Effectiveness & Efficiency. Organisational performance can be seen as consisting of two dimensions:...
Transcript of Effectiveness & Efficiency. Organisational performance can be seen as consisting of two dimensions:...
• 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
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
• http://www.youtube.com/watch?v=4T629Fkq5Ps
• 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