiency are a broad basis on which to evaluate organisational success More specific performance indicators can be identified in different organisations and for different types of productive activity Performance indicators provide more precise and measurable data to evaluate performance and improvement –THESE ARE REFERED TO AS KEY PERFORMANCE INDICATORS (KPI’s)

YouTube clip – KPI’s Key Performance Indicators, also known as KPI’s help an organization define and measure progress toward organizational goals

Where do KPI’s fit in the organisation Once an organization has analyzed its mission, identified all its stakeholders, and defined its goals, it needs a way to measure progress toward those goals. Key Performance Indicators are those measurements. KPI’s are also used for benchmarking –Benchmarking: a process in which an organisation compares its own work outcomes with similar work in other organisations

Your turn! Define the terms; Key Performance Indicator p.23 Benchmarking p. 24 Complete Activities p. 24 Questions 1 -7 Finish for H/W