Definition: Effectiveness, in business, refers to the level of quality with which a task or process is carried out that ultimately leads to higher overall business performance. In other words, does it do what it’s supposed to do?
What Does Effectiveness Mean?
What is the definition of effectiveness? It is how well a business and the people in it perform value-creating tasks, and how well the business functions worth together. Effectiveness can be applied to many parts of business activities. From a managerial standpoint, a business is effective if its people are performing their required tasks. The more consistently employees perform tasks properly, the more effective they are. This includes proper use of communication, technology, organizational and individual knowledge, and resources.
Measures of effectiveness can also be used to describe production in a manufacturing setting. In this case, a process is considered effective if the outcome achieved the desired specifications. In other words, did the product turn out the way that the organization intended? Over a period of time, the more often that products come out meeting specified criteria, the more effective the process is considered. One important note is that effectiveness does not measure efficiency. In other words, effectiveness does not measure how much time or inputs are used in production.
Let’s look at an example.
Example
Phil is the general manager of a mid-sized manufacturing plant. He wants to measure the effectiveness of his operational processes, but is having trouble coming up with metrics that are not focused on measuring how efficiently the organization uses resources (time, raw materials). What are some metrics that Phil can use to measure the organization’s effectiveness?
Remember, effectiveness describes if the organization and its components are doing the correct things. The following examples show how it can be measured:
- Number of employees that met all performance goals
- Proportion of units that met the specified standards
- Customer satisfaction
Summary Definition
Define Effectiveness: Effectiveness means how efficiently an operation or activity is at achieving its goal and the company’s overall objective.
