Process Excellence: Efficiency vs Effectiveness
“Efficiency is doing the things right; effectiveness is doing the right things”. – Peter Drucker
When it comes to practicing Process Excellence, organisations can simply not ignore the importance of the terms ‘efficiency’ and ‘effectiveness’. Both of these are essential for increasing productivity as well as improving customer service. While these two terms are often used interchangeably, they bear huge differences when considered in the context of process excellence. So, let’s distinguish these two factors and find out how they are related to business process excellence and implementation.
Understanding Process Effectiveness
Effectiveness of a process is the measure of how relevant the final output is to the BPI objectives. In order to be effective, a process must deliver the desired output while fulfilling the needs of customers in a satisfactory way. To be more precise, a truly effective process will make customers happy by providing everything right – the right results at the right place, time and cost.
Achieving process effectiveness is a thorough procedure that mostly involves:
- Knowing as well as understanding the requirements and desires of customers
- Turning them into measurable targets and expectations
- Making them into reality with proper data collection, drafting of measurement methods and execution
Once the customer needs and expectations are defined and quantified clearly in terms of certain specifications such as delivery format, delivery frequency, etc., it becomes much easier to establish the measurement criteria needed for delivering error-free, high-quality services with great customer experience through robust business process implementation steps.
Effectiveness of a business process can be measured with the following widely accepted parameters. These can help you analyse the effectiveness of your process the best possible way:
- Feasibility of Solution
- Reliability of Solution
- Timeliness of Delivery
- Presentation of Outputs
- Accuracy of Outputs
- Responsiveness of Outputs
- Post-delivery customer service
Understanding Process Efficiency
Process efficiency, on the other hand, is a measurable concept that acts as a vital factor in determining productivity. It is essentially the ratio of ‘useful output to total input’, which ensures resource (mainly cost and time) optimisation along with maximum waste reduction.
Efficiency is regarded as a term of paramount importance throughout the business process management lifecycle. Every single process ends up with some issues or gaps over time, which can impact the process efficiency in a negative manner. However, to get rid of them and be well-organised, a business process must be effective enough.
An inefficient process can affect the entire Business Process Improvement initiative both externally and internally. While organisations mostly consider the experience of external customers for measuring their process efficiency, there are quite a few vital internal factors that should also be used as measures for this purpose. They are as follows:
- Proportion of non-value-added activities
- Extended delay time
- Underutilised or overutilised resources
- Lack of skilled people
Recognition of these factors makes the identification of inefficiencies easier and companies can come up with a variety of resolutions:
- Outcome-related improvements (like digitalisation, harmonisation and separation of outcomes)
- Activity-related improvements (like elimination, automation, parallel routing of activities)
- Resource-related improvements (like integration of activities and assignment of resources)
It creates a more manageable environment for the processes to run and the organisations gain better control over their businesses. As a result, the operational inconsistencies are eliminated and the customers get excellent services. Hence, process excellence is achieved.
A Comparative Approach
As mentioned before, both effectiveness and efficiency are a must for an organisation to enjoy the business process management benefits and improve the performance of the business as a whole. But to get a clearer view, the terms must be put side by side:
- Process efficiency signifies an optimal (in most cases, the fastest or the cheapest) way of operating processes. Conversely, process effectiveness implies executing the right processes and achieving the desired goals.
- Process efficiency is measured from the point of view of achieving the goal of optimal usage of resources (time, cost and effort) in the execution of an organisation’s processes. On the contrary, process effectiveness is measured from the point of view of achieving the goal of customer (both internal and external) satisfaction with regard to accomplishment of the process objective.
Apart from these disparities, both efficiency and effectiveness can improve process speed, process flow, on-time delivery, reliability, operating costs, and other process baselines.
Therefore, organisations need to engage their people in doing the right things that can turn out to be effective in meeting their functional needs:
- Removing wastes, optimising processes
- Aligning processes, people, systems, and governance
- Assisting in system implementation (gap analysis)
- Increasing accountability
- Determining capacity utilisation
- Reducing employee onboarding time
Then, they need to ensure that those things are done the right way by following appropriate approaches to reach their strategic business goals, which are:
- Reducing costs
- Increasing productivity
- Improving customer service
- Creating operational transparency
- Creating operational transparency
Thus, both efficiency and effectiveness can be achieved in a business process, which can help enterprises establish perfect baseline measures for productivity and in turn achieve business process excellence.
Strategies to Balance Process Efficiency and Process Effectiveness
Achieving process excellence requires striking the right balance between efficiency and effectiveness. Here are some strategies to balance the two:
Define Clear Goals and Metrics
- Align business processes with organisational objectives.
- Develop key performance indicators (KPIs) to measure both efficiency (time, cost, resources) and effectiveness (customer satisfaction, quality, goal achievement).
Engage Stakeholders at all Levels
- Involve process owners, employees, and customers in designing and refining processes.
- Gather feedback from end-users to ensure processes meet customer needs effectively.
Prioritise Customer-Centric Approaches
- Always consider the customer experience when optimising processes.
- Balance cost-saving initiatives with maintaining or enhancing the quality of service delivery.
Focus on Training and Development
- Equip employees with skills to handle tasks efficiently and effectively.
- Provide continuous training on tools, methodologies, and customer service excellence.
Achieve Process Excellence with the Right BPM tool
Selecting the right BPM tool is pivotal to achieving both process efficiency and effectiveness, forming the foundation for process excellence. PRIME BPM, with its in-built methodology and powerful analytics engine, enables you to seamlessly analyse your current business processes and uncover improvement opportunities.
With the PRIME Analyser Engine, you can evaluate priority processes in detail, gaining critical insights into the value of each task. Identify whether tasks are business-value-adding, customer-value-adding, or non-value-adding to accurately measure the effectiveness of your processes.
In addition, calculate your process cycle efficiency with a single click. Access essential data points like process cost, execution time, and delay time, and compare your current processes to industry benchmarks to understand where you stand.
Armed with these insights, you can uncover opportunities to enhance efficiency and effectiveness. Address delays, eliminate bottlenecks, and optimise workflows to elevate your business operations and achieve true process excellence.
Experience the powerful functionalities of PRIME BPM software. Take a 15-day Free Trial.
